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Virtual Bookkeeping

Virtual Bookkeeping: How to Hire The Right Bookkeeping Team

Contents

Small business owners today don’t have a lot of time to dedicate to bookkeeping tasks. Thankfully, full-time and part-time virtual bookkeeping companies can ease the burden of a small business’ bookkeeping needs. They can make life easier around the office so that you and your team can focus on the tasks that you are more skilled to handle.

But how do these online bookkeeping services work? And how can you find a company that you can trust?

It’s essential to carefully study the companies that offer a virtual bookkeeping business before trusting them with confidential information such as financial statements, bank accounts, accounts receivable, and balance sheets.

Let’s analyze what a virtual bookkeeper does and why utilizing virtual bookkeeping services can help your small business.

How does virtual bookkeeping work?

Virtual bookkeeping involves hiring an accounting professional or accounting firm to handle your day-to-day financial needs. Instead of having your employees use accounting software such as Quickbooks online, you’ll be outsourcing these services to an experienced bookkeeper from a company that specializes in these services.

In addition to providing basic reporting of all your financial documents, a remote bookkeeper can handle cash flow reporting and forecasting, invoicing, and income statements, to name a few. Some of the more experienced firms aren’t just CPAs. They also provide CFO services that go beyond financial reports and help you grow your business.

Virtual bookkeeping services aren’t just for startups, even seasoned small businesses can benefit from the peace of mind online bookkeeping services can provide over their bookkeeping employees.

Your company’s size is indeed irrelevant in the discussion of whether a virtual bookkeeper could be of benefit to you. It’s only relevant in the type of virtual bookkeeper you might choose to hire, as we’ll soon see.

Why hire a virtual bookkeeper?

There are plenty of benefits that virtual bookkeeping services can provide your small business. Some of these include:

  • Handling mundane tasks such as data entry and routine bookkeeping services
  • Generating month-end accounting reports and reconciling your financial transactions
  • Pouring over financial records and updating your general ledger
  • Identifying potential areas of savings, efficiencies, opportunities, and growth
  • Planning and forecasting to keep you prepared for what’s ahead
  • Streamlining your financial process with technology tools that could automate tasks such as payroll
  • Ensuring you are well prepared for tax filing all year round, instead of only worrying about it as tax season approaches
  • Giving you peace of mind with relevant financial data so you can focus on attracting new clients

Virtual bookkeepers make the entire accounting process much more manageable than handling it yourself -The best firms are more than just accountants who act as freelancers; they are trusted business partners that have your company’s best interests in mind.

Virtual bookkeeping vs. Local bookkeeping

Just like any business decision, it’s necessary to weigh the pros and cons of using a virtual bookkeeper versus using a local bookkeeper — either an on-staff employee or another accountant.

When you hire a virtual bookkeeping company, they manage all your accounting tasks online. The virtual bookkeeper completes all of these tasks digitally as if they were sitting right next to you.

A local bookkeeper, by contrast, will complete the work in your office. If it’s an on-staff employee, he or she will already work in your office. If it’s an outside company that you hire, then a representative from that company will physically go to your office to complete the tasks.

While having an on-site bookkeeper may sound very appealing to many small business owners, there are some definite downsides. First and foremost, local bookkeeping services are often much more expensive. Their pricing models could include a high hourly rate. The main reason for this is they’ll be logging hours related to their work and also the travel time and effort to get to your office.

A virtual bookkeeper offers the opportunity for small businesses to save money. Not only that, but virtual bookkeepers are usually more flexible. Since they work from home, they can perform the work at any time. Small businesses are also provided with the added benefit of scaling up if they need more accounting services over time.

Types of virtual bookkeepers

Small business owners will have a lot of choices when searching for virtual bookkeeping services nowadays. Your two main options will be a freelancer and a bookkeeping agency. Both of these types of virtual bookkeepers will be able to provide you with financial management services, though there will be pros and cons to using both.

Freelancers will often come with a less expensive price tag because they will often have diverse clients that make up their book of business. This is a positive of hiring a freelancer.

There are some downsides, though. First, you never really know what you’re going to get with a freelancer. Just like hiring an employee, you’ll have to do the legwork to research the freelancer’s skill set and ability to do the job. They also often won’t have a system of proprietary services that they can bring to the table. You’ll also be mainly communicating with freelancers through Slack (or other messaging apps) or email.

A bookkeeping agency will sometimes come with a higher price tag, but it’s often well worth it. These agencies bring years of experience to the table, as well as a team of accountants who can help your business in several ways. It’s easy to verify their qualifications, and you can rely on them for more advanced financial tasks such as cash flow management, CFO services, and forecasting.

There are situations in which a freelancer might be the best choice for your small business. Similarly, there are situations in which an agency would be the right choice for you. To make the decision, follow some of the steps below to see which might be right for your small business.

