Virtual Bookkeeping

Written by Tammy Durden

Do you know what ‘Virtual Bookkeeping’ is and why it is a great alternative to an in house employee?

I know, I know…your financial information handled by someone who you cannot drive to and see in person.  In today’s virtual world, however, nearly all business tasks can be performed online.  Most experienced and professional virtual bookkeepers are going to approach all of your information as confidential and should provide a confidentiality clause within the contract.

What to Look for in a Virtual Bookkeeper

  • Check for years of experience
  • Ask for references or do a Google Review Search
  • Make sure that they carry insurance on their company – whether a Freelancer or an LLC, you can request a ‘Certificate of Insurance’ (some are even bonded, although not necessary)
  • Great at Communicating when contacted
  • Familiar with Microsoft Excel
  • A Company or Person who is always learning and/or taking training
  • Must Know Quickbooks Online (& in some cases Freshbooks, Zohobooks, Xero & Sage can be helpful)

Keys to the Kingdom?

This does not mean they get the ‘keys to the Kingdom’, so to speak.  In other words, do not immediately hand over bank log ins and passwords.  In fact, it is not even necessary to give them the Quickbooks (QB) log ins.  Any company already set up on QB can simply invite a virtual (or in person) Bookkeeper to be on their Accountant or Bookkeeper by adding them to their system, which will send an automated email to the Bookkeeper.  If set up properly, the Bookkeeper will not need any access to the bank, as long as the Company communicates well, doesn’t mind answering questions and sends Bank Statements on a regular basis.

Hands Off Approach

If, however, the preference is more of a ‘hands off’ and ‘I do not want to have to deal with it, just send my reports monthly’, then you may want to call the bank and ask if there is a way to give a separate log in for the bookkeeper.  This insures there is always a trail when logged on.

Do not panic, however, if the bank does not do this as some banks will not have this availability.  In these cases, if the business does not mind giving permission, the bookkeeper can access the bank information by logging in online (under their log ins).  This will enable them to download the Statements, view checks when there is a need to see vendors and answer most questions themselves without having to contact the business.  I do not recommend this approach initially, until you have established trust and worked with someone for several months.

Comes Down to Availability

It honestly depends on the business and how involved or even how available they are to answer questions on a regular basis for the Virtual Bookkeeper.  Without account access, they will require that you send Statements and answer some questions about checks and perhaps some other inquiries.  A good bookkeeper will keep track of the common vendors and what these purchases are for so they will not have to ask multiple questions each month, after the initial on boarding process.

What Can a Virtual Bookkeeper Do for You?

  • Maintain the Company Books
  • Allocate the Monthly transactions
  • Setup and maintain your general ledger
  • Payroll
  • Accounts Payable
  • Accounts Receivable
  • Print Checks
  • Pay Invoices
  • Balance Sheet
  • Profit & Loss Statements
  • Monthly Bank Reconciliation
  • Run Quarterly Reports
  • Assist with Budget
  • Submit Payroll Taxes
  • Prepare 1099’s & W-2’s
  • Submit Information to Your CPA for Taxes
  • Assist with Allocating to Separate Projects if necessary

And much more depending on the size and needs of the business.

What Do Virtual Bookkeepers Charge?

Most Virtual Bookkeepers will offer a Free Consultation to help determine the level of need for your business.  In general, they offer a few different packages, often these can be seen on their website.  In the consultation they should lead you to an appropriate package.  These are usually listed on the website or will be supplied when an inquiry is made regarding the fees.  Bookkeeping packages can range from $250 monthly up to over $1,000 per month, depending on the size of the business and the number of transactions per month, as well as, the number of employees that will need to be processed for payroll.

It is important to give full information when discussing with a potential bookkeeper so that they can provide you with the proper package quote.  This monthly retainer package is generally paid at the beginning of every month and is renewable automatically each month unless cancelled in the allowable time (per the contract agreement).

