What Does a Bookkeeper Do? Daily UK Duties, Average Costs, and Accountant Differences
What does a bookkeeper do? A bookkeeper keeps a business’s day-to-day financial records accurate, so tax, payroll and decisions rest on real figures.
A bookkeeper is a finance professional who records, organises and reconciles a business’s daily transactions so owners and accountants can rely on the figures. For UK small businesses in the 2026 to 2027 tax year, that includes preparing VAT figures and payroll data for HM Revenue & Customs (HMRC).
Key Takeaways
- Bookkeepers record transactions, reconcile bank accounts and prepare VAT and payroll figures; UK law requires records, not a bookkeeper.
- Sole traders keep records at least five years after the 31 January deadline; limited companies, six years.
- VAT registration starts above £90,000 turnover; Making Tax Digital for Income Tax applies above £50,000 income from April 2026.
What Does a Bookkeeper Do Day to Day?
A bookkeeper records every transaction, reconciles bank statements and keeps the ledger accurate. The National Careers Service describes the role as processing sales and purchase invoices, making sure bank statements match income and payment records, and preparing VAT returns.
Day-to-day tasks usually include:
- Recording transactions: Sales, purchases and expenses go into software such as Xero or QuickBooks.
- Bank reconciliation: Each bank line is matched to an invoice or receipt, which checks for errors and discrepancies.
- Accounts payable: The bookkeeper handles supplier bills, entering and scheduling them so they are paid on time.
- Accounts receivable: Sales invoices are raised, and the bookkeeper chases unpaid invoices.
- Payroll and expenses: Wages and expense claims are prepared for each pay run.
- General ledger upkeep: The ledger stays clean, so financial records are kept up to date for the accountant.
While modern cloud software automates much of the raw data entry, a human bookkeeper is still needed to spot anomalies, chase unpaid invoices, and ensure transactions are coded to the correct tax categories before they reach HMRC.
Beyond these daily checks, operating in the UK introduces specific compliance responsibilities.
What Does a Bookkeeper Do for a Small Business in the UK?
What a bookkeeper does in the UK extends to VAT figures, payroll data and digital records that work with Making Tax Digital. These duties follow thresholds set by HMRC.
VAT registration is required once taxable turnover passes £90,000 in 12 months, according to GOV.UK, and below that level it is optional. Once registered, the bookkeeper prepares the VAT return figures each period. Payroll adds another layer, because the bookkeeper also prepares wages and expense claims.
Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income above £50,000. They must keep digital records and send quarterly updates through compatible software.
From September 2026, HMRC begins signing up people whose qualifying income exceeded £50,000 in 2024 to 2025.
Each month, the bookkeeper produces monthly financial reports, including management accounts, that give a clear view of cash flow. Preparing those figures is bookkeeping, but signing off annual accounts and tax is a different role.
Bookkeeper vs Accountant: Who Does What?
A bookkeeper records and reconciles transactions all year, while an accountant prepares the year-end accounts, files returns and gives tax advice. The bookkeeper works alongside the accountant by handing over clean records.
Bookkeepers commonly train through the Association of Accounting Technicians (AAT), while accountants hold chartered titles.
| Task | Bookkeeper | Accountant |
|---|---|---|
| Daily transactions | Records them | Reviews the results |
| Bank reconciliation | Does it | Relies on it |
| VAT return | Prepares the figures | Checks and advises if engaged |
| Payroll | Prepares pay data | Advises on tax treatment |
| Year-end accounts | Helps prepare them | Varies by provider; confirm in writing |
| Self Assessment and Company Tax Return | Varies by provider | Usually prepares them |
| Tax planning advice | Not usually | Yes |
Scope varies by provider. Some bookkeepers help prepare annual accounts and returns, while others pass them to an accountant. Annual accounts must still reach Companies House, so the owner should agree in writing who files what before work starts.
What a bookkeeper cannot do reliably is plan a business’s tax position. That advice usually sits with the accountant, so owners should ask before assuming it is included. Many small businesses start with a bookkeeper and add an accountant as finances grow more complex.
Is Bookkeeping Compulsory for a UK Business, and Do You Need the Records for Tax?
UK law requires businesses to keep accurate records, but it does not require a bookkeeper.
From the moment you register as a sole trader, you must keep business records for at least five years after the 31 January Self Assessment deadline. Limited companies must keep accounting records for six years from the end of the last company financial year they relate to.
A company can be fined £3,000 by HMRC, or a director disqualified, for failing to keep accounting records.
Tax returns are built from bookkeeping records, and HMRC can check them. It may ask for the accounts, tax calculations and PAYE records behind a return. GOV.UK places the record-keeping duty on the owner or company director, so hiring help does not remove it.
Keep records ready for HMRC whoever does the data entry, because penalties for missing or inadequate records can reach £3,000 per failure, though HMRC often starts with a warning.
