Whether you are just thinking about starting a business or are in the early stages of running your small business, one top priority should be to decide how to manage your bookkeeping. Keeping your business finances organized, especially in the first year, is vital to the success and health of your growing business. Here are our top tips for how business owners can choose the best virtual bookkeeping services. For quick answers to some of your most important questions, check out our FAQ (frequently asked questions) at the end of the article.
What is virtual bookkeeping?
There are really two answers to this question, but both essentially have to do with recording, categorizing, and reconciling your business transactions, producing financial reports virtually, and even managing payroll. The difference is in whether you choose to do it yourself with accounting software, or hire a dedicated bookkeeper to manage your business finances virtually.
There are more options than ever for business owners, both in terms of software options for do-it-yourself bookkeeping and with bookkeeping companies and freelancers who can bring both bookkeeping and small business experience to your company.
Virtual bookkeeping software is designed to take the guesswork out of expense tracking, inventory tracking, reconciling monthly transactions, and creating cash flow statements. Whereas hiring a virtual accountant means you have a real person who understands the nuances of accounting and bookkeeping. Online accountants can answer questions in real time and be on call when you need support and advisory services.
Why choose a virtual bookkeeping service?
One of the most obvious benefits of virtual bookkeeping is how it organizes your record-keeping. Picture this: relying on paper files means you have to take the time to create an easy-to-navigate file organization plan, follow through on that organization so that you can conveniently find the information you need, and manage an ever-growing storage system to stay on top of your records.
On the flip side, virtual bookkeeping organizes all your small business data and information in the cloud. Not only do you have robust search engines that help you find important information in a fraction of the time, you’ll probably free up an enormous amount of physical space in your office. Virtual bookkeeping is secure and simple to navigate, and makes tax season that much easier.
But staying organized doesn’t just help you when tax filing needs to happen; the robust reporting tools that come with virtual bookkeeping products allow you to identify areas of improvement, make healthy financial decisions, and think ahead about when and how to scale up your business sustainably. Choosing a good virtual bookkeeping service can help you accomplish these aspects of running a small business while keeping an eye on the bottom line.
Choosing a dedicated bookkeeper to manage your small business finances provides peace of mind for business owners. Whether they feel nervous about reconciling business accounts, or feel they don’t have the time needed to manage the volume of monthly reconciliations, a dedicated account manager or virtual bookkeeper can provide accurate accounting and additional services as needed.
Using a virtual bookkeeping business or hiring an experienced freelance bookkeeper also provides affordable bookkeeping services, as compared to hiring someone full-time to manage your books in-house. Many professional bookkeepers offer competitive pricing with either a flat rate, monthly rate, or custom pricing based on your individual needs, making this an excellent option for small businesses or companies that are just starting out.
What are the options for virtual bookkeeping services?
The most important thing that any bookkeeper will do for you is keep track of your books on an ongoing basis so that they know what’s going on with your money. This means keeping accurate records of transactions as well as tracking income, expenses, and payroll over time. If you’re looking for online bookkeeping services, there are three options: cloud-based solutions, desktop software, and hiring a virtual bookkeeper. Cloud-based solutions offer many benefits including ease of use, flexibility, scalability, security, and cost savings. Desktop software offers similar features but also includes more robust reporting capabilities. Both options have their pros and cons, which we’ll discuss below.
Cloud-Based Solutions
A cloud-based accounting system works by storing data online instead of using local hard drives. The advantage here is that this type of setup makes accessing information easy because everything happens through the internet. You don’t need to worry about backing up files or having them physically stored somewhere else. It also helps if you want to access your accounting records from anywhere since you won’t need to download anything onto your computer. However, one downside to cloud-based systems is that they aren’t always secure. They may not encrypt sensitive documents like bank statements, making them vulnerable to hackers who might steal personal information. Another drawback is that some companies charge monthly fees for storage space. These costs add up quickly, particularly if you run multiple businesses.
Desktop Software
If you prefer working with traditional methods such as spreadsheets and paper forms, then desktop software is probably right for you. With desktop software, you get full control over every aspect of your accounting processes. For example, you can create custom reports, enter new transaction details manually, and even print invoices directly from within the program itself. One major benefit of desktop software is its ability to integrate with other programs. So, if you already use QuickBooks Online for payroll processing, you could easily import employee hours into QBO while still maintaining separate entries for each individual. In addition, you can sync your inventory between different locations via barcode scanning technology.
