Balancing accounts, generating financial reports, and preparing for the tax season are some of the responsibilities of an accountant. A business can’t thrive without proper bookkeeping and accounting. While keeping books is tedious, it’s not as challenging as accounting. However, not every firm can afford to hire an in-person professional. In this case, they can use the services of a virtual one. Our article describes the duties of a virtual accountant and why businesses benefit from hiring them.
Who is a virtual accountant?
Before we dive into the topic, let’s figure out who is a virtual (or remote) accountant. It’s typically a contractor who performs the same functions as a traditionally hired person. They work from home (or an office if it’s a firm) rather than at an office.
As mentioned, most remote workers are contractors or freelancers. Thus, a company hiring one doesn’t employ them officially. The individual doesn’t work full-time hours for a business, making their labor less expensive.
Industry-average taxes and benefits are not paid by the business owner. Virtual specialists are responsible for paying their taxes, so you don’t have to spend hours filling out various forms. It may be the ideal solution for a small business that does not have the funds to retain a full-time worker or for self-starters, who are just beginning their business journey.
A virtual employee provides their services through professional accounting software or other remote apps. A business owner does not need to meet the accountant in person as long as they can discuss all topics through video conference calls or in chats.
Understanding how virtual accounting works
Typically, big businesses and corporations can hire entire departments to handle accounting. However, small and mid-sized companies don’t have such options. Sometimes, company owners can’t even afford to employ permanent accountants.
That’s when the work of a virtual assistant comes in handy. But how do they work? A business owner may find a company that delegates the task to one of their employees. Sometimes, businesses sign contracts with freelance assistants. Primarily, they work with accounting software. You may even find a virtual worker that works with the software you already use. Thus, you get reports and documents online through a chosen program.
What does a virtual accountant do?
Such assistants collect and verify financial transactions for their clients, ensuring they are both financially efficient and comply with legal company procedures. They operate from home rather than an office.
A virtual accountant can perform the following tasks:
- Prepare for taxes.
- Generate and file financial reports.
- Examine financial reports.
- Help business owners cut costs.
- Keep financial data up to date.
- Ensure the accounting procedure of the company adheres to generally accepted accounting principles.
- Take care of payroll.
- Control invoicing.
- Make financial forecasts regarding the business’s growth.
Some companies hire remote assistants if they need an audit. In this case, an expert checks the work of another employee. Moreover, individuals can benefit from hiring virtual assistants just as much as company owners. Such a person can document and evaluate an individual’s expenditures and offer a plan on what to do to reach a specific financial goal.
Virtual accountant vs. virtual bookkeeper
Accounting and bookkeeping are terms that are often used interchangeably, but they are not identical. Each profession provides a distinct set of financial services. Even though accountants and bookkeepers may perform similar tasks, these professions are not the same.
A virtual bookkeeper is a professional who keeps track of a company’s daily transactions. They are in charge of documenting all the data related to revenue and expenditures. Moreover, such a professional must keep the books according to generally accepted rules. This data allows a virtual accountant to generate financial statements and forecasts.
A virtual accountant assists in making logical and more informed financial decisions by analyzing the financial data collected by the bookkeeper. They consider the larger picture, provide financial reports, anticipate trends, and suggest best practices.
You need a bookkeeper and an accountant to get the best service. While it’s possible to do the bookkeeping part independently, it takes specialized skills to do the accounting job. However, small businesses prefer to work with virtual assistants since they may not afford to have a permanent specialist as a staff member.
The advantages of hiring a virtual accountant for small or mid-sized business
Using the services of a virtual accountant enables firms to save resources. If a company outsources the task to a freelance accountant, it doesn’t have to pay standard benefits to official employees. Thus, they save costs. However, cost-saving properties are just one benefit of using virtual accountant services. Check out other advantages:
- Save time.
- Save costs.
- Manage profit sources.
- Frequent reports on the financial situation of the business.
- Help with future business optimizations.
- Assist with tax preparation.
Virtual accounting offers the same benefits for businesses as traditional accounting but without typical disadvantages. For instance, it’s cheaper to work with a virtual accountant since most are sole proprietors. A company doesn’t have to hire them, so it doesn’t need to pay for standard employee benefits and equip his workplace. Yet, the company gets all the benefits of working with a professional. Let’s dive into the details of each benefit you get.
Save time
Proper accounting and bookkeeping consume the time of small or medium-sized company owners that they could have dedicated to other tasks. Maintaining finances, managing costs, preparing taxes, and ensuring suppliers get paid may overwhelm most business owners.
It may feel more cost-effective to do it yourself, but it’s wise to focus on more critical tasks like finding new partners, vendors, clients, etc. Hiring a remote accountant guarantees you the time to focus on essential duties.
Save costs
Suppose you have a software development company. None of your employees works from the office. Thus, a company saves costs on rent and maintenance bills. What’s the point of hiring a traditional expert?
The better option is to outsource the task to a virtual accountant. A business owner doesn’t have to pay traditional employee benefits and taxes, thus saving a large amount of money.
Get profit sources handled
Keeping track of all clients might be challenging when you work with several customers or have various income sources. A remote accountant or bookkeeper may assist you in organizing these clients and their tasks. Moreover, they can offer insightful reports regarding how the business is doing.
These reports can provide information on clients and business partners bringing more profits. Thus, it’s easier to decide what clients deserve more attention as they bring more income.
Get frequent reports on the financial situation of the business
A remote accountant could also maintain the financial documents that show how the company is performing. If you retain books properly or hire a remote bookkeeper, the virtual accountant prepares reports based on this data.
The virtual accountant may also take care of accounts payable and receivable and perform payroll. Overall, the expert performs all those duties that assist in understanding the company’s profits and expenditures. They also evaluate whether the company’s cash flow is healthy to perform typical financial operations.
While these actions may appear repetitive and monotonous, they are necessary for assessing how the business handles its income. Understanding a standard company’s expenditure can assist in developing better cost management methods.
Get help with future business optimizations
Some virtual employees, like a CFO, may also provide their clients with financial forecasts. Based on analyzed data, a remote accountant can predict the growth of the client’s company and indicate possible risks. Typically, they make evaluate these most important documents:
- The cash flow statement.
- The income statement.
The remote accountant can also prepare these statements in the first place. Typically, it takes an expert to track the company’s operations for at least a quarter of the year. Based on retrieved data, the virtual assistant can prepare these statements and generate evaluation reports on how the company will grow.
Get help with tax preparation
Typically, small and mid-sized business owners prefer to handle bookkeeping and accounting independently. However, they often regret this decision when the tax season is near. Business owners should understand that a virtual accountant helps with taxes like a traditional one. Thus, you may avoid confusion and stress by delegating this task to a virtual employee.
Conclusion
To conclude, a virtual specialist performs the same tasks as a traditional one. The difference is that you don’t have to meet in person. You may sign a contract with a freelancer or an accounting company that will delegate the task of accounting to one of their employees.
One of the most significant advantages is that hiring a virtual employee is cheaper. Accounting is a difficult job that requires skill and experience. Thus, the salary of an average expert is relatively high, and not every business may afford to pay for such services. Outsourcing the task to a freelancer or an accounting firm may become a great alternative.
Businesses still get quality services without overpaying. Moreover, they don’t have to employ workers officially, so they don’t pay employee benefits or taxes for accountants. If you are looking for a remote bookkeeper at an affordable price, contact BooksTime. With our accountants, your reports and finances are in good hands.
