They could be – without even knowing it. And although your VA would be responsible for any fines levied, your business and your reputation could be at risk. So if you are already using a virtual bookkeeping assistant, or you’re thinking of outsourcing this task to someone else – here’s what you need to know.

Why use an outsource bookkeeping service?

Companies and individuals that help you look after your finances are appealing. Unless you are financially experienced, this can be one of the most stressful parts of running your own business – you know that your finances need to be accurately kept and reported to make sure you stay on the right side of the law.

So it makes sense to outsource to a specialist – but there are some things you need to check first, because there are legal requirements for anyone who is managing even basic small business bookkeeping.

What you need to know

Anyone managing your finances – in terms of record keeping – is taking on a task with a high level of responsibility. So it makes sense that everyone involved, from bookkeepers to Finance Directors, has their work supervised.

Within a business, this is usually straightforward to manage. By being professionally qualified and a member of any of the recognised supervisory or professional bodies, a company accountant meets legal requirements – and because he or she is responsible for members of the finance team, there’s no need for the business to worry about any other form of registration.

Similarly, if you are outsourcing your books or finances to an accountancy practice, the same applies. You should always check, of course, that the accountants you choose are legitimately qualified and registered, but the process is simple.

Many small businesses, however, can’t afford, or don’t want the complexity of working with an accountant, and just need someone to manage their books – often an outsourced bookkeeping assistant.

Is your bookkeeper working within the law?

Money laundering legislation requires that anyone handling your records needs to be:

  • Under the supervision of a recognised supervisory body
  • Follows the rules on anti-money laundering, including confirming the ID of clients in accordance with legislation
  • Registered with HMRC as offering financial services, if not a member of a supervisory body

If your bookkeeper doesn’t know they should be registered, or what their legal obligations are, do you want to trust them with your accounts? There is a full list of supervisory bodies on the government website, which we’ve linked to at the end of this article.

If something goes wrong with your accounts – for which you are responsible, even if you outsource the bookkeeping – will your assistant’s professional indemnity insurance cover any costs or fines you incur?

The answer is ‘probably not’ – it’s likely to be invalidated if they have failed to meet a regulatory requirement. So if the worst happens, you will be left with the significant hassle and cost without any recourse to your bookkeeper.

When doesn’t your business bookkeeping help need to be registered

HMRC has made some exceptions for virtual assistants:

  • Being a virtual assistant is their main business
  • Their annual business turnover is less than £30,000
  • No more than 5% of their total business turnover applies to accountancy service activities
  • The accountancy services they provide support their main business
  • There is no other business activity they need to register under money laundering regulations
  • Their work is reviewed by an accountant or bookkeeper who is registered for money laundering supervision

If your virtual bookkeeping company meets all these requirements, they do not need to register. But they must inform HMRC that they meet these criteria, and they must register if any of the criteria change.

How can you find out if your bookkeeper is registered?

HMRC does not keep a list of registered bookkeepers and financial support providers. So first, you must ask your VA if they are a member of a recognised supervisory body. If they are, they will have a membership number and you should be able to confirm this with the relevant body.

If not, and they are registered individually with HMRC, they will have a registration number and they should be able to share that with you.

If you ask your VA if they are registered, and they don’t know what you’re talking about, that’s a big red flag. It shows that they haven’t investigated what they need to do to run their business professionally. It may also show that they know they should register, but have chosen not to.

Either way, if the VA you are talking to either doesn’t know they should be registered, can’t provide you with proof of supervisory membership, or can’t show you a document from HMRC that confirms they are exempt, then you should think twice about working with them.

What if I just want someone to help with invoicing?

This is another task that can take ages to complete, and it’s only natural to consider outsourcing this to someone else. So if you just need someone to type up your invoices and register them on whatever system you use, does that person need to be registered with HMRC?

According to KoffeeKlatch, an organisation that helps VAs and other small businesses with their legal obligations, some financial tasks are considered ‘administrative’ by HMRC, and so virtual assistants managing these tasks wouldn’t need to register.

So, according to HMRC, typing up invoices doesn’t require any registration, and neither does managing credit control, as long as VAs are not entering or amending records of payment. But essentially, anyone who is responsible for the calculation, review or reporting of the financial information for your business should be registered with HMRC unless they meet the relevant exemptions.

What should you do next?

If you are considering outsourcing your bookkeeping – and it’s a really great thing to do – just make sure you are aware of the Money Laundering legislation requirements and what’s expected of your VA. You can check out the key information on the government’s website.

If you are interested in using virtual bookkeeping assistant services then why not call us on 0800 994 9016 or use our contact form in the menu above?


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