What does a bookkeeper do?

The short answer

Every sale, purchase, payment and refund leaves a trail. A bookkeeper turns that trail into an organised record in your accounting software. The aim is simple. At any point, the figures in the software should match what actually happened in the bank and on paper.

That record is what everything else is built on. VAT returns, year-end accounts, tax returns and management figures all start from the books. If the books are wrong or out of date, every report that comes out of them will be too.

The core tasks of a bookkeeper

The exact list depends on the business, but most bookkeeping work falls into a handful of jobs.

Recording transactions

Each transaction is entered or confirmed in the software and coded to the right account. A payment to a fuel station goes to motor costs. A supplier bill for stock goes to purchases. A customer payment is matched to the invoice it settles. Most modern software pulls in bank lines automatically through a bank feed, so the work is less about typing and more about deciding what each line is.

Bank reconciliation

Reconciliation means checking that the bank balance in the software agrees with the real bank statement. Each line is matched to something that explains it, such as an invoice, a bill or a receipt. Anything left over is a question to answer. It might be a duplicate, a missing entry, or a payment nobody recognises. A reconciled bank account is the clearest sign that the books can be trusted.

Matching receipts and bills

Spending needs paperwork behind it. A bookkeeper collects receipts and supplier invoices, often through a capture tool such as Dext, and attaches them to the matching bank lines. This is also where VAT is checked. If you are VAT registered, you generally need a valid VAT invoice to reclaim the VAT on a purchase.

Sales invoices and customer payments

Depending on how the business is set up, the bookkeeper may raise sales invoices, or record the ones you raise. They then track which customers have paid and which are overdue, so you know who to chase.

Supplier bills and payments

Bills from suppliers are entered with their due dates. That gives you a list of what you owe and when, and stops the same bill being paid twice.

Chasing what is missing

A good part of the job is following up gaps. That means card payments with no receipt, deposits with no explanation, and invoices that a supplier never sent. The sooner these are chased, the easier they are to find. Our guide to daily vs monthly bookkeeping explains why timing matters so much here.

Reports for the owner

Once the records are in order, the software can produce useful reports. Common ones are a profit and loss summary, a list of who owes you, a list of who you owe, and a view of the cash position. A bookkeeper keeps these accurate enough to rely on. If you are not sure how to read them, see our guides on reading a balance sheet and cash flow.

The records the law expects you to keep

Bookkeeping is not just good practice. UK rules set out what records businesses must keep and for how long. A bookkeeper helps make sure those records exist and are organised.

• Limited companies must keep records of all money received and spent, assets the company owns, debts owed to and by the company, stock at the year end and the stocktakes used to value it, and goods bought and sold. These must be kept for 6 years from the end of the last company financial year they relate to. HMRC can fine a company £3,000, or a director can be disqualified, for not keeping accounting records.
• Sole traders must keep records of all sales and income and all business expenses, plus VAT and PAYE records if those apply. They must be kept for at least 5 years after the 31 January submission deadline of the relevant tax year.
• VAT-registered businesses must keep VAT records for at least 6 years. These include copies of sales invoices issued, purchase invoices received, debit and credit notes, and business records such as bank statements and till rolls.
• Employers must keep payroll records, such as pay, deductions, reports and payments to HMRC, for 3 years from the end of the tax year they relate to.

For more detail on retention, see how long to keep business records.

Bookkeeping and Making Tax Digital

Making Tax Digital is changing where and how records are kept.

• VAT. Unless you are exempt, you must keep some VAT records digitally and follow the Making Tax Digital for VAT rules.
• Income Tax. Sole traders and landlords with qualifying income over £50,000 in 2024/25 should have started Making Tax Digital for Income Tax from 6 April 2026. Those over £30,000 in 2025/26 will need to start from 6 April 2027, and those over £20,000 in 2026/27 from 6 April 2028.

Under Making Tax Digital for Income Tax, quarterly updates are due by 7 August, 7 November, 7 February and 7 May. Each update draws on the records kept in software. Books that are kept current make those dates routine rather than a rush.

What a bookkeeper usually does not do

The line between bookkeeping and accountancy varies from firm to firm, but there is a common split. A bookkeeper keeps the records. An accountant uses those records to prepare formal accounts and tax work, and to give advice.

Work that usually sits outside day-to-day bookkeeping includes:

• Preparing year-end accounts and filing them with Companies House
• Preparing Corporation Tax and Self Assessment returns
• Tax planning, such as how a director should take money out of a company
• Running payroll and sending reports to HMRC, which is often a separate service
• CIS returns for construction businesses

Some bookkeepers also prepare and file VAT returns, while others hand the figures to an accountant to submit. It is worth asking exactly what is included before you agree anything.

Bookkeeper vs accountant at a glance

• Focus. Bookkeeper: accurate, current records. Accountant: accounts, tax returns and advice built on those records.
• How often. Bookkeeper: ongoing, often daily or weekly. Accountant: mostly at set points, such as the year end or a tax deadline.
• Typical output. Bookkeeper: reconciled bank accounts, coded transactions, debtor and creditor lists. Accountant: statutory accounts and tax returns.
• Why it matters. An accountant's work is faster and cheaper when the books are already clean.

For more detail, read bookkeeper vs accountant: who does what.

Signs your business needs a bookkeeper

Plenty of small businesses keep their own books. If you can, and it does not eat into time better spent elsewhere, that may be fine. But a few signs suggest it is time for help:

• The bank feed in your software has weeks or months of unreviewed lines
• You often find card payments you cannot explain
• VAT returns or Making Tax Digital updates turn into a scramble
• You are not sure which customers owe you money
• Your accountant sends long lists of questions at the year end
• You make decisions on hiring, stock or spending without current figures

A hypothetical example

How bookkeeping is usually charged

Some bookkeepers bill by the hour. Others charge a fixed monthly fee based on the size and complexity of the business. A fixed fee makes the cost predictable, but check what it covers and what is charged as extra. Our guide on how much a bookkeeper costs in the UK covers this in more detail.

If your books are already behind, expect the first step to be a catch-up job to bring them up to date. Regular bookkeeping then carries on from a clean, reconciled position.

What to ask before you hire a bookkeeper

• Will they work in the software you already use, or ask you to switch?
• How often will they update the books: daily, weekly or monthly?
• Who chases missing receipts and invoices, and how?
• What reports will you get, and how often?
• Which jobs are included in the fee and which are quoted separately?
• Who prepares and submits VAT returns and year-end accounts?