But virtual bookkeeping (also known as remote bookkeeping) comes with drawbacks as well as benefits. Let’s look at how virtual bookkeeping works, then figure out whether it’s a good fit for your business.
What is virtual bookkeeping?
A virtual bookkeeper handles your bookkeeping remotely—they may not be in your town or even your time zone. All communication and financial document storage is handled within bookkeeping software. Your virtual bookkeeper categorizes your transactions and prepares financial statements for your business.
Virtual bookkeeping is a full-time job. Your bookkeeper has a portfolio of clients they’re working for, but they’re always available for questions or conversations about your finances. Their flexible schedule gives you the communication of a full-time bookkeeper but on a part-time budget.
Why is bookkeeping important?
Every business, from the biggest corporations to pre-revenue startups, benefits from bookkeeping. Up-to-date financials allow business owners to make informed budgeting decisions, identify potential tax deductions, and have stress-free tax seasons. Bookkeeping creates financial statements, like your balance sheet and income statement, that hold key information about your cash flow, profitability, and business health.
Every business needs basic bookkeeping to handle tax season. But the top-tier businesses rely on up-to-date books to help maximize profits, minimize costs, and make smart investments.
Further reading: Six Reasons to Keep Your Bookkeeping Up-to-date
Why hire a virtual bookkeeper?
You’ll benefit from the help of a virtual bookkeeper if:
Doing your own bookkeeping is eating up too much of your time and energy
Your financial records are out of date, and you need help catching up
Last tax season was stressful, and you want next year to be easier
You want to track expenses and deduct eligible ones on your tax return
You’ve been paying your accountant to go back and sort out your bookkeeping at the end of the year, so they can file your taxes
You aren’t sure how much profit you’re earning month to month or how much cash your business has on hand
Virtual bookkeeping is especially helpful if your business mostly deals with digital transactions rather than cash. While a virtual bookkeeper can handle cash transactions, it’s faster and easier for them to categorize digital transactions (like credit card, debit, Shopify, and Paypal transactions).
Virtual bookkeeping vs. local bookkeeping
Traditionally, local bookkeepers have been the first choice for small businesses. In the past, you’d hire a bookkeeper in your community—either an individual working for themselves or someone at a bookkeeping firm. Then, you’d deliver your financial transaction records each month, and they’d handle all the data entry for you.
These days, most local options use the same bookkeeping software as virtual bookkeepers. By syncing up with your bank accounts and credit cards, the software allows bookkeepers to automatically record transactions, categorize them, and create financial reports.
In fact, you may find you rarely need to meet with your local bookkeeper in person. That’s because local and virtual bookkeepers are becoming more and more alike in both their services and how they offer them. But there are still a few differences.
Virtual bookkeepers vs. local bookkeepers
|Local bookkeepers||Virtual bookkeepers|
|Paperwork||If you deal with a lot of paper financial records—receipts, bank statements, invoices from suppliers—you can deliver them to a local bookkeeper by hand.||To get paperwork to a virtual bookkeeper, you’ll need to photograph or scan it, then send it to them.|
|Software options||Most local bookkeepers use off-the-shelf accounting software. You’ll need to purchase this software and become familiar with it in order to check your books.||While freelance bookkeepers may still use off-the-shelf software, services like Bench let you check your books with a customized platform designed for business owners to use easily.|
|Mobile access||Depending on the software your bookkeeper uses, you may not be able to check your books on your mobile device.||Services like Bench offer a mobile app that lets you check your financial reports on the go.|
|Online business experience||A local bookkeeper may not have experience with industries such as ecommerce or services like PayPal.||Virtual bookkeepers tend to be favored by online businesses—after all, virtual bookkeeping businesses are online themselves. They’re more likely to have experience with issues specific to online businesses.|
|Tax time||A local bookkeeper can hand off your books to a CPA at tax time, who will use the info to file your taxes.||Some virtual bookkeeping services, like Bench, will also take care of your tax filing for you. Online freelancers don’t typically offer this.|
|Payment||Local bookkeepers charge by the hour and usually have a minimum monthly rate.||Online freelancers usually charge by the hour, much like local bookkeepers. However, online bookkeeping services like Bench charge a flat monthly rate.|
|Price||Your pool of local bookkeepers is limited, and they’re usually more expensive than virtual bookkeepers.||Virtual bookkeeping services are typically less expensive than local bookkeepers.|
Types of virtual bookkeepers
There are two types of virtual bookkeeping solutions: freelancers and services.
Freelancers are hired online through sites like Upwork. Their levels of experience and education vary widely—bookkeepers aren’t legally required to have specific credentials.
You’ll likely need off-the-shelf accounting software in order to check your books and help your virtual bookkeeper categorize any transactions they’re unsure of. Be prepared to communicate mainly through email or messaging apps like Slack.
Virtual bookkeeping services typically give you a team of bookkeepers to complete your bookkeeping for you. (At least, that’s what we do at Bench.)
Virtual services are more sophisticated than individual freelancers. They usually have full teams, so you don’t have to worry about your bookkeeper going on vacation or getting sick. And they usually have more robust features like a dedicated app.
At Bench, for example, we connect directly to your bank and credit card accounts to automatically pull your transactions. Then we categorize every transaction and produce shiny financial statements for you. We also give you an easy-to-use platform with simple reports and dashboards to keep track of your finances.
