How to become a self-employed bookkeeper

This article was written by FreeAgent’s Content team and our Chief Accountant, Emily Coltman FCA.

Self-employment is fast becoming a popular career choice for bookkeepers. Whether you’re at the beginning of your bookkeeping career or an established bookkeeper thinking of making the switch to self-employment, this step-by-step checklist will help you get to grips with starting your business.

Getting ready to start

1. Get the relevant education and qualifications

If you’re already an accredited bookkeeper, you can skip to step 2.

If you don’t have any professional bookkeeping experience or qualifications yet, getting some education and training will set you up for success in the future. While you can establish yourself as a self-employed bookkeeper without any qualifications, you’ll be a better bookkeeper in the long run having invested in yourself at the start.

Education institutions such as your local college may offer bookkeeping courses. You can also get qualified through a professional body such as the Institute of Certified Bookkeepers (ICB) and the Institute of Accountants & Bookkeepers (IAB), which offer qualifications that can lead to professional accreditation.

Achieving accreditation with an organisation like the ICB is a great way to differentiate yourself as a professional bookkeeper and make a good first impression with potential clients. Most accrediting organisations also offer ongoing professional support and advice to their members, so getting accredited can help you win more business and run your business better.

Taking the time to get to grips with different accounting and bookkeeping software (including FreeAgent) will also set you up for future success. Not only will this help you to provide a better service to your clients, but it will also help you familiarise yourself with the software you’ll be using to run your own business.

2. Decide on your business structure

Before you start your bookkeeping business, you’ll need to decide on the legal structure that your business is going to take. A sole trader structure should be suitable for most bookkeepers, but you can get support through the government website if you’re in any doubt about what business structure is best for you.

If you want to work for yourself as a sole trader or set up a partnership with another bookkeeper, you’ll need to take certain steps to make sure that you:

  • are registered for the right taxes with HMRC
  • are trading under an appropriate name
  • are keeping the correct business records

The government provides some helpful step-by-step instructions on its website for setting up as a sole trader or setting up a business partnership.

If you decide to set up a limited company, you’ll need to follow certain steps to create your company and register it as a legal entity with Companies House. Luckily, the government also provides guidance on how to set up a limited company on its website.

If you set up a limited company, you also won’t technically be self-employed - as limited company directors are employees of the company they set up!

3. Pick a name

One of the most exciting parts of setting yourself up as a self-employed bookkeeper is choosing the name you’ll trade under. Feel free to have fun and be creative, but remember:

  • If you’re setting up as a sole trader or a partnership, your business name cannot include the words ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’. Your business name cannot be offensive, be the same as an existing trademark or contain a ‘sensitive’ word or expression. It cannot suggest a connection with government or local authorities unless you get permission.
  • If you’re choosing a name for a limited company or LLP, your business name must not include any of the sensitive words or expressions referred to in the guidance from Companies House. This includes words that may imply a connection with government or public authorities, unless they have been specifically approved. Company names that are considered to be ‘too like’ or the ‘same as’ existing names will be rejected. For example, ‘EZ Electrix 4U Ltd’ is considered the same as ‘Easy Electrics For You Ltd’.

If you’re feeling stuck, we’ve written a blog post about choosing a business name that might help get you started.

4. Create a business plan

One of the most important steps in starting out as a self-employed bookkeeper is creating your business plan. This plan will help you define:

  • what services you’ll offer
  • your target market
  • how much you’ll charge for your services
  • how you’ll advertise your business

Our guide to how to write a business plan can take you through the process in 10 steps, and you can also access templates and other resources via the government website. Here are some important strategic questions to consider when writing your business plan:

Who will your customers be?

Identifying your target customer base from the outset can help you avoid a few headaches down the road! There might be a particular industry or group of professionals that you’re familiar with from past experience, such as IT contractors or marketing freelancers, or you might have a preferred type of business to work with (e.g. sole traders). When thinking about your customer base, it’s important to consider who your customers will be, what services they’ll need and how you will provide them.

Which bookkeeping services are you going to offer?

The services each client needs will be different, but you’ll need to decide which general bookkeeping services you will provide. It’s important to carry out this step before you think about the tools you’ll need to run your business, such as online bookkeeping software, so you can make the right choice. The services you offer might include:

  • entering data into accounting and bookkeeping software
  • filing invoices
  • paying suppliers
  • making other payments
  • preparing and filing payroll
  • performing customer and supplier reconciliations
  • performing bank reconciliations
  • completing and filing VAT returns
  • processing business expenses
  • chasing late payers
  • scanning documentation
  • preparing books for end-of-year accounts
  • Self Assessment and/or Corporation Tax filing
  • preparing financial statements

When considering which services you’ll provide, it’s crucial to establish where your responsibilities as a bookkeeper will end and where those of an accountant will begin. The extent of your duties, the services you offer and the clients you manage are likely to reflect your experience or the bookkeeping qualifications you’ve achieved. Be sure to factor in which services you can offer to different clients when planning your business and which are better suited to being handled by their accountant.

