We’ll walk you through how to choose an online bookkeeper. You have to understand which accounting tasks you want to outsource now and which services you might need when your business scales. Most importantly, you have to shop around and evaluate your options based on different factors, such as the bookkeeper’s fees, the accounting software they use, and how they will communicate with you to work on your books.
Step 1: Determine Which Services You Currently Need
First, think about how much work you want to do yourself and what can be outsourced easily based on your situation. For instance, if you’re a freelancer or sole proprietor, you might need to outsource tax filing and catch-up bookkeeping to a company, like those in our guide to the best online bookkeeping services for freelancers. If you’re a midsize or large company needing to outsource payroll, you might consider Bookkeeper360, which earned a spot in our roundup of the leading online bookkeeping services.
Keep in mind that you don’t necessarily need to have the same accountant do everything. For example, you wouldn’t have a bookkeeper prepare your taxes unless the bookkeeping firm also hires tax specialists.
The following are common bookkeeping needs that a business might have:
- Transaction recording: This involves recording all income and expenses, including sales, purchases, salaries, and bills.
- Bank reconciliation: Regularly matching bank statements with your accounting records to identify and rectify any discrepancies.
- Accounts payable (A/P) and accounts receivable (A/R) management: Keeping track of money owed to vendors and money owed by customers, which includes sending and receiving invoices, processing payments, and managing overdue accounts.
- Financial statements: Generating essential financial reports like profit and loss statements, balance sheets, and cash flow statements. These reports provide insights into your company’s financial health and performance.
- Payroll processing: Calculating employee salaries and deductions, including taxes and benefits. This might involve generating paychecks or direct deposits and filing payroll taxes.
- Tax preparation: Organizing financial records for tax filing and collaborating with your accountant to ensure accuracy and maximize deductions.
Beyond these core tasks, bookkeeping needs can vary depending on the size and complexity of your business. For instance, businesses with inventory might require inventory management within their bookkeeping system.
Step 2: Decide Which Services You Might Need in the Future
As your business grows, so will its needs, and you don’t want to have to change your bookkeeper when you scale. That’s why it’s important to identify a bookkeeper or a company that can grow with you, such as Bookkeeper.com, which offers full-service bookkeeping with flexible plans based on the size and needs of your business.
Services that you may need in the future include:
- payroll and human resources (HR) management
- tax filing and advisory services
- chief financial officer (CFO) advisory services
In addition, you may decide to change your business model, which could include adding ecommerce. Selling online introduces new payment methods and potential sales tax complexities. Or, if you decide to accept investments from shareholders and lenders, you’ll not only need to account for their investments, but you might also have to produce GAAP-compliant financial statements and maybe even have an audit from a CPA. If you decide to take your business global, operating internationally adds currency conversions and potentially new tax regulations.
Step 3: Evaluate Your Prospective Virtual Bookkeepers
Once you understand what you need exactly, it’s time to do your research and talk to your prospective virtual bookkeepers. To narrow your options down, you must consider important factors, including the following:
- Qualifications: Check if the online bookkeeper has any certifications, such as QuickBooks ProAdvisor or Certified Bookkeeper.
- Communication style: Discuss preferred communication methods (e.g., phone, email, video calls) and frequency. Ideally, find someone who is easy to reach and responsive.
- Meetings: Some online bookkeepers allow you to schedule meetings on a monthly basis, while others allow you to schedule as often as necessary. Communication can be as simple as a phone call or as elaborate as a one-way video conference with the ability to screen-share your documents or software.
- Dedicated bookkeeper: Decide whether it’s important to have a dedicated bookkeeper―so that you can always talk to the same person.
- Software expertise: Know which accounting software your prospective bookkeeper uses. Review the best small business accounting software to see which program suits your needs.
- Industry experience: Give preference to virtual bookkeepers with experience in your industry, as they’ll understand your specific bookkeeping needs.
- Online portal: Ask your prospective bookkeeper if they use an online portal. It can be a valuable way to communicate with them, see their ongoing task list, schedule future appointments, and share private documents.
- Price: Some virtual bookkeepers offer the option of paying for services on an as-needed basis, whereas others let you customize your services by paying an additional hourly rate.
- References and reviews: Contact references provided by the virtual bookkeeper to gain perspective on their work. Also, look into the firm’s online reviews, if available.
- Data security: Ensure the virtual bookkeeper has robust data security practices to protect your financial information.
Our related resource: Best Online Bookkeeping Services
Step 4: Preview Your Top Choice, Then Hire
Once you have selected your top choice, you should preview the fit for your business with either a free trial or demonstration. Some virtual bookkeeping services provide a short-term contract, which allows you to change your mind without losing a large financial investment.
