by Blake Bobit, founder of Solution Scout
In recent years, technology has permeated nearly every business function and traditional bookkeeping has been transformed. While bookkeeping software has been around for decades, it is increasingly being deployed on cloud servers rather than on site. Virtual bookkeepers have seized the opportunity and now offer remote accounting services to businesses for a fraction of the cost of a traditional bookkeeper.
For small businesses, hiring a full-time bookkeeper has always been a daunting task. Since hiring a bookkeeper in-house can be prohibitively expensive, many small businesses rely on part-time resources to manage their books.
Some business owners may try to manage their books on their own, but without specific accounting knowledge this often leads to errors. Also, once they factor in the value of their time and realize it takes at least a few hours to do the books each month, it clearly makes sense to outsource the function.
Virtual bookkeeping essentially involves an external resource taking access to your financial accounts and managing entries for expenses, revenues, etc. Virtual bookkeepers perform every task from reconciling your bank statements to preparing your financial documents, and may even help with payroll processing. This allows a small business to save on costs, office space, and keep books in shape with minimal effort.
How Virtual Bookkeeping Works in Practice
The process of remote bookkeeping may vary depending on the kind of virtual bookkeeping service or bookkeeper you sign up with.
For companies who engage individual virtual bookkeepers to work on their own systems, access credentials are created for them to log in to accounting software and company networks. The software would be hosted on company servers or on your private cloud network managed by the company itself. In such an arrangement, a virtual bookkeeper works as a remote worker. This arrangement is typically preferred by large to mid-sized companies who utilize virtual bookkeepers to scale up their in-house teams.
Typically, when you engage with an individual virtual bookkeeper, the person works as an independent contractor and shares you a work invoice based on billable hours. However, some large companies may choose to keep individual virtual bookkeepers on their payroll, and such an arrangement comes with additional financial burdens related to benefits and payroll taxes.
Virtual Bookkeeping Service
For most small businesses and even for many mid-sized businesses, opting for a virtual bookkeeping service is a better choice. When you sign up with a virtual bookkeeping service you would most likely use online bookkeeping software like QuickBooks to manage your accounting process. The accounting data would be kept in a bookkeeping software, but you as the business owner might not have.
Virtual bookkeeping services primarily focus on accounting tasks along with monthly reconciliation, expense management, payroll processing, etc. Most virtual bookkeeping services offer different plans and you can opt to choose one depending on your needs. Ideally, you should take up a plan that covers payroll processing and tax preparation too.
Why Work With a Virtual Bookkeeping Service?
There are several benefits of working with a virtual bookkeeping service besides the cost savings you can achieve by working with a remote team. To start with, with a virtual bookkeeping service you get to work with an experienced team. Many virtual bookkeeping services offer both cash basis and accrual basis accounting, which your local part-time bookkeeper may not offer.
Virtual bookkeeping services are also experts at managing your data. Since the data is hosted on the cloud, you can access your financial documents, including returns and payroll data, etc. from anywhere and on any device. Moreover, most top-end services offer detailed reports to their customers and, if needed, they can also generate custom reports.
Additional Benefits of Virtual Bookkeeping
Besides bookkeepers who actually work on your account, a virtual bookkeeping service will assign a personal account manager. For any questions or concerns you can reach out to your account manager and they can also guide you regarding any additional services you may require.
For example, growing companies can benefit by having a CFO or similar resource for guidance. However, most of them simply cannot afford to hire one. To help address the need, some virtual bookkeeping services offer fractional CFO services that are available for any specific guidance you need.
You can get similar expertise from other resources including professionals who deal with IRS audits, taxation rules related to interstate commerce, and complex regulations.
Virtual bookkeeping services are often the best bet for small businesses looking to manage their books and meet compliance norms. However, business owners need to carefully go through the plans offered by the remote bookkeeping services and choose one that covers all their needs. It also helps to work with a provider who has expertise and clients related to your type of business.
Blake Bobit has been an entrepreneur and business owner for over 25 years. He founded Solution Scout to provide the most helpful answers to questions about business solutions. Blake has helped businesses in many industries nationwide and enjoys the challenge of staying up-to-date on all things HubSpot.