Handling finances as a small business owner can be intimidating and complex. The good news is that you can delegate these tasks to an online bookkeeping service. This will take the weight off your shoulders and allow you to focus on other tasks which you love.
An online bookkeeping service refers to any kind of service provider, business or program that manages the finances of your business. Depending on the type of service you choose, you might also get help with taxes and legal issues.
Online bookkeeping services come in different forms including software, Certified Public Accountants (CPAs), outsourced back-office services and virtual assistants. The cost you will incur for each of these services varies widely.
What Do Online Bookkeeping Services Offer?
Also referred to as remote bookkeepers or virtual bookkeepers, online bookkeepers can be very useful for any business. They generally offer the same services as onsite or traditional bookkeepers, only from a remote location rather than your office.
Here are some of the main tasks handled by a virtual bookkeeper.
Accounting
There’s always an element of accounting in every bookkeeping service. An online bookkeeper will monitor the income and expenses of your business. This is vital for taxes and the reporting you have to do. It will also help you make wise decisions about how to keep your costs manageable and how to price your products or services.
If your company is medium-sized or large, you might need to hire a CPA who is able to handle more complex accounting tasks which your business might require. For sole proprietors or small businesses with few employees, basic bookkeeping is usually enough. You might only need the services of a CPA for tax filing. At Rakow & Co we can assist you with all your bookkeeping and tax requirements, from sales tax to preparation and tax planning.
Taxes And Tax Planning
Most virtual bookkeeping services offer tax support to some extent. However, for full tax support, you will need to hire an IRS Enrolled Agent (EA) or a CPA. An ordinary bookkeeper can maintain your financial records to prepare you for tax season, but it’s only an EA or CPA that is allowed to prepare and file tax returns on your behalf.
An online bookkeeper can perform the following tasks:
- Quarterly tax estimates
- Individual and business federal and state income tax returns
- Salary recommendations to satisfy IRS S Corp requirements
- Tax planning all year long to reduce your tax bill and stay compliant
Online bookkeeping software can also come in handy for generating quarterly tax estimates. For an extra fee, some tools even allow you to consult a tax professional one-on-one at tax time.
Payroll And Bill Payment
Paying contractors and employees can be confusing and time-consuming when it comes to paying payroll taxes and issuing tax forms. Online bookkeeping services simplify taxes and payroll for both large and small businesses.
Though some online bookkeeping tools come with add-ons for payroll services, they usually don’t include tax form filing or tax payments. If you’re struggling with this area of your business, chat to us about our add-on services which include payroll.
Invoicing
Depending on the nature of your business, you might get paid via monthly or weekly invoicing to your customers. Since invoicing basically involves data entry and tracking, you could easily work with an assistant that doesn’t have any accounting or bookkeeping expertise. However, you will need a professional if the cash owed to your company (accounts receivables) is connected to other financial monitoring a bookkeeper does.
Benefits Of Online Bookkeeping
When you realize your business needs help with bookkeeping, you have two options; hire a traditional (onsite) bookkeeper or hire an online bookkeeper. Though both options are viable, the following are some benefits you will enjoy from working with an online bookkeeping service.
Lower Operating Costs
Hiring a bookkeeper on a full-time basis can be very costly. Besides their salary, you’ll have to cover their insurance, benefits and payroll taxes. In addition, you will be required to provide office space, a desk, software, office supplies and anything else they need to perform their tasks. Working with an online bookkeeper will eliminate most of these expenses and save you lots of money in the long run.
Reduced Fraud
Since a traditional bookkeeper has a direct interest in your company, the chances of committing fraud are very high. And you might not even detect the adjustments made in your financial reports. To avoid loss due to fraud, hire the services of a remote bookkeeper.
An online bookkeeper doesn’t have any direct interest in your business and is therefore less likely to be dishonest. The consequences are much more severe as it’s their business reputation on the line. In addition, online bookkeeping services usually double-check books before submitting them to their clients.
