freelance bookkeeper

Freelance Bookkeeper: What Credentials You Need to Succeed

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If you are thinking of having a self-employed career and you derive pleasure in working with numbers, you may want to know what it takes to become a freelance bookkeeper. With the increasing number of people that work for themselves and smaller companies outsourcing their financial needs, there is ample opportunity to build a successful career as a freelance bookkeeper.

With the use of accounting software, video meetings, and instant messaging, virtual bookkeepers are increasing, making it easier to work remotely. Therefore, it is a good option if you want to start freelancing from home.

What does a freelance bookkeeper do?

Regardless of their size, businesses will have a series of financial transactions every month. They include sales, purchases, invoices, payroll, bills, expenses, etc. The larger the company, the more the volume in transactions.

A freelance bookkeeper will come on board to record and process these financial transactions. It begins with data entry and filing of invoices, making payments, chasing invoices, and getting the books for the business ready for the accountants at the end of each financial year. A bookkeeper also needs to reconcile records with banks, suppliers, and customers, checking if everyone has got the exact figures or investigating why a difference may occur.

The need for bookkeeping goes back to 2600 BC during the Babylonian records. Modern-day technology has helped make single and double-entry bookkeeping a lot easier by automating most of the routine parts of the job. However, most freelancers will choose to learn and specialize using one system such as Quickbooks or Xero.

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What skills and qualifications does a freelance bookkeeper need?

No formal education or qualification is required for you to render your services as a freelance bookkeeper. However, when handling the finances of other businesses, the ability to demonstrate possession of some relevant training will help reassure clients that you know your stuff.

Some of the most recognized organizations that offer training and qualification for bookkeepers are the International Association of Bookkeepers (IAB), the Institute of Certified Bookkeepers (ICB), and the Association of Accounting Technicians (AAT). It is also possible to pass through the qualification process as a prerequisite to having an apprenticeship in accounting.

What skills and qualifications does a freelance bookkeeper need?
What skills and qualifications does a freelance bookkeeper need? Image Source: Corporate Finance Institute.

The ability to work with numbers, meticulous keeping of records, and an eye for detail is essential as you will need to spot discrepancies and errors. You will also need to decide on the software platforms you will grant to clients and ensure that you are conversant with how to use them effectively.

There are various courses available for the popular bookkeeping software, often made available from the said companies and third-party providers.

Bookkeeping All-in-One For Dummies.

The difference between freelance bookkeepers and accounts

There are no qualifications to become a freelance bookkeeper. It is your responsibility to record and collate all the business’s financial records before preparing the accounts up to the trial balance stage, where there is complete reconciliation with all other parties.

On the other hand, Accountants need to qualify through the Association of Accounting Technicians or Chartered Certified Accountants. They may have rounded up a degree program in accounting.

They have to prepare the accounts for tax and deal with Her Majesty’s Revenue and Customs if their clients are subject to an investigation.

An accountant is supposed to know and understand all of the legal requirements that relate to the client’s finances and audit statements, evaluate the financial records and recommend ways a client can save money.

It is crucial for any freelance bookkeeper to make sure that they know the areas of their responsibilities end and when you should refer clients to an accountant.

How much can a freelance bookkeeper earn?

Freelancing incomes generally vary across individual businesses and the agreement entered with clients or contracts. Therefore, it is hard to say what you can earn being a freelance bookkeeper. The rate, however, varies depending on experience.

As a freelancer, you need to take care of the costs of your software and equipment, business expenses, and having no paid holidays or sick leave. Therefore, it is essential to consider this when setting hourly, daily, or project rates for clients. A freelance bookkeeper should have a good idea of their living costs and the income they require to run a successful business.

Learn How To Set Your Terms, Rates, and Charge What You’re Worth As A Freelancer.

Do freelance bookkeepers have legal or insurance requirements?

Bookkeepers are likely to fall under the Money Laundering Regulations in the UK as a service in accounting, which means that you need to register with HMRC or an appropriate professional body like AAT, ICB, or IAB.

As you will go about processing personal information, you will need to pay a data protection fee to the office of the Information Commissioner every year.

With the nature of financial matters and the risk of making mistakes, it is advisable to invest in Professional Indemnity Insurance. It will help to meet the cost of actions by a third party if they have incurred financial loss due to something done by you or the company.

You will gain protection against losses if data gets damaged or gets lost; there is a breach of confidentiality in the event of negligence. Accounting firms must possess a PI cover as part of their professional status.

How to get clients as a freelance bookkeeper

If you are beginning as a freelance bookkeeper and need to get clients, the best way to go about it could be by making friends with accountants and other freelancers.

How to get clients as a freelance bookkeeper.
How to get clients as a freelance bookkeeper. Image Source: Entrepreneur.

While qualified accountants can generally carry out bookkeeping, they outsource this to other people, allowing them to focus on more specialized tasks. As a freelance bookkeeper, you will pass on the financial records to accountants at the end of each year. Therefore, building a good relationship means having people you trust when the client requires further advice and a source to get regular bookkeeping tasks.

Another valuable source for clients is other freelancers. Many people go with self-employment because they want to focus solely on the work they are passionate about and not necessarily because they want to spend the time balancing accounts.

Rendering assistance in freelance communities will result in potential clients making inquiries about your services.

Events that center on networking are a great way to link up with other local businesses in your area or industry sector. You can also look at advertising or put something in trade publications. Once you get your first client, you will get to know that referrals are valuable for a new business.

In conclusion, becoming a freelance bookkeeper does not require a degree or formal qualification. You, however, need to showcase your skills so that prospects know that you have what it takes and can willingly entrust you with jobs for them.

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