Can I do my own bookkeeping and just use an accountant for tax?
Running a small business often involves deciding which tasks to handle yourself and which to outsource. Finance is one area where this choice regularly comes up — particularly when it comes to bookkeeping versus accounting.
A common question is: Can I do my own bookkeeping and just hire an accountant to handle my tax? The answer is yes — many business owners do exactly that. But whether it’s the right choice depends on a few factors, including your time, confidence, and how comfortable you are with numbers.
What’s the Difference Between Bookkeeping and Accounting?
It helps to start by understanding the difference between the two.
Bookkeeping is the day-to-day recording of financial transactions. This includes keeping track of sales, purchases, receipts, payments, bank reconciliations, and VAT if applicable.
Accounting builds on that bookkeeping. Accountants take the financial records and use them to prepare tax returns, annual accounts, financial reports, and often provide advice on tax efficiency and business performance.
Put simply, bookkeeping is the input, accounting is the output. If the bookkeeping isn’t accurate, the accounting won’t be either.
Can You Do Your Own Bookkeeping?
Absolutely — and many business owners do.
Bookkeeping has become much more accessible in recent years thanks to cloud-based software like Xero, QuickBooks, FreeAgent, and Sage. These tools are designed to be user-friendly for non-accountants, with bank feeds, automated transaction matching, invoice creation, and reporting tools.
What You’ll Need to Do:
Enter sales and purchase invoices
Record income and expenses
Reconcile bank transactions (i.e., match bank statement entries with your records)
Keep copies of receipts and invoices (digitally is fine)
Track VAT if registered
Manage payroll records if you employ staff
What You Won’t Need to Do:
Prepare year-end financial statements
File Corporation Tax returns, Self-Assessment, or other complex tax forms
Handle HMRC queries related to tax calculations (your accountant handles this part)
Advantages of Doing Your Own Bookkeeping
Cost Savings: You reduce the cost of paying someone else for daily bookkeeping.
Control: You have a real-time view of your business finances — knowing exactly what’s going in and out.
Faster Decisions: Immediate access to your numbers can help with cash flow management and decision-making.
Learning Curve: You develop a better understanding of your business finances over time.
Downsides to Be Aware Of
Time-Consuming: Bookkeeping can be tedious, especially if you fall behind.
Risk of Mistakes: Misclassifying transactions, missing VAT entries, or forgetting to reconcile banks can cause issues later.
End-of-Year Headaches: Poor bookkeeping makes the accountant’s job harder at year-end and could lead to higher fees for sorting out errors.
Tax Implications: Mistakes in bookkeeping can lead to VAT errors, missed expenses, or incorrect income reporting — affecting your tax bill.
What Happens at Tax Time?
If you handle your own bookkeeping, your accountant will typically ask for:
A full set of financial records (sales, purchases, bank statements, loan info)
Access to your bookkeeping software (if you use one) or spreadsheets
Any supporting documents related to assets, loans, or unusual transactions
From there, the accountant will prepare:
Company accounts (if you run a limited company)
Corporation Tax returns (CT600)
Self Assessment returns (if you’re a sole trader, landlord, or company director)
VAT checks and submissions (if agreed)
Your accountant will rely on the data you’ve entered, so if it’s incomplete or incorrect, the tax return may be delayed or wrong.
Common Pitfalls When Doing Your Own Bookkeeping
Not Reconciling Regularly: Unreconciled bank accounts lead to missing or duplicated entries.
Missing Expenses: Forgetting allowable business costs means you overpay tax.
Incorrect VAT Treatment: Misunderstanding VAT rules, especially with partial exemptions, imports, or the flat-rate scheme.
Mixing Personal and Business Transactions: Creates confusion and errors in reporting.
Falling Behind: Catching up on six months of bookkeeping at once increases the chance of mistakes.
A Hybrid Approach: The Best of Both Worlds
Many small business owners handle their own bookkeeping but still work closely with their accountant throughout the year, not just at tax time.
Accountants may offer:
Quarterly checks: A quick review to make sure everything is on track.
VAT reviews: Checking that VAT returns are accurate before submission.
Payroll support: Even if bookkeeping is DIY, many outsource payroll due to complexity.
End-of-year adjustments: Correcting depreciation, accruals, or loan interest you may not have entered.
This balance keeps costs down but ensures the year-end process runs smoothly.
What Kind of Businesses Tend to DIY Bookkeeping?
Sole Traders: Straightforward income and expenses are easier to handle yourself.
Freelancers/Consultants: Often have fewer transactions, making DIY bookkeeping manageable.
Very Small Limited Companies: Especially owner-managed businesses with low volume but want to save on monthly bookkeeping costs.
When It’s Better Not to DIY
You may want to outsource bookkeeping if:
Your business has a high volume of transactions.
You manage complex VAT situations (e.g., international sales, margin schemes).
You don’t have the time or interest in doing it accurately.
You’ve previously made bookkeeping mistakes that led to tax problems.
Summary: Can You Do Your Own Bookkeeping?
Yes — with modern accounting software and a bit of discipline, many small business owners successfully handle their own bookkeeping. It’s a common and perfectly acceptable approach, especially if the goal is to manage costs and maintain control over daily finances.
However, accurate bookkeeping is crucial. The accountant preparing your tax returns will work with the information you provide. If your bookkeeping is incorrect, it affects everything — from tax filings to how much tax you pay.
Whether you continue doing it yourself long-term or eventually hand it off as the business grows is entirely up to you. The key is to stay organised, stay on top of it, and know when to ask for help if needed.