At Rakow & Co we offer expense monitoring alerts for unusual transactions as part of our full service bookkeeping package.
Access To Top Industry Experts
Online bookkeeping services give you access to the most talented, experienced professionals in the industry. Depending on your business needs, you can find an expert specializing in areas like managerial accounting, personal financial planning, tax preparation, IT auditing and non-profits. Virtual bookkeepers are usually up-to-date with cutting-edge financial software, thus ensuring efficient and consistent reporting.
Accurate Books
Keeping up-to-date books is crucial for the efficient management of your business. Accuracy is especially non-negotiable when it comes to financial audits such as tax preparation. A small error in your tax forms could result in hefty fees and penalties for your business. Online bookkeepers are usually detail-oriented and meticulous, thus ensuring the accuracy of your books.
Flexible Schedule
A traditional bookkeeper will only work during standard hours. If they have to work overtime, it will cost you more. A virtual bookkeeping service will put in all the extra hours required to ensure the job gets done on time. And if you hire an online bookkeeper in a different time zone, they can get the job done while you are sleeping. At Rakow & Co our bookkeeping services are delivered with one fixed monthly fee so there’s no surprises at the end of the month when you get the bill.
Personalized Support
There is no such thing as a one-size-fits-all bookkeeper. Today’s businesses need a service that can offer personalization and agility. An online bookkeeping service can provide specialized solutions for your business, as well as solutions for business software integration, ecommerce and more. And you will not have to pay an extra fee to receive proficient technical support.
How To Select An Online Bookkeeping Service
There are dozens of online bookkeeping services for small business. So, what factors should you consider when choosing between the numerous options available?
Location
You will need to communicate regularly with your bookkeeper. If the online bookkeeping service is remote, you will only be able to reach them via phone or mail. However, there are occasions when a one-on-one meeting is necessary. You should therefore consider working with a service that is physically accessible. This way, you can visit their office and consult their accounting experts whenever you need to.
Your Business Needs
Online bookkeeping services offer a wide range of services including payroll, audit and tax preparation, strategic planning, tax and audit preparation, accounting and bookkeeping. Think about what services you want to handle in-house and what you want to outsource. Look for a service that can offer you exactly what you need.
You’re Running Payroll Late
Delaying salaries can be very frustrating and demotivating for your employees. This could lower their productivity and even result in a high turnover rate. Hiring a professional payroll service will ensure that paychecks are processed on time, thus keeping your employees happy and motivated.
The Company’s Software And Technology
The main aim of hiring a virtual bookkeeping company is to make your life easier. Find out if the software and technology they use is easy to learn and implement. You should also find out if the company offers training and support to users.
Expertise
Find out how many employees the company has, what their qualifications are and their level of expertise. Don’t forget to check their portfolio to see which clients the company has worked with in the past. It is very important to verify the company’s competence before hiring them.
Adherence To Security Regulations
The confidentiality of your company’s data is of utmost importance. Be sure to ask the online bookkeeping service about their security regulations to ensure the safety of your information. You should also find out what they will do in the event of a security breach.
Integration With Your Accounting Software
Chances are that you are already using accounting software to run your business. If you don’t plan to do away with your current software, be sure to choose a bookkeeping service that will integrate seamlessly with it.
Budget
The cost of online bookkeeping services varies from one company to another. Some companies create monthly invoices while others charge on an hourly basis. Others charge an extra fee for services like HR, payroll and tax prep. Consider your options and choose a service that fits your budget.
Once you’ve found a bookkeeping service that seems to meet your requirements, peruse their contract carefully before signing on the dotted line. Look out for any information on service commitment, data protection, liability and the overall credibility of the company.
Conclusion
How you handle your finances from the onset will have a major impact on the growth of your business. Therefore, choosing the right online bookkeeping service is a critical business decision. Take enough time to compare different online bookkeeping services before making a decision.
At Rakow & Co we can provide you with the best online bookkeeping services, using Quickbooks and modern accounting apps. We help you streamline your business finances and give you more control. Contact us for more information.
