What Are Virtual Bookkeeping Services?

It used to be common that every business had its own accounting department. Accounting and bookkeeping are vital functions to any business—large or small—but today, many are opting to use outsourced accounting services. Continuity in accounting is important, which means you need an accounting team you can rely on to help you make financial-related decisions. 

Virtual bookkeeping services are becoming increasingly common as companies take advantage of the gig economy and teams move to remote work. A bookkeeper works in tandem with an in-house accounting team or outsourced accounting firm to help meet financial goals, calculate important KPIs, and make thoughtful decisions. 

But what are virtual bookkeeping services, exactly, and what does a virtual bookkeeper do? Let’s look at some services they provide, plus a virtual bookkeeper job description to really make it clear.

Virtual bookkeeping services have emerged as a game-changer for modern businesses, especially for business owners, entrepreneurs, and small business owners who need efficient accounting, HR, and payroll services. At Milestone, we understand the essence of maintaining accurate and up-to-date financial records, and virtual bookkeeping offers a seamless way to accomplish this.

Definition of Virtual Bookkeeping

In essence, virtual bookkeeping involves managing your financial records using online platforms and tools rather than working in a physical office. Virtual bookkeepers use cloud-based software to manage financial records, ensuring that your company’s financial data is meticulously monitored and recorded without the constraints of geographical boundaries.

Overview of Online Bookkeeping Platforms

Numerous online bookkeeping platforms are available, each designed to cater to various business needs. These platforms have advanced bookkeeping software featuring cloud accounting, real-time data updates, and comprehensive financial reporting. Popular platforms include QuickBooks Online, Xero, and Wave. These tools streamline bookkeeping tasks and offer enhanced data security and accessibility from any device with internet connectivity.

Differences Between Virtual and Traditional Bookkeeping

The primary distinction between virtual and traditional bookkeeping lies in the mode of service delivery. Traditional bookkeeping often requires an in-house employee or an accountant who works on-site. On the other hand, virtual bookkeeping leverages technology to offer remote bookkeeping services. This approach reduces overhead costs, offers greater flexibility, and allows businesses to tap into a wider pool of expert bookkeepers who can provide specialized knowledge.

Virtual Bookkeeper Job Description

In reality, a virtual bookkeeper isn’t much different than a traditional bookkeeper, whose job is to manage the day-to-day finances of a business or organization. There are several key tasks that any bookkeeper is responsible for. A list of accounting and bookkeeping services include things like: 

• Accounts payable
• Accounts receivable
• Payroll
• Expense reconciliation 
• Expense management
• Bank and credit account management

The main difference between a traditional bookkeeper and a virtual bookkeeper is where they work, and the software they use. 

A traditional bookkeeper shows up and works in your office every day. Usually they’re paid as a full-time employee of your business. They use local software like Quickbooks desktop to manage accounts receivables, invoices, and the flow of financial transactions into and from the business. 

On the other hand, a virtual bookkeeper will use a cloud-based software that allows them to work remotely. As long as they have an internet connection, they can do their job. And a variety of communication tools, like Slack or Google’s suite, makes it easy for a business owner or in-house accountant to manage the bookkeeper virtually. 

How Do Virtual Bookkeeping Services Work?

Understanding how a virtual bookkeeping company operates is crucial for entrepreneurs and small business owners looking to maximize efficiency. Here’s a detailed breakdown of how these services operate:

How Virtual Bookkeepers Access Financial Data

Virtual bookkeepers access your financial data through secure, cloud-based platforms or a hosted virtual desktop. You’ll usually grant them access to your financial accounts, which enables them to monitor and manage your records in real time. Security protocols, including encryption and multi-factor authentication, protect sensitive information.

Major Tools and Software Used in Virtual Bookkeeping

Several tools and cloud-based accounting software solutions are fundamental to cloud accounting. Popular options like QuickBooks Online, Xero, and Wave facilitate smooth, secure management of your finances. These platforms allow bookkeepers to perform tasks remotely and keep your accounting data up-to-date and accessible.

Typical Steps in a Virtual Bookkeeping Process

The process usually begins with setting up your business on the chosen bookkeeping platform and connecting your accounts. Financial transactions are then recorded and categorized automatically or manually. Virtual bookkeepers also reconcile bank statements, generate financial reports, and ensure compliance with financial regulations. Regular communication through video calls or emails keeps you updated and ensures that your financial records are accurately maintained.

