Running a business requires keeping a tab of all the purchases and sales made. You need to keep your records updated to ensure you get reliable figures by the end of the period. And not every business owner is trained to do so. As such, you’ll need a bookkeeper to handle this laborious work.
Traditionally, a bookkeeper can be an in-house staff member working within your business premises or a retained service from the bookkeeping firm several doors away. However, with the latest technological development and hyper-connectivity due to high-speed internet and the availability of various software and tools, bookkeepers are steadily working virtually.
Virtual bookkeeping is still traditional bookkeeping; the same accounting standards and rules are followed, but it is more technologically savvy and requires less face-to-face interaction.
If you are considering hiring a virtual bookkeeper but are still unsure how it is done or what it could do for you, this article is definitely for you.
Table of Contents
What is virtual bookkeeping?
Like the bookkeeping you already know, virtual bookkeeping still pertains to managing financial tasks, daily transaction record-keeping, bank reconciliation, and even payroll processing. The only difference is that the bookkeeping isn’t physically present in your business address or work premises.
Your virtual bookkeeper could be working from his home in the next town. Or he could be thousands of miles away, keeping your financial records in the Philippines or India.
This enormous physical distance and time zone difference are bridged by online accounting or bookkeeping software like QuickBooks, communication tools like Zoom, and project management applications.
As a practicing accountant in the Philippines, virtual bookkeeping allows me to get clients from the United States, Australia, Canada, and New Zealand. Gone are the days when an accountant or bookkeeper’s clientele was only within his home city or county. The globalized world has also transformed the bookkeeping profession.
Traditional bookkeeping vs. Virtual bookkeeping
| Traditional bookkeeping | Virtual bookkeeping | |
Key tasks | (1) Record-keeping and data entry using accounting tools or bookkeeping software (2) Accounts payable processing (3) Accounts receivable processing (4) Bank accounts reconciliation (5) Payroll processing | Same as traditional bookkeeping |
| Accounting tools | Locally-installed accounting software like QuickBooks Desktop | Web-based or online accounting software like QuickBooks Online |
Communication | (1) In-person meetings (2) E-mails (3) Phone calls | (1) E-mails (2) Phone calls (3) Messaging apps like Slack (4) Video conferencing like Zoom (5) Document collaboration like Drive and Dropbox Project management software like Trello |
| Workplace | Inside the office or business premise | Anywhere in the world |
For easier comparison, the table below details the differences between virtual bookkeeping vs. traditional bookkeeping:
Virtual bookkeeping provides flexibility, albeit it requires some adjustment to how you do business. Added software and tools allow seamless communication even with the considerable physical distance.
However, virtual bookkeeping allows businesses to outsource accounting services to countries with much lower average salary wages. By scrutinizing the qualifications and hiring them from reputable virtual assistant providers, you can hit the jackpot by getting a good virtual bookkeeper for a fraction of what you usually pay.
You are not shortchanging the virtual bookkeeper, though. You can pay the virtual bookkeeper a competitive fee relative to the wage levels of the country where he or she is located. It means you are not underpaying. The virtual bookkeeper gets a rate that is proportional to the cost of living in his or her country.
Types of virtual bookkeepers
1. Freelancers
You’ll get These virtual bookkeepers from websites like Upwork or Fiverr. You can also hire some pre-vetted ones from FreeUp.
As freelance virtual bookkeepers, you’ll expect them to have various work experiences. Freelancers may also handle several clients apart from you as they are contracted for specific deliverables and are not tied to your company or business.
2. Agency
Bookkeeping firms are changing with the times. As virtual bookkeeping grows in prominence and popularity, traditional bookkeeping firms are now offering it to clients.
With agency virtual bookkeeping, you’ll get a team to handle your account. There can be expected cumulative expertise and collaboration, so you’ll always have someone to contact.
3. Staff or employee
You can also hire a virtual bookkeeper to provide dedicated service to your business. The position can either be full-time or part-time. With a dedicated staff, you’ll expect the virtual bookkeeper to focus on handling your accounts and record-keeping tasks.
How to choose a virtual bookkeeper?
In interviewing a potential candidate, you answer the following essential questions to determine your needs and know what exactly to expect from the virtual bookkeeper:
1. How many transactions do you do in a month?
It answers the question of the volume of your business transactions. It is relevant as most freelancers charge hourly rates, and more transactions would mean a more expensive bookkeeping fee. Freelancers must also know your average monthly transactions to provide you with their fee quote.
You may also consider hiring a virtual bookkeeper from the Philippines for a fixed monthly rate. You get the same qualifications and competence but at a much cheaper rate. Most of the time, the rate isn’t directly proportional to your monthly transactions, so you won’t pay more as your transaction volume increases.
You may also want to try the agency service route. I run a bookkeeping and accounting firm that offers virtual bookkeeping. It is a boutique accounting firm that caters to e-commerce businesses and start-ups. We offer a flat fee of $500 per month bookkeeping package using QuickBooks online and cover all your accounting and finance needs.
2. Do you have a tax preparer?
Tax preparation and filing are commonly done locally, as laws and rules differ worldwide. If you have a tax accountant, you must ensure your virtual bookkeeper can work with the accountant for annual compliance. It is important that your virtual bookkeeper can directly coordinate with your tax accountant as they handle complimentary services.
3. Are you familiar with specific accounting software?
It is an essential question as hiring a virtual bookkeeper necessitates using online accounting software. A virtual bookkeeper works for specific software, and it helps if you hire someone who works for software that you’re familiar with or have experience using.
4. How much is your monthly budget?
Your budget will dictate the type of virtual bookkeeping service you get. Knowing your budget ahead of time will narrow your options and save you time with consultation calls and inquiries with a virtual assistant or virtual bookkeeping providers.
How do we assess virtual bookkeepers?
1. Check the provider’s online reviews
Reputation is essential; an efficient virtual bookkeeping service will surely get favorable online reviews. If you hire a virtual bookkeeper from a job marketplace, you must ensure you’re using an established and reputed marketplace or jobs portal.
2. Consider how they present themselves
If a virtual bookkeeper has no online profile, website, or social media, that’s a red flag that you should be wary of. Most experienced and reliable virtual bookkeepers have an online presence.
3. Experience
Virtual bookkeepers should have knowledge and experience in your industry. Certain intricacies are unique per industry; your virtual bookkeeper must know these.
