Outsourced Bookkeeping vs an In-House Bookkeeper: Which Suits Your London Business?

There comes a point in most growing businesses when the bookkeeping stops fitting into the evenings. Receipts build up, invoices go out late, the VAT return becomes a scramble, and you realise you don't actually know how much cash the business will have next month.

The instinct is to hire someone. Sometimes that's right. But for many small and medium-sized businesses in London, outsourcing the bookkeeping gives the same result, with fewer gaps and less to manage. This guide sets out the real differences so you can make the decision on facts.

What a bookkeeper actually does

Before comparing options, it helps to be clear about the work itself. Good bookkeeping usually covers:

• recording sales and purchase invoices
• reconciling every bank account, card and payment platform
• chasing customers who haven't paid
• preparing supplier payments for approval
• running payroll and pension submissions
• preparing VAT returns
• producing monthly figures you can make decisions from

For most SMEs, that adds up to somewhere between a few hours a month and two or three days a week. Very few businesses below a certain size genuinely need a full-time bookkeeper.

The real cost of an in-house bookkeeper

The salary is only the starting point. When you employ someone, you also pay for:

• Employer National Insurance, currently 15% on earnings above the secondary threshold
• Workplace pension contributions under auto-enrolment, a minimum of 3% of qualifying earnings from the employer
• Holiday: at least 5.6 weeks a year of paid leave, during which the work still needs doing
• Recruitment: agency fees or advertising, plus the time spent interviewing
• Equipment and software: a laptop, licences and desk space, which in London is rarely cheap
• Training and supervision: someone has to check the work and keep their knowledge current

There is also the risk that's harder to price. If your only bookkeeper is off sick, leaves at short notice or goes on parental leave, the knowledge of how your finances work can leave with them.

When an in-house bookkeeper makes sense

Employing someone directly is often the right call when:

• there is genuinely a full-time workload, every week
• much of the work has to be done on site, such as handling cash, stock counts or post
• the role combines bookkeeping with other office or operations work
• you have someone senior in the business who can review the work properly

When outsourcing makes more sense

Outsourced bookkeeping tends to suit businesses where:

• the workload is a few days a month, or varies through the year
• you want cover for holidays and absence without thinking about it
• you'd rather pay for an outcome (accurate, up-to-date books) than manage a person
• you want bookkeeping, VAT, payroll and year-end accounts handled by people who talk to each other
• you need someone qualified to spot problems, not just enter data

Because the work is done in cloud software, location matters less than it used to. That said, many London owners still like having their accountant close enough to meet in person when something important comes up.

Five questions to help you decide

1. How many hours a week does the work really take? Track it for a month before deciding.
2. What happens when the bookkeeper is away? If the answer is "it waits", that's a risk.
3. Who checks the work? Mistakes in VAT or payroll are expensive to put right.
4. How quickly do you need your figures each month? Decide what "up to date" means for you.
5. Do you want to manage a role, or receive a service? Both are valid. They suit different owners.

A middle route that works well

You don't have to choose one or the other. A set-up we see work well in London SMEs is a split: someone in the business collects receipts and approves bills, while an outsourced team reconciles the accounts, runs payroll and VAT, and produces the monthly numbers. You keep day-to-day control and gain a qualified second pair of eyes.

Keep your records in software you own

Whichever route you take, make sure the accounting software is in the business's name and that you hold the main login. Cloud software such as Xero means your records are always yours, and anyone who helps you can be given access, or have it removed, in a few clicks.

How Liberty Financial can help

We provide outsourced bookkeeping for London businesses, from a few hours a month to two or more days a week. Your books are kept current in Xero by a dedicated account manager, backed by our team of chartered accountants in Southwark. If you're weighing up a hire, talk to us first and we'll give you an honest view of which option suits your business.