You can check your bank balance, order pizza, and even balance your chakras online. Why not hire a bookkeeper as well?
A virtual bookkeeper can take bookkeeping tasks off your hands for good. That’s great news when you run your own business and your day planner has more entries than Wikipedia.
But virtual 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. You communicate with them and share your financial info using software. They categorize your transactions and prepare financial statements for your business.
Why is bookkeeping important?
When your bookkeeping is accurate and up to date, you get all the info you need to make important business decisions, take advantage of tax deductions, and file your taxes accurately and on time.
If you’re new to bookkeeping, or you’re a bit hazy on what it involves, check out our intro to bookkeeping basics.
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
- You’ve fallen behind on bookkeeping, and 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).
Some business types are especially well-suited to virtual bookkeeping:
- Ecommerce stores
- App developers
- Freelance software designers and engineers
- Freelance writers, illustrators, and videographers
- Health and wellness professionals who book appointments and take payments online
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 an employee at a bookkeeping firm. Then, you’d deliver your transaction records each month, and they’d enter and categorize everything for you.
Now, most local bookkeepers use software. By synching up with your bank and credit card accounts, they can automatically record transactions for you, categorize them, and create financial reports.
In fact, you may find you rarely need to meet with your local bookkeeper in person. Local bookkeepers and virtual bookkeepers are becoming more and more alike in the services they offer, and how they offer them. But there are still a few differences.
Local bookkeepers vs. virtual bookkeepers
|Local bookkeepers||Virtual bookkeepers|
|Paperwork||If you deal with a lot of paper records—receipts, 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 app, 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 financials 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, they are online businesses. They’re more likely to have experience with issues specific to online businesses.|
|Tax time||A local bookkeeper can hand off your books to an accountant 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: Individuals, 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 bookkeeping 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 app (desktop or mobile) with simple reports and dashboards to keep track of your finances.
You can also message your bookkeeper directly in-app, and upload any documents they need.
If your books are behind, we can get you up for a flat fee. 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, the process of choosing the best virtual bookkeeper for your business is the same.
First, answer all the important questions about what you need from a bookkeeper. Then, ask a few questions to assess the options you have.
Virtual bookkeeping 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 means 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 an accountant who files your taxes?||Make sure that whatever virtual bookkeeping solution you choose can either work one-on-one with your accountant, or connect you with a qualified accountant who can do your taxes for you.|
|Are you familiar with accounting software? What kind?||Since freelancers typically work with off-the-shelf software, you may want to pick one that already uses an app familiar to 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 to 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?
If a virtual bookkeeper has no website, no online profile, and no social media, that may be a sign they’re inexperienced or unreliable.
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 deductible expenses relevant to your business.
The top virtual bookkeeping services
Price: From $139 per month (billed annually)
- Professional bookkeeping team
- Cashflow tracking with Pulse
- Complete tax filing services with BenchTax
- Payroll, invoicing, and sales tax add-ons
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 app 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.
Your Bench team can work 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 for BenchTax, 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 business that does business in the U.S. who wants their bookkeeping done over the internet.
If you’re ready to have bookkeeping taken off your hands for good, give Bench a try.
Price: From $129 per month (billed annually)
- Proprietary app
- Monthly accounting coaching available for an additional cost
- Add-ons like payroll processing for an additional cost
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 $129 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.
Price: From $185 per month
- Invoicing and accounts receivable
- Inventory management
Equivity offers a range of virtual services for businesses—from administrative assistants to paralegals. Bookkeeping is one of those services.
While Equivity offers a fairly robust—if pricey—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 need virtual payroll or inventory tracking. It’s also best if you already have experience with software like QuickBooks—otherwise, you could face a learning curve.
If you’re familiar with QuickBooks and want to stay in that environment, there are lots of virtual QuickBooks services out there, including Pilot, ScaleFactor, and a whole bunch of independent virtual bookkeepers who will do your accounting in QuickBooks.
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.