You can also message your bookkeeper directly if you have any questions or need to upload any documents.
If your books are behind, we can get you caught up for $299 per month. We can even get your taxes filed for you.
How to choose a virtual bookkeeper
Whether you go with a freelancer or a service like Bench, choosing what’s right with you starts with your bookkeeping needs. Here are the important questions you should ask yourself when choosing the best virtual bookkeeper for your business:
|What to ask||How to choose|
|How many transactions do you do in an average month?||Since freelancers charge by the hour, more transactions mean more expensive bookkeeping. They may need to know how many transactions you do per month in order to quote you an average monthly rate.|
|Do you use accrual or cash basis accounting?||Some virtual bookkeepers only work with one method or the other.|
|Do you already have a CPA who files your taxes?||Make sure that whatever virtual bookkeeping solution you choose can either work one-on-one with your CPA or connect you with a qualified CPA who can do your taxes for you.|
|How important is availability?||A freelance virtual bookkeeper may be hard to reach during holidays or busy times of the year, like tax season. Online services are less likely to have this problem.|
|How much can you afford to pay each month?||This will help narrow down your choices—so you don’t waste time scheduling consultations with bookkeepers you can’t afford.|
How to assess virtual bookkeepers
How do they present themselves online?
If a virtual bookkeeper has no website, no online profile, and no social media, that may be a sign they’re inexperienced or unreliable. Look at their LinkedIn to see if their past experience suits your business needs.
What do the reviews say?
Check online reviews, and if you can’t find any, ask the bookkeeper if they can provide testimonies or connect you with some current clients.
Do they have experience in your industry?
You may be better off with a virtual bookkeeper who is already familiar with businesses like your own. They’ll categorize transactions for you and be more familiar with tax deductions and credits relevant to your business.
Do they use software you’re comfortable with?
A lot of virtual bookkeepers use accounting software like Xero or QuickBooks Online. Both are easy to navigate for bookkeepers and accountants alike but require some learning for the typical small business owner. When a virtual bookkeeper uses software you’re comfortable with, you have a smoother onboarding experience and can hit the ground running.
The top virtual bookkeeping services
At Bench, we give you a team of professional bookkeepers who do your bookkeeping for you. They automatically import all your business transactions, categorize them for you, and produce monthly and year-end financial reports.
Our intuitive platform is designed for business owners, not accountants. So you can easily see all your transactions, track your cash flow, and check out visual financial reporting through your web browser or on your phone.
Starting at $249 a month with an annual subscription, your Bench team works with your accountant to make sure they have all the info they need to file your taxes and help you benefit from as many tax deductions as possible. If you don’t have an accountant, you can opt to add tax filing to your subscription, and let Bench take care of taxes for you.
Bench is North America’s most popular bookkeeping service. And, out of all virtual bookkeeping services, Bench is the highest rated by users.
Who it’s for:
Bench is a great fit for any company that does business in the U.S. and wants their bookkeeping done over the internet.
If you’re ready to have bookkeeping taken off your hands for good, give Bench a try.
The Wave suite of apps manages tasks like invoicing, payroll, and accounting/bookkeeping for small business owners. Their cloud-based accounting software is free to use.
With their Wave Advisor service, Wave promises to handle your bookkeeping for you, using their free cloud-based accounting software. While pricing starts at $149 per month, it may be difficult to predict how much Wave bookkeeping will cost your business. There are no publically available pricing tiers—you’ll have to book a call with Wave to get a quote.
Who it’s for:
Wave bookkeeping is a good choice if you already use apps from the Wave suite of tools. However, if you stick to a strict budget for your business, Wave may not be for you—it’s hard to predict how much it will cost per month unless you speak with one of their salespeople.
Equivity offers a range of virtual services for businesses—from administrative assistants to paralegals. Bookkeeping is one of those services.
For pricing, $210 a month gets you 5 hours of an administrative assistant to handle your books. For bigger businesses, the price increases as more hours of work are required.
While Equivity offers a fairly robust bookkeeping package, they don’t use their own software. If you sign up for Equivity, your virtual bookkeeper will use QuickBooks, or another off-the-shelf accounting app, to manage your bookkeeping for you. You’ll need to learn how to use this software in order to help categorize transactions or enter transactions manually.
Who it’s for:
Equivity is a good choice if you want an administrative assistant that goes beyond bookkeeping. It’s also best if you already have experience with software like QuickBooks—otherwise, you could face a learning curve.
Can you afford a virtual bookkeeper?
If you’re still on the fence about hiring a virtual bookkeeper, crunch some numbers to help reach a decision.
Say you spend seven hours per month on bookkeeping tasks. If you’re a freelancer, try applying your hourly rate to the time you spend on bookkeeping.
If you have employees or contractors, try applying the hourly rate of the one whose time costs the most.
Once you do the math, you’ll get an idea of how much you really spend on bookkeeping every month—even if you’re not cutting yourself a check for those services.
Then, consider how that time could be better spent on other aspects of your business—like getting new clients, developing new products, or enjoying some much-needed R&R.
In this case, hiring a virtual bookkeeper could save you a lot. Because bookkeeping is going to cost you no matter how you take care of it.
Still not sure you can afford bookkeeping for a business? Learn how much a bookkeeper costs.