Before you take on any clients

5. Set up your business banking

If you’ve decided to set up as a sole trader or to start a partnership with another bookkeeper, you don’t legally have to open a business bank account for your practice. However, there are a number of good reasons to open a business bank account and use it for your income from self-employment.

If you’re setting up a limited company, it should have its own bank account separate from the personal finances of the person or people who run it.

A quick plug: With a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle bank account, you can get FreeAgent accounting software free of charge for as long as you retain your account. Optional add-ons may be chargeable.

6. Choose your software and tools

Robust online bookkeeping software is vital for running a successful bookkeeping business from home. When considering the options, choosing software that you find simple to use and enables you to provide your chosen set of services is important. FreeAgent, for example, automates tasks such as inputting invoice data, reconciling bank transactions, running payroll, completing VAT and Self Assessment tax returns and even filing them to HMRC.

In addition to online bookkeeping software, it’s also wise to get your hands on an appointment-booking app to help you keep your calendar up to date once you start working with clients. Digital communication tools, like video call and messaging apps, and virtual meeting software, are also essential for running a successful bookkeeping business from home.

When it comes to physical equipment or 'hardware', there’s probably not much more you’ll need than a computer, an internet connection and a smartphone that supports all the software you plan to use to run your bookkeeping business.

7. Get your business finances in order

As a self-employed bookkeeper, we’re certain you’ll be a superstar when it comes to keeping on top of your own business finances.

We’re also certain that you’ll be busy, though. Taking the time to set up the processes you’ll use to manage your finances and tax liabilities early on will save you time in the long run. Here are some steps you can take now to set yourself up for success in the future:

  • Create an invoice template you can use to bill your clients.
  • Connect your accounting software to your business bank account.
  • Set up any integrations between your accounting software and other software you’ll use.

If you’re a FreeAgent user, you can find more information on how to get set up in our Knowledge Base.

8. Make sure your business is compliant

Professional bookkeepers are regarded as an accountancy service provider. To comply with Anti-Money Laundering (AML) regulations, this means you may need to register either with HMRC or a supervisory body such as:

To find out whether you need to register, you can check with HMRC.

As discussed in step 1 (see above), bookkeeping associations such as the ICB provide support to their members and qualifications that can help to attract clients - so it may well still be a good idea to join even if you’re not required to do so by AML.

It’s not just money laundering regulations you need to comply with. As a bookkeeper, you’ll likely be handling clients’ confidential data (particularly if you offer payroll as a service), so you’ll need to ensure you’re compliant with data protection regulations such as GDPR.

9. Draw up templates for your contracts

Before you take on any clients, you’ll need to draw up templates for any legal contracts between you and the clients. For a self-employed bookkeeper, the most crucial of these contract documents is a letter of engagement.

A letter of engagement is a formal agreement between a bookkeeper and their client that outlines the terms and conditions of their professional relationship. A good letter of engagement should:

  • list the services you’ll provide to the client
  • outline the responsibilities of both parties
  • state any terms and conditions (including your payment terms)
  • have a clear termination policy

You can find more information about what makes a great letter of engagement in our dedicated guide.

10. Decide how you’ll market yourself

Marketing is a specialism that can feel almost as complex as accounting or bookkeeping, and when you’re starting out as a self-employed bookkeeper, it can be tough working out where to start. It’s even tougher when you’re also focused on the day-to-day running of your practice, so taking some time to understand how you’re going to market yourself can pay off down the road.

For an in-depth look at marketing for bookkeepers and accountants, you can check out our dedicated series of guides through the link provided. In the meantime, here are a couple of useful steps to get you started:

Define your target market

When creating your business plan, you should have identified the businesses or individuals that could benefit most from your bookkeeping services. Defining your target market like this can help you think about how (and where) to best advertise your services to them.

Create an online presence

Whether you have a physical premises or you’re running your business from home, you’ll need an online presence in order for clients to find you.

Social media platforms such as LinkedIn, X (formerly Twitter) and Facebook can be great places to interact with clients. Engage with potential clients on platforms where they spend time. LinkedIn can be particularly useful for professional services like bookkeeping. Share valuable content, such as tips on financial management, industry updates, or success stories to demonstrate your expertise.

We’d also recommend setting up your own website to better showcase the services you offer, client testimonials (once they come rolling in) and your contact information. If you have a physical office where clients can visit you, you should also consider setting up a Google Business Profile and Apple Business Connect profile so they can find you more easily on the map.

11. Find your first client(s)

Once you’ve completed the above steps (or at least most of them) you should be ready to take on your first clients. Good luck! If this is your first experience of onboarding a client to an accounting or bookkeeping business, you might want to check out our dedicated client-onboarding checklist for tips on how to make the process run as smoothly as possible.

After you’ve taken on your first client

Once you’ve found and onboarded your first client (or clients), you’re officially in business as a self-employed bookkeeper!

If your clients use FreeAgent, you can point them in the direction of our extensive Knowledge Base or first-class customer support to help them get the most out of their accounting software.

If you and your clients aren’t currently using FreeAgent, you can find out more about our award-winning software and take a free trial today.

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