Virtual Bookkeeping vs. Traditional Bookkeeping
Your business started as a dream, and now it’s becoming a reality. It started in your mind, and now you have a business name, a title, a logo, and possibly a store, an office, and even a small staff. You want to take your business to the next level and keep bringing your dreams to life.
However, owning a business means running all parts of the company. This means wearing different hats like HR, payroll, support, sales, marketing, housekeeping, and bookkeeping. All of this takes precious time away from building your business. You might be able to delegate tasks to your employees if you have any, but there are some tasks that not everyone can do. Some jobs are essential but take up so much of your time that it isn’t in your best interest to do it yourself.
Bookkeeping is Essential
Bookkeeping is an essential piece to running a business. Traditional bookkeeping is a great asset because the bookkeepers are right on-site, but many companies are small, or at least, start small and can’t afford or even have space (if there is an office) for an in-house bookkeeper. No matter how big or small, a business needs to have a reliable, trustworthy, and knowledgeable bookkeeper. The solution to this problem is hiring a virtual bookkeeper! A virtual bookkeeper might sound out of the ordinary. However, this type of service has gained popularity over the last several years, especially now with a pandemic that keeps most people working in their homes.
What is a Bookkeeper?
Before going into more detail about why hiring a bookkeeper is crucial to running an organized, financially up-to-date, and successful business, we will discuss what a bookkeeper does.
Bookkeeping Defined
Business News Daily gives an excellent, simplified overview of a bookkeeper’s job. “A bookkeeper’s job is to maintain complete records of all money that has come in and gone out of the business. Bookkeepers record daily transactions in a consistent, easy-to-read way and their records enable the accountants to do their jobs.” This definition also shows the difference between a bookkeeper and an accountant.
A bookkeeper can do all of the following:
- Records financial transactions
- Posts debits and credits
- Creates invoices
- Manages payroll
- Maintains and balances ledgers and accounts
Bookkeeping doesn’t require a certification, but there are certifications and licenses available for someone to attain.
Bookkeeping VS. Accounting
A bookkeeper is not an accountant. As stated above, a bookkeeper sets up an accountant for success with an organized and well-balanced chart of accounts, ledgers, and payroll. An accountant will then take all of that data, analyze it and discuss their findings with the business owner on how to proceed in the future.
An accountant can be a bookkeeper, but it’s important to understand exactly who you are hiring and for what. As mentioned previously, accountants and bookkeepers perform different tasks. Like hiring a virtual bookkeeper, virtual accountants can be employed to take the place of a traditional in-house accountant. If you are looking for an accountant, review our articles titled “What Does A Virtual Accountant Do For A Small Business” and “4 Questions To Ask A New Accountant“.
Virtual VS. Traditional
Virtual bookkeeping does not mean downloading and using software on your computer. Sure, you may have some accounting software you have downloaded currently, but how much time are you spending inputting data and worrying that it’s accurate? Those are tasks a bookkeeper can handle for you. As a business owner, you might even find yourself rushing at the end of the year to ensure your books are accurate for tax season or audits. Having up-to-date books is crucial because it shows you where your business is financially and what you can do to boost your sales or cut costs. Keeping up-to-date books is the primary task of a bookkeeper, making them an invaluable resource for your business.
Comparison
Traditional bookkeeping and virtual bookkeeping are similar in that they function almost exactly as the other would, whether in-house or online.
Availability
- A traditional bookkeeper works within the business’s space. They have an office and are in contact with the owner, staff, vendors, customers, etc. They are available to you because they are physically present.
- A virtual bookkeeper is present, but just online. You will work through computer software, such as QuickBooks Online, to share information and data. They have the ability to video conference, email, and chat online with you about any issues or needs that come up.
Cost
- Traditional bookkeepers are most likely considered part of the staff, which means you went through hiring them, are on the payroll, and might have a benefits package.
- A virtual bookkeeper is not part of the staff, eliminating the need to have another person on payroll and benefits. On average, hiring a virtual bookkeeper will cut your costs of having an in-house bookkeeper significantly.
- An example of incredible cost savings is that our bookkeeping services at RAI start at $650 a month. We will also set you up and train you to use the best accounting software for your business. That would be the equivalent of a full-time bookkeeper being paid $8.13 an hour. According to the Bureau of Labor Statistics, the average hourly wage for a bookkeeper is $19.89. That is a cost savings of 59% just on compensation alone. That does not include other costs incurred for having an in-house employee.
Additional Benefits
Adding to the great benefits a virtual bookkeeper already has, is that you will also be able to get rid of the clutter and go paperless! Going paperless seems like a daunting task, but having your invoices, contracts, payroll, ledgers, and accounts all available online will save you time, money, and space. You will save time by being able to pull any report, vendor, invoice, etc., right on the computer in a matter of seconds. You won’t have to worry about searching through filing cabinets or piles of paper to find what you are looking for. On average, paperwork takes up about 50% of space in an office. Maximize the efficiency of your area by getting rid of the clutter and going virtual. You will save money just on the cost of paper and ink alone, which in turn can lead you to reduce overhead costs and maximize your profits.
In Conclusion
Redmond Accounting can provide you with the virtual bookkeeping, accounting, and payroll experts you need to keep your business up-to-date, organized, and running as efficiently as possible. We offer Controller and CFO and Consulting services as well. We pride ourselves on saving you time, reducing errors, avoiding fraud, and keeping your accounts secure. We want to help you be confident in the direction your business is headed by providing you with professional, award-winning, outsourced bookkeeping and accounting services. If you are ready to get started, schedule a consultation.