Three Benefits Of Hiring A Virtual Bookkeeper

Your small business can benefit from the immense tools a virtual bookkeeping service can provide. Here are three of the top benefits they can provide:

  1. Expert service for a fraction of the cost: What small business owner wouldn’t love to have an on-staff CFO and expert accountant? This is often out of the question for small businesses, though, because these employees are highly-paid. The virtual bookkeeping cost is much lower, and hiring one doesn’t compromise the quality of services you get in return.
  2. Online tracking of your finances: Doing business today is easier than in the past because of the advent of the internet and technology. But to take advantage of this technology, you have to integrate your services online. A virtual bookkeeper can help you do this. Or, if you have it set up already, they can integrate easily with your systems. Online, cloud-based systems are great because they can be accessed from anywhere, at any time, and provide you with real-time data.
  3. Data transparency and time-saving reporting: Want to know where your finances stand at all times without having to do the manual work yourself? A virtual bookkeeper can provide you transparency with all your data while saving you time by removing the reporting task from you. The fact that this agency (or person) will be an independent firm you hire also adds credibility to the data collection and analysis.

How to choose a virtual bookkeeper based on your company size

The size of your small business could be a determining factor in which virtual bookkeeping service you choose. Smaller companies often don’t require much more than basic financial management and reporting from their bookkeeper. Larger companies often require much more.

Of course, the company’s current size isn’t always the determining factor in what virtual bookkeeping services are needed. It would be best if you considered not only where your company is today, but also where it’s going tomorrow — and where you would like it to go.

To help make your decision of hiring a virtual bookkeeper easier, ask yourself the following questions:

Question to Ask
Things to Consider
Do you have a lot of monthly transactions?
More transactions mean more time, which can mean higher cost for you if you hire a freelancer who charges by the hour.
Do you use cash basis or accrual accounting?
A freelancer or smaller virtual bookkeeping service may only work with one of these methods, or the other one.
What accounting software do you use?
Freelancers may only be familiar with one piece of software, like Intuit Quickbooks. If you don’t have software already set up, a freelancer might not be the right choice to set it up for you.
Do you have a separate accountant to handle your taxes?
If you do, make sure the virtual bookkeeper you hire can work directly with that accountant. Or, search for a virtual bookkeeper who can handle your taxes as well.
Do you need more extensive financial services?
Do you have a need for CFO services such as cash flow management and forecasting? If so, a virtual bookkeeping agency with lots of experience is probably best.
What’s your budget for accounting?
Your budget may determine which virtual bookkeeper is the best fit for you. Make sure your budget matches your business needs.

How Much Does Virtual Bookkeeping Cost?

So, how much would virtual bookkeeping cost you? It depends, of course, on a number of different things. You first have to determine whether you’re hiring a freelancer or a virtual bookkeeping agency. The part-time bookkeeping cost of a freelancer would be less than that of a full-time one.

Next, you have to figure out how your needs align with the virtual bookkeeping service’s rates. For example, if the freelancer you’re hiring charges by the hour, then you can easily calculate your total cost per day, week, and month based on the number of estimated hours the work will take. You will need to agree on the minimum and a maximum number of hours the person should work over a set period of time.

If you are hiring a virtual bookkeeper who provides more in-depth services, you’ll need to inquire with the agency to develop a custom offering and price.

For example, with Punch Financial, we’ll listen to your every need and build you a custom virtual bookkeeping solution that will meet all your needs. Whether it’s simple accounting and bookkeeping to more advanced tax preparation and planning, cash flow forecasting, and CFO services, Punch Financial can build an affordable plan for your small business.

How To Find and Choose the Right Virtual Bookkeeping Service for Your Company

Once you’ve decided to hire a virtual bookkeeping service, how do you find the right person or agency for you? You should take some steps to make sure the part-time virtual bookkeeping service you hire is qualified to do the job you need.

Treat your search for a virtual bookkeeper like you’re hiring an employee. Assess the company’s quality based on things such as their listed industry experience and online presence. See if they can provide references or examples of their work. Ask to interview some of the company’s expert staffers to get a feel for the people you’d be working with.

Next, find out what bookkeeping software the company uses and whether that jives with the software you use. If you don’t use bookkeeping software at the moment, have the company describe to you what they use and why they use it versus other software options.

Ask how the company plans to communicate with you to keep you in the loop. Make sure that they would be accessible to you when you’d need them, or at least within a reasonable time. 

See if the company would have any suggestions on how you can take your business to the next level through their services. This will be a useful tip to know if they are experienced and think outside the box.

Finally, make sure that the part-time virtual bookkeeping cost is something you can afford. If it’s not, then that company would not be a good fit for your small business.

Conclusion

There’s a lot that goes into deciding whether to employ a virtual bookkeeping service for your small business. Once you have decided to use a virtual bookkeeper, you must assess whether the company in question would meet your needs at a price that works for you.

Punch Financial is an excellent option for small business owners searching for a virtual bookkeeping service. We have a dedicated team of accounting experts that can provide everything from basic accounting services to full-fledged CFO planning. Contact us today to find out more.

About the Author

Tyler Barr, Director
Tyler Barr, Director

Tyler Barr is the director for Punch Financial and an outsourced controller who specializes in managing financial and accounting functions for various small businesses and startups.

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