Virtual Bookkeeping Personnel
You can also choose to outsource your bookkeeping and hire a dedicated bookkeeper to manage your accounting virtually. This is someone who has access to and can manage and reconcile your financial transactions. They’ll provide accounting expertise and take the guess-work out of filing your quarterly and annual taxes. You may even be able to find someone that has significant experience in your industry, meaning they can provide expertise and knowledge beyond number-crunching.
Think about the unique benefits that cloud-based solutions, desktop software, and virtual bookkeepers can each provide your small business. Your decision may just come down to personal preference, but think about what makes your small business or industry unique.
Are there services and benefits that make one option more attractive than the other? How does cost factor into your decision? Do you want to have robust options for scalability as your small business grows? Can you invest better in your small business by managing your accounting and transactions yourself or by outsourcing your bookkeeping?
Your answers to each of these questions can help you narrow down the options and make the best choice for your virtual bookkeeping services.
What makes a good virtual bookkeeping service?
When it comes to software, every option is going to offer basic bookkeeping services and accounting support. But the best ones go above and beyond that with added tools that make small business management easier and more efficient.
Some systems offer project management and communication tools, allowing a high-level of collaboration that is ideal for businesses with a lot of employees. Other tools have processes for tracking and managing inventory and shipping, which is great if your small business produces a physical product. Some services will give you the option of creating custom reports, while others offer a variety of reports but no custom build-out options. And some software providers offer efficient solutions for automating regular processes, such as monthly reconciliations and quarterly financial statements. Again, a big factor in your decision-making should be deciding what bells and whistles are specific to your small business needs and necessary for your success.
One specific service to research when looking into managing your own finances through bookkeeping software is customer service or customer support. When you are looking at virtual bookkeeping services, find out if they offer training videos, troubleshooting, or a 24/7 hotline that you can call anytime you need help with the software. The more responsive they are to customer needs, the better your experience will be in using their virtual bookkeeping software. You can also check out online reviews of their customer service.
When looking for a virtual bookkeeper to manage your accounts, ask about their experience, how long they’ve been bookkeeping, how they will communicate with you, if they offer payroll services, and the accounting tools that they prefer to use. Check to see if they have their own website, or if there are online reviews of their bookkeeping services. If you feel like you can manage the majority of your accounting yourself and just need help around tax time, ask about their fees for quarterly tax services.
Going with a virtual bookkeeper (rather than managing bookkeeping software yourself) can provide business owners with real-world advice on the best software and tools for their unique business needs.
Sound Accounts offers virtual bookkeeping, payroll, and licensing services to small businesses in a variety of industries. Contact us for a free consultation to see if our services are a good fit for your company.
Learn more about virtual bookkeeping with our frequently asked questions and answers below.
FAQ’s
What is a virtual bookkeeping service?
A virtual bookkeeping service is a cloud-based software used to track transactions, prepare monthly income and expense summaries, file taxes, and generate various types of reports. Business information is entered into the system so it accurately reflects the company’s finances.
What is a virtual bookkeeper and what do they do?
A virtual bookkeeper is an online accountant who works remotely from home. They take care of all aspects of running your books including: entering transactions, reconciling bank accounts and financial records, preparing financial statements, analyzing data, generating reports, and providing tax advice. A virtual bookkeeper also helps clients file taxes on time so they don’t incur penalties. Virtual bookkeepers typically charge hourly rates based on how many hours per month they work.
What are the benefits of hiring a virtual bookkeeper vs. using bookkeeping software?
There are several reasons why you might want to hire a virtual bookkeeper instead of doing this task yourself. They save time by taking the task of entering transactions manually off your plate. Hiring a professional means you won’t have to worry about mistakes being made because no one else has access to your personal files. Finally, working with a virtual bookkeeper allows you to focus on other parts of your business rather than spending valuable time tracking down errors and trying to figure out where things went wrong. Bookkeeping software is a great tool, but it is only as good as the information you put in it. If you have concerns about accuracy, or feel you may not have the time to devote to tracking all your transactions, then hiring a virtual bookkeeper is a wise investment for your small business.