Once you sign up, you’ll begin the onboarding process. You may be required to provide your bank account statements or software file to set up your account, but if you have elected to have a dedicated bookkeeper, then they should be able to assist with that.
How Can a Virtual Bookkeeper Help Your Business?
Virtual bookkeeping services are often less expensive than hiring a local bookkeeper. Because they work online, they tend to be very tech-savvy and can view and adjust your books with very little effort from you. Unlike local bookkeepers who may not take advantage of cloud-based accounting software, a virtual bookkeeper will never ask you to provide them with paper reports, save digital backups for them, or post your own adjusting journal entries.
Typical Services Provided by Virtual Bookkeeping Companies
- Account reconciliation: One of the most common services that virtual bookkeeping companies provide is account reconciliation and the performance of a month-end close, ensuring that your books are accurate.
- Invoicing customers: Often available as an add-on service, many companies will take on the task of billing your customers for you.
- Paying bills: Bill pay services are also provided by online bookkeeping services for an additional fee, with the ability to process payments via automated clearing house (ACH) or check.
- Reports: The complexity of the financial reports provided varies, from a basic profit and loss (P&L) statement to reports customized for your industry.
- Tax management: Many online bookkeeping firms also provide tax services, including tax preparation, filing, and advice.
- CFO advisory services: Growing startups and other venture-backed companies may be interested in solutions such as CFO advisory or controller services.
Virtual Bookkeepers vs Traditional Local Bookkeepers
Virtual Bookkeeper | Traditional Local Bookkeeper | |
|---|---|---|
Meetings | Telephone or online | Usually in-person |
File Sharing | Accountant has remote access to your books | Provide them with paper reports or a digital backup of your books |
Accounting Software Used | Cloud-based software, such as QuickBooks Online | Locally installed software, such as QuickBooks Desktop |
Communication | Email, phone, and online tools, such as Zoom and Google Hangouts | Email, phone, and in-person meetings |
Of course, not all local bookkeepers are strictly traditional, and many will likely use some of the modern tools of the virtual bookkeeper, such as Zoom meetings and cloud-based accounting software.
Hiring Full- or Part-time Remote Employees vs Contracting With a Bookkeeping Firm
Another option to explore before hiring a virtual bookkeeping firm is hiring a remote bookkeeping employee. As an employee, you’ll have more authority over when they work and how they accomplish their tasks. Depending on your knowledge of accounting and the importance of your deadlines, this added supervisory authority could be valuable.
Full-time or Part-time Remote Employees | Bookkeeping Firm | |
|---|---|---|
Control & Integration | More direct control over the work and can integrate into company culture | Less direct control over the work and may require clearer communication for specific needs |
Tasks Best Suited For | Back office tasks like billing clients and paying vendors that take an extensive knowledge of the company and access to detailed company records | General accounting tasks that aren’t company-specific, like reconciling accounts and providing financial reports |
Cost | Can be more expensive with salary, benefits, and potential office set-up costs (even remotely) | Can be more cost-effective, especially for part-time needs, with predefined packages or hourly rates |
Scalability | Less flexible to scale workload quickly if needs change | More flexible to scale services up or down as your business needs change |
Management | Requires time investment for recruiting, onboarding, training, and performance management | Offers access to a pool of experienced bookkeepers with diverse expertise and firms handle recruiting, training, and management |
To make the best choice, it is important to consider your company’s bookkeeping complexity, budget, time commitment, and growth plans.
Frequently Asked Questions (FAQs)
Rates for a virtual bookkeeper vary depending on the experience and services offered. Rates start at around $140 per month and could go up as high as $499 monthly. To get a better idea of the cost, check out our guide to the best online bookkeeping services, which includes pricing information for each of the providers.
Yes, online bookkeeping is feasible for a variety of reasons. Because virtual bookkeepers work remotely, this offers flexibility and eliminates the need for office space. Also, online bookkeeping services can be cheaper than hiring an in-house bookkeeper due to lower overhead costs. Another advantage is that you can access a wider pool of experienced bookkeepers and scale services up or down as your business needs change.
This depends on your company’s financial complexity and workload. If you’re struggling to keep up with bookkeeping tasks or your finances are getting messy, a virtual bookkeeper can free up your time and ensure accuracy.
Look for certifications (e.g., QuickBooks ProAdvisor) and experience relevant to your industry. The bookkeeper should be proficient in popular accounting software like QuickBooks, Xero, or FreshBooks. Be sure to assess their communication style and discuss preferred contact methods and availability for questions. Also, ask about their data security measures and ensure they comply with relevant regulations.
Bottom Line
You need to determine exactly what bookkeeping assistance you need, now and in the future, before shopping for an online bookkeeping service. Once you’ve compiled a list of bookkeepers that meet your needs, you should consider other factors, such as the service’s price and the type of communication available.
