Online bookkeeping works means by which financial information is recorded, stored, and managed for a business from a remote location. The goal of the operation is all about tracking the income and expenses of a company to gauge and improve profitability.
The virtual bookkeeper helps keep the company on track by understanding the bigger financial picture and enables the company to make informed financial decisions. When it comes to online bookkeeping, it always pertains to an outsourced contractor who helps a company in monitoring accounts, filing taxes, and preparing financial statements.
To put it plainly, virtual bookkeepers allow business owners to function with freedom without being held up by responsibilities related to financial operations. In addition, a virtual bookkeeper allows both large and small firms to get expert bookkeeping at a reduced cost. Now having an understanding of virtual bookkeeping, let’s understand how it actually works.
How Online Bookkeeping Works?
Whenever a company hires a virtual bookkeeper, it gives the person remote access to their bookkeeping software and financial documents. The bookkeeper can log in from the comforts of their home or anywhere and provide highly competent and effective services that are as good as working from an office.
Online Bookkeeping works or Cloud-based bookkeeping works in three main ways:
- The bookkeeper connects remotely and works on the books, just like working from within the office premises.
- He/ She works on an online bookkeeping software like QuickBooks online with a log-in ID that the client company has provided.
- The bookkeeper accesses the client’s desktop through a hosted virtual desktop from a remote location.
Scope of Online Bookkeeping Works
- Certain companies would expect the bookkeeper to handle all or most of the bookkeeping services. This can include invoicing, billing customers, and preparing payroll. Some may even assign the task of sending email invoices to the client for their approval.
- Some clients will get the work done partially by themselves such as writing checks, sending invoices, and entering bills. They will only expect the bookkeeper to make proper entries and reconcile accounts and bank statements.
- In some cases, top leadership within companies may ask the bookkeeper to make themselves available for discussions around budget planning, cash flow, late customer payments, and other financial priorities of the company.
- At certain times the bookkeeper would be expected to do some amount of data entry and receipt tracking. The bookkeeper may also be entrusted with the responsibility of categorizing expenses, and indicate who and how much was paid. Moreover, there will be the added responsibility of tracking receipts. Eventually, the person would also be responsible for tracking payments and handling invoicing issues.
Responsibility of the Bookkeeper – Four Significant Financial Statements
- Balance Sheets: The summary of the financial position of the client
- Income statement: A view of the client’s income and expenses over a period of time
- Statement of Changes in Equity: This is the statement of retained earnings that would contain the owner’s share capital, retained earnings, and change in reserves over a period of time.
- Cash Flow Statement: This is the record of cash and its equivalents entering and leaving the company.
Benefits of Virtual Bookkeeping
- Companies can save a ton of time and cost by hiring a virtual bookkeeper. A company would be saved on recruiting, onboarding, and training a full-time employee.
- Virtual bookkeepers work with a lot lesser distractions by working from home and thereby turn out to be far more efficient than in-house bookkeepers.
- Virtual bookkeeping is always going to turn more cost-effective given the need for every company to scale up during the long term.
- Small businesses cannot really afford to hire an experienced in-house bookkeeper and they would most often hire a newbie. In contrast, it is entirely possible to hire an expert online bookkeeper for consistent and accurate services with minimum room for lapses or errors.