Why Choose A Virtual Bookkeeper Instead of an In House Employee:

“A virtual bookkeeper may be appealing to a company because of the cost savings and flexibility associated with this arrangement. Virtual bookkeepers do not require office space or supplies, and those working as contractors require no insurance, benefits or employment taxes — a huge savings for the employer.”  According to Amanda Banach in her Article

Most packages come out to around $25 up to $60 per hour, but some will be $75 & up per hour.  In general, the average is approximately $50 per hour.  The National average salary in the United States is $42,912 for a Bookkeeper  (for an Inexperienced Bookkeeper).  In Canada, depending on the location, it ranges from the low $40,000 to up to over $46,000 per year. Considering a CPA will probably charge well over $150 per hour, it is still a steel to have a bookkeeper (virtual or otherwise) complete your monthly accounting tasks.  This will also end up much less expensive than paying a full-time in house person (probably less than a part-time in house employee).

Other Advantages of Using a Virtual Bookkeeper:

Other big advantages, in favor of trying a Virtual Bookkeeper:

They are Not an employee but a Contracted Worker who would receive a 1099.  The Company will only use the services (bookkeeping) they are providing and virtual bookkeepers own their own company.

There should be a signed contract that would go on file, signed by both parties.

Employee Versus a Virtual Professional:

This is significant because if you hired an in house Bookkeeper, rather than use the services of a Virtual Bookkeeper, you will have to provide:

  • Consistent pay  – which usually comes out to much more a year than you will pay a contracted virtual professional.
  • Sick pay – Companies usually pay employees for a number of ‘sick days’.
  • Vacation pay – every employee has some vacation time, the difference is the Company pays an employee (up to a fixed amount of hours or time) while on vacation – not so with a virtual professional.  You pay a flat monthly rate with a virtual bookkeeper.
  • Lunch time – an employee receives a number of hours each week for their lunch time, usually on the company.
  • Break time (Restroom breaks, get a Drink breaks, etc…).
  • ‘Play’ time (time when people in the office are just talking, or do not have anything to do but are still ‘on the clock’).
  • Health Insurance (a portion paid by the Company) – this is usually a significant amount per employee.
  • Disability Insurance (most of the time supplemented by the Company)
  • Worker’s Comp
  • Half of the Social Security taxes paid by Company
  • and more

When the Company contracts a Virtual Bookkeeper, as a service provider, the savings of the benefits paid alone are well worth using their services versus hiring an employee.

If, for example we used the average salary of a bookkeeper in the States of $42,912, this comes out to $3,576 monthly PLUS all of the Benefits.  Even if the very minimal in benefits and add in the SS, health insurance, etc… we’ll round it to about an added $300 per month (approximate figures).  This total would be $3,876 per month for an in-house Bookkeeper.  Keep in mind, the general monthly package for a Virtual Bookkeeper is usually less than $1,000 per month. Already saving the company thousands of dollars.

Why Be a Virtual Bookkeeper Versus an Employee?

There are many reason someone would choose to do Virtual Bookkeeping rather than be an employee of another Company.  For some Professionals it is simply the freedom of choosing their own hours. Others love the flexibility of doing it when the kids are at school or even night when all are asleep.  Remember they will not only be taking care of your business but they will also have other clients as well.  This can also be a great advantage because the best professionals are always learning.  What can often happen as they work on software systems such as Quickbooks, they can encounter an issue they must learn from and get an answer.  This very lesson could soon benefit your company as well.  Most virtual professionals are learning whether a lesson presents itself or not, because they want to be up on the latest technologies and stay sharp with their skill sets. Sharing resources and services can ultimately benefit all businesses.  The growth we all learn on the journey of entrepreneurship is something that not only gives us wisdom, but that can also be shared in real ways on real projects if we are willing, with our clients.

Thank you for reading and if we can be of service to help you with your virtual bookkeeping, please let us know.  We love your feedback and comments as well as sharing our articles.  You are very important to us.  Remember to sign up to receive updates, specials and out Newsletters!

Disclaimer:  This article is simply to inform those considering this option and to give general information and direction, not provide exact numbers.  These are the opinions of the author, although this topic was also thoroughly researched.

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