By Austin Miller, Content Marketing Manager
The Term Virtual Accountant might sound like something plucked from a George Orwell novel, but that couldn't be farther from the truth. They are very present, very real, and perhaps most importantly—they are very human.
What is a Virtual Accountant?
Thankfully, having a virtual accountant is not like having a nerdier version Siri, it's a cocktail of remote accountants working in sync with technology to bring you a seamless experience that doesn't require you do to any work.
How it Works
Now each virtual accounting company might do things differently, but based off our own online bookkeeping service—the sign up process should be relatively easy. We'll use our sign up model to give you an idea of how it works:
Step 1: Sync Your Account
The first step in the onboarding process is to sync your bank account to the software so that your transactions automatically get imported into the software. Our accountants get read-only access, meaning they can't actually touch your money, but they can categorize the transactions (thus, bookkeeping). Our software syncs with hundreds of thousands of institutions, so likely there won't be any problems.
Step 2: Customize Your Preferences
Once you get your account synced up, you'll get a demo from one of our accountants. During this demo, you'll learn the nuances of our software, and we will learn the nuances of your business. Most importantly, we'll create custom rules around your preferences. Would you like something categorized a certain way? No problem. We'll make sure the software knows that so you never have to worry about it again.
Step 3: Relax + Stay in Touch
After the onboarding process, our software will be able to do most of the work automatically. But don't worry, every business owner is assigned a remote bookkeeper who reviews the work to make sure it's up to your standard.
If you ever have questions or concerns, you can text, email, live chat, or call your bookkeeper anytime to get feedback, advice, or even answers about tax strategy.
Is a virtual accountant right for my business?
Since we're in the business of providing online bookkeeping services for small business, we are definitely a little bias. But truth be told, we wouldn't have built a business around this product unless we didn't think it provided tremendous value to entrepreneurs.
In fact, the idea of Bookly came about when our CEO Zach Olson was the humble owner of a skate shop. Olson saw the pains of trying to run a business using traditional accounting solutions (the slow turnaround times, hourly fees for consultations, outdatedness and lack of tech) and decided to do something about that. Whether or not virtual accounting is a good fit for your business, depends on your understanding of the "Bookkeeping Trinity."
The Bookkeeping 'Trinity'
When it comes to bookkeeping frameworks, there are three main options AKA the “Bookkeeping Trinity." Here's how each one works, and what it means for your business.
The 'Traditional' Method
The most traditional method of bookkeeping is to hire an accountant or accounting firm. (We’re talking local mom and pop shops and freelancers.) These guys offer great benefits over the DIY self method—like the fact that you’ll barely have to lift a finger and you’ll also be privy to expert insight (pending they’re qualifications of course).
Of course there are also some drawbacks such as higher fees and slow turn around times. Many of these places charge high hourly fees for consultations which can make it difficult to set a steady course for your monthly budget, not to mention their services can often be “behind the times” in terms of integrating technology.
When it comes to the traditional method, business owners will have to consider whether or not they want to hire an in-house bookkeeper or an external accounting firm. Both methods can be expensive with hourly consulting fees and salary/benefit considerations for in-house hires. In-house accountants can be a solid option if you own a large operation and need constant oversight. Smaller businesses however, might find that the costs don’t outweigh the rewards when it comes to hiring a full-time accountant.
The 'Semi-Traditional' Method
DIY software is an increasingly popular option, giving business owners a great UI to track their finances. Companies like Quickbooks and Xero provide robust software that can help facilitate advanced accounting functions. Not only are many of these types of tools extremely helpful, they can also save money when it comes to hiring a traditional accountant. Although this is a great option for accountants, it may not be optimal for business owners.
Having a good piece of software doesn’t make you knowledgeable about the US tax code, regulations or requirements. Business owners can miss out on deductions, disqualify themselves as a compliant business, and face IRS auditing through improper tax filing. Having simply taken an accounting class in college is no substitute for the wealth of knowledge an accountant brings to the table.
Even if you feel confident enough in your accounting, there is still the consideration of time. Anyone who has started a business knows that they will soon find themselves being pulled in lot’s of different directions. Bookkeeping is a time consuming task—business owners need to ask if reconciling transactions is the best use of their time.
The 'Virtual Accountant' Method
The third and final option (which no suprise, we’re big proponents of), is software as a service options. This hybrid option has been hailed as "the future of small business accounting" and provides the best of both worlds, giving users access to customized software as well as a dedicated bookkeeper. Instead of having to reconcile your own transactions, a bookkeeper (accountant) will do it for you. Some of these services like Bookly, offer unlimited consultation at no hourly cost. Instead they prefer the more modern “Netflix” model of a monthly flat-rate fee. This gives business owners comfort, knowing the can reach out for advice without fear of incurring extra costs and make more accurate monthly budget predictions.
This option will not be for everyone, for example—extremely large and complicated corporations or accounting firms (just covering our bases). However for the other 90% of business owners—this bookkeeping framework is likely to be the most inclusive and cost effective. It offers all of the good (and more) of the aforementioned methods without the bad. The hybrid mixture of cloud-based tech combined with a human element of a bookkeeper takes away the headache of navigating tax law and entering data—while still providing a high touch high tech solution.