How Much Does a Bookkeeper Cost, and Is There a Free Option?
Published UK fees run from about £100 to £600 or more a month, depending on volume, VAT and payroll. Hiring an employee instead adds National Insurance, holiday cover and equipment, which is why outsourcing is often cheaper.
What Bookkeepers Typically Charge
Provider guides quote £20 to £40 an hour, and monthly packages from £100 to £350 for small firms, with fuller services reaching £600 or more. These are provider-published figures rather than official data, so a fixed quote is worth requesting. Four factors move the price:
- transaction volume
- VAT registration
- payroll or Construction Industry Scheme work
- a backlog that needs clearing before ongoing work starts
Is There a Free Option?
Free accounting software exists, and several providers offer free tiers, but free software leaves the bookkeeping itself with the owner. Tiers often carry limits, such as a turnover cap, and suit a very small business that still does its own bookkeeping.
Check that any cloud accounting software appears on HMRC’s list of compatible software before relying on it.
How to Choose a Bookkeeper for Your UK Business
Choose a bookkeeper by checking scope, credentials, software fit and data handling before comparing price.
No legal qualification is required to work as a bookkeeper in the UK, so these checks do the vetting.
Seven Checks Before You Hire
- Agree the scope in writing, including tasks, frequency and who files the VAT return, annual accounts and tax returns.
- Check professional membership, such as the Institute of Certified Bookkeepers (ICB) or the Institute of Accountants and Bookkeepers (IAB), and ask for proof.
- Ask about anti-money laundering supervision, through HMRC’s Supervised Business Register or a professional body such as the ICB or IAB.
- Request proof of professional indemnity insurance, which covers errors in the work.
- Confirm the software fit: Cloud accounting software that supports digital tax filing, with the account held in your business’s name, so the books stay accessible if the relationship ends.
- Ask how your data is stored, who can access it and how it is backed up.
- Get references and a fixed fee in writing before work begins.
Red Flags
- No professional membership and no explanation
- Scope or fees that will not be put in writing
- Cash-only payment without an invoice
- No clear answer on where your data is stored
Once the right person is hired, the quality of what you hand over decides the quality of the books.
What to Hand Over While Your Bookkeeper Works for You
Give your bookkeeper complete source documents on a regular schedule, because accurate books depend on them.
- Receipts and invoices, captured digitally as they arrive rather than in a box at year end
- Bank access, through a read-only feed or monthly statements
- Payroll changes, such as starters, leavers and pay rises
- Clear separation between personal and business spending
- Login access as an invited user to your software or HMRC business tax account, rather than a shared personal password
- A monthly review slot to question the reports and approve queries
Agree a rhythm early: weekly uploads, a monthly report review and quarterly VAT or Making Tax Digital updates where they apply. Keep a copy of everything you send, because records can still go missing.
What Happens If Your Bookkeeping Records Are Lost?
Self-employed people who cannot replace lost records must give HMRC their best figures and say whether those figures are estimated or provisional.
GOV.UK sets this out for sole traders and partners. Limited companies should take advice from an accountant or HMRC.
- Ask your bank, suppliers and cloud accounting software provider for copies.
- Ask your bookkeeper or accountant for working files and backups.
- Rebuild missing figures from statements and invoices, noting what is estimated.
- Tell HMRC when you file, and send actual figures later if you used provisional ones.
Keep a second copy of important digital records and paperwork, and ask where your bookkeeper stores them.
The Information Commissioner’s Office (ICO) enforces UK data protection law, which covers the personal data in bookkeeping records. That makes storage and backup fair questions to ask before hiring.
Conclusion
What does a bookkeeper do? They keep the records behind tax, payroll and decisions, including Making Tax Digital deadlines.
The law requires records, not a bookkeeper, so hire one when volume, VAT or payroll make the work heavy. Knowing how to choose a bookkeeper means checking scope, credentials and data handling first.
FAQs
What does a bookkeeper do for a small business?
A bookkeeper records transactions, reconciles bank accounts, manages invoices and supplier bills, and prepares VAT and payroll figures. Monthly reports then show cash flow and profit.
Is a bookkeeper the same as an accountant?
No. In the bookkeeper vs accountant split, the bookkeeper maintains day-to-day records, while the accountant prepares statutory accounts, files tax returns and gives tax advice, although scope varies by provider.
Is bookkeeping compulsory in the UK?
Keeping accurate business records is compulsory; hiring a bookkeeper is not. Sole traders keep records at least five years after the 31 January deadline, and limited companies keep them for six years.
Can you get bookkeeping for free in the UK?
Free accounting software exists, but it leaves the bookkeeping itself with you. Check that it works with Making Tax Digital before relying on it.
Figures reflect GOV.UK and HMRC guidance checked on 2 October 2026. Fees vary by provider and individual circumstances differ, so confirm current rules and terms with HMRC or a qualified adviser before deciding.
