What is Virtual Bookkeeping? What You Need to Know?

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Businesses can find it difficult as well as challenging to keep accurate records of their financial transactions. Bookkeeping can take up a lot of time. It also requires specialised knowledge to perform bookkeeping. You may hire an in-house bookkeeper or outsource your bookkeeping to a third party. But virtual bookkeeping service providers would offer a better solution. 

What is Virtual Bookkeeping?

Virtual bookkeeping is an online platform with the use of technology that allows experienced and qualified bookkeepers to offer their accounting process to businesses virtually. Enabled by the online collaboration skills and internet, it consists of a team of virtual bookkeepers offering online bookkeeping services instead of working at the client’s office. You may communicate with them using software. 

The bookkeepers record the company’s financial transactions from a remote location. All your interactions would be through video calls or messaging apps. You may never meet them in person. Virtual bookkeeping service provides you with monthly bookkeeping for your credit cards, loans, bank accounts and payment processors. They categorize your transactions and prepare financial statements. 

Why hire a virtual bookkeeper?

You’ll benefit from a virtual bookkeeper in the following ways:

  • You want your tax filing to be on time and accurate
  • You need a lot of catching up on the bookkeeping
  • Doing your own accounting is consuming a lot of time and energy
  • You want to track business expenses and deduct eligible ones for your tax returns 
  • You are paying your accountant to sort out previous years bookkeeping to file tax returns
  • Virtual bookkeepers can handle transactions a lot faster and easier. 
  • You aren’t sure of the profit earned by your business monthly or how much cash in hand does your business have.

Virtual bookkeeping is well- suited for the following types of businesses:

  • App developers
  • Ecommerce
  • Freelance writers, illustrators and videographers
  • Freelance software designers and engineers
  • Health and wellness professionals

Types of virtual bookkeepers:

There are two types of virtual bookkeepers: Individual and services

Freelancers: 

Freelancers- Individuals are hired using an online platform. Bookkeepers aren’t required to have specific credentials hence their level of experience and education varies widely. You’ll likely need off the shelf accounting software inorder to check your books and help them to categorize transactions that you’re unsure of. Communication will be mainly through emails or messaging apps. 

Services:

Virtual bookkeeping service provides a team of bookkeepers to perform bookkeeping activities. They are more sophisticated compared to freelancers. They have a huge team, so there is no chance of going on vacation or taking a sick leave. They automate your financial transactions so it's available at your convenient time. 

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How does virtual bookkeeping works.

Nowadays, more and more companies are using virtual bookkeeping services. This gives an advantage to the businesses to focus on their core objectives. Simultaneously, virtual bookkeeping may boost a company's profitability. 

Step 1: The first step involves a video call to discuss your company’s accounting assignment. You need to provide details such as bank accounts, about the loans taken if any, so basically all financial aspects of business would be discussed. 

Remember to keep all your documents ready. Be more specific about your needs.You just have all the facts and figures with you. So if the discussion is steady and you are prepared to hire them, you need to move onto the next step. 

Step 2: This step involves providing the cloud accounting firm with access to your bank accounts, payment processors and credit cards. 

Pros and Cons of virtual bookkeeping:

Pros of virtual bookkeeping:
  • They have great expertise with qualified and experienced teams. It would be difficult for small businesses to hire experts of the same level. 
  • Another benefit is that you need expert advice with your taxes or any other query related to accounting. 
  • This is more efficient as you will have more time to focus on core activities of the business and how to grow it.
Cons of virtual bookkeeping:

The following are the cons of virtual bookkeeping:

  • It can be expensive as the amount required to spend could be beyond your budget. 
  • All the data would be on cloud, instead of a local server. This means you will have a lower control over your finances or face data security issues.

What does a Virtual Bookkeeper do?

Virtual bookkeeper would furnish you with a set of reconciled accounts as well as financial statements every month. IT is the duty of the virtual bookkeeper to categorize all your transactions and keep your financial records up to date. Accounting software like quickbooks, Xero are different from the virtual bookkeeper in regards that you need to have basic accounting knowledge. But with virtual bookkeeping- the entire responsibility is in their hands. 

How to find a virtual bookkeeping service?

We will guide you through how to choose a virtual bookkeeping service. What questions you need to ask them and the qualities to look for. 

The first thing is to ask about the accounting software that they use to carry out accounting. If suppose they use QuickBooks for small business but records are maintained with XERO, you need not want to further discuss with them. As this can be a trouble to move to a new system. 

The next thing to consider is cost. Find out how much you would be required to pay to render their services. What all services are included in the package? What reports they will be delivering? Ask about additional or hidden costs if any.