What Are the Benefits of Virtual Bookkeeping?

The rise of virtual bookkeeping offers numerous advantages for small businesses, entrepreneurs, and small business owners. Whether you’re seeking to streamline your financial operations or gain real-time insights into your business’s performance, online bookkeeping services provide various benefits that can significantly impact your bottom line.

Cost Savings

One of the most compelling advantages of virtual bookkeeping is the potential for cost savings. Traditional bookkeeping services often require in-house staff, which means additional overheads such as salaries, office space, and benefits. On the other hand, virtual bookkeeping services allow businesses to outsource their finances to a virtual bookkeeper who often works remotely, thereby reducing these additional costs. This pay-as-you-go model enables businesses to only pay for the services they need, making it a cost-effective option.

Scalability and Flexibility

Another significant benefit of virtual bookkeeping is its scalability and flexibility. As your business grows, so do your financial needs. Virtual bookkeeping services can easily adjust to manage increased transaction volumes and complex financial operations. Additionally, these services often offer various packages and pricing plans, allowing businesses to scale up or down based on their current requirements. This flexibility ensures that your bookkeeping solution grows with your business, providing continuous support regardless of size or scope.

Real-Time Financial Monitoring

Traditional bookkeeping methods often involve delays, making it difficult for business owners to have a real-time view of their financial health. With online bookkeeping, you can access your financial data in real time. Many virtual bookkeeping platforms are integrated with cloud accounting software, allowing up-to-date financial reporting and instant access to your financial records from anywhere. This real-time data is invaluable for making informed decisions quickly and efficiently, helping you avoid potential financial issues and capitalize on opportunities as they arise.

How to Choose a Virtual Bookkeeping Service?

In today’s digital age, selecting the right virtual bookkeeping business is crucial for entrepreneurs and small business owners looking to streamline their accounting, HR, and payroll functions. Identifying the best fit for your business needs is essential, with many options available.

Considerations for Selecting a Service

When evaluating potential virtual bookkeeping services, assess your business’s specific needs and objectives. Consider factors such as your business’s size, transaction volume, and financial operations. Additionally, examine the service provider’s experience and expertise in your industry. A specialized provider can offer tailored solutions that address industry-specific nuances.

Evaluating Software and Tools

The technology that underpins virtual bookkeeping is central to its effectiveness. Look for service providers that leverage robust cloud accounting software and have integration capabilities with other business tools you use. Key features include real-time updates, automated reconciliation, and data security measures. Popular accounting software like QuickBooks Online, Xero, and Zoho Books are commonly used and provide a solid foundation for virtual bookkeeping.

Do I Need a Virtual Bookkeeper? 

As discussed above, many companies both large and small are moving toward using virtual bookkeeping and other outsourced accounting services. Even if these businesses have an in-house team, using an outsourced accounting service offers them talent and specialities they may not have available from their full-time employees. 

While there used to be a large focus on in-house teams, the recent pandemic saw many businesses change their work structure to be more flexible—and that has made companies realize they don’t always need to be in-person in order to get quality work accomplished. In the same way, it’s no longer necessary to have an accountant in the back office. Instead, you can have a team available virtually that can execute everything from lower-level accounting functions like bookkeeping up to higher-level services like an outsourced CFO. 

Tips for Finding Reviews and Testimonials

One of the best ways to gauge the reliability and effectiveness of a virtual bookkeeping service is through customer reviews and testimonials. Explore online platforms like Google Reviews, Trustpilot, and industry-specific forums. Look for feedback on the service provider’s accuracy, responsiveness, and customer support. Pay special attention to reviews from similar businesses, as their experiences will likely be most relevant.

Start-ups and small businesses often find value in outsourced accounting services and virtual bookkeeping, because it allows owners and operators more time to focus on their business without having to add additional headcount.. Conversely, when larger companies hire a full-time, in-house accountant, that person will definitely be able to keep the books. Depending on skill level, talents, and specialization, they may be able to offer other value to the company as well. That said, when you hire a mid-level accountant (who may have other skills) to primarily do bookkeeping, it may be difficult to keep their interest—and that could lead to turnover – which leads to major business disruption like missed invoices when the books aren’t kept up with.

Is a virtual bookkeeper right for you, or even a full outsourced accounting partner? Contact Milestone, where you can find virtual bookkeeping and other outsourced accounting services that can help take your business to the next level. We use the latest in cloud-based software to provide you with the insights you’re looking for.