The Future of Accounting: Why Every Business Needs a Virtual Accountant
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| The Future of Accounting: Why Every Business Needs a Virtual Accountant |
Over the last 10–15 years, the accounting industry has seen two big shifts. The first one happened when businesses transitioned from paper journals to computerized accounting systems. This switch not only reduced accounting costs but also made it way simpler to organize and find information.
The second shift started over the last 5–10 years: businesses are shifting from having in-house accountants to hiring contracted accounting services. This second shift is spearheaded by the desire for business owners to lower costs and increase the quality of their accounting information to meet acceptable standards.
The move towards contracted accounting services was just the beginning of what we now see as the emergence of virtual accounting services.
With the advancement of business technology, the options for handling accounting functions have expanded. Virtual accountants have been active and effective in recent years, and their roles in the success of modern businesses cannot go unnoticed.
No wonder hiring virtual accountants can bring the profitability your business needs and contribute immensely to the success of a company.
It's not just about hiring a virtual accountant because you want to be seen as a modern business. Before you hire one, you should know what you want and how they can help you. This leads us to the types of services offered by a virtual accountant or virtual accounting firm.
Services Offered by Virtual Accounting Firms
If you want to understand the services that virtual accountants can offer your business before hiring them, they can assist you regardless of the accounting issues your business is facing. Here are five important services offered by virtual accountants:
1. Bookkeeping services
With a virtual bookkeeping service, you can do your bookkeeping quickly, affordably, and easily. Basically, you just enter your data electronically, and your financial records stay up-to-date.
When your financial records are organized and up-to-date, you can easily track where your money is going in your business. This lets you identify areas where you can trim expenses or invest more strategically, with the aim of boosting your bottom line.
Having accurate financial records sets you up well for tax season or any financing applications you might need to tackle.
2. Financial statement preparation
Generally, it is the duty of accountants to prepare financial statements for the business they work for if they are in-house accountants or for their clients if the preparation of financial statements is outsourced to them.
Therefore, if your business can't hire a full-time accountant to handle your accounting, including preparing financial statements, then hiring a virtual accountant is the best option.
In this scenario, you would hire them solely for the preparation of financial statements, and the contract ends after they deliver the work. You don't have to retain them as permanent staff and pay them monthly.
3. Tax planning and preparation
When it comes to dealing with personal taxes, many people might wonder about the benefits of hiring an accountant versus using popular tax software.
The answer to hiring an accountant or using tax preparation software becomes clear when you realize the complex nature and stress involved in planning and preparing your own taxes.
Virtual accountants offer the same services as traditional accountants but do it all online, often with lower fees. Because they have fewer overhead costs, they can pass on the savings to you.
For someone needing tax planning and preparation, virtual accountants can be the most efficient and cost-effective choice. When you hire a virtual accountant skilled in taxes, you get professional advice on any tax issue and have your tax return prepared with added convenience.
This service might include regular email exchanges or webcam sessions, all without the need for the client to leave their home. And it's all done at a lower cost compared to a traditional accountant.
4. Payroll processing
The benefits of modern business are too numerous to count, but the speed and efficiency of modern accounting and payroll services are indisputable.
For medium-sized businesses, it's crucial to prepare payroll on time so that their staff can get paid promptly. Early salary payments motivate employees to work more.
A virtual accountant can assist in preparing payroll using payroll processing software, especially if your in-house accountants are busy with other tasks. They will not only prepare payroll but also deduct the various taxes that each employee should pay and remit them to the government.
5. Financial analysis and reporting
It's obvious that both analysis and reporting are valuable for businesses. Yet, not every business can afford to hire an accounting professional just for this task, and it's not typically offered by a standard bookkeeper.
That's where a virtual accountant comes in. With their flexibility and lower rates compared to chartered accountants, virtual accountants can offer this service to clients using the internet.
Virtual reporting entails providing reporting services to clients without needing to be physically present at their place of business. These reports typically come in two forms: a summarized report or a detailed report with plenty of graphs and charts to illustrate the financial position.
Virtual financial analysis is a component of virtual accounting services. It involves using computers and specialized accounting software to project into the future based on historical data.
A virtual accountant can use different financial tools to advise clients on optimizing operations and boosting profitability. Clients can provide the necessary data for analysis in the form of spreadsheets, scanned documents, or directly through accounting software.
Benefits of Working with a Virtual Accountant
There are several benefits that you will enjoy when you hire a virtual accountant for your accounting services. The five most important ones are:
1. Increased flexibility and convenience
With a virtual setup, communication with a virtual accountant usually happens over the phone and email, which means less paperwork and more efficiency. This works well for busy business owners since it cuts down on time spent in meetings or dealing with paperwork exchanges.
With document-sharing technologies, you can give your accountant access to financial information without needing an in-person visit. For many people, having the flexibility to choose when their accountant works, including meeting outside typical business hours, is a huge advantage.
Since a virtual accountant can work from different locations and time zones, there's a chance to get work done overnight. This means you'll have the most up-to-date financial information available when you need to make important business decisions.
2. Cost savings and reduced overhead
Hiring a virtual accountant will help you save the cost of employing a full-time accountant and also reduce the burden of purchasing office equipment for the accountant, assuming they are working physically within the company.
Working with a virtual accountant means you don't have to spend on office space, extra supplies, or utility expenses. As the employer, this removes your obligation to provide these items and reduces direct costs to your bottom line.
These savings often result in lower billing rates compared to traditional accountants. In many cases, using a virtual accountant can cut your costs by almost half. This shift of reduced overhead costs from the employer to the virtual accountant benefits both parties.
3. Access to specialized expertise
A virtual accountant typically brings a diverse background and experience in both public and corporate accounting. This breadth of experience equips them with the understanding of business operations, managerial practices, and financial strategy needed to truly partner with their clients.
Furthermore, virtual accountants have ample resources to work with, including templates for common business documents and access to research information not available to the general public.
With these tools available to them, there is no limit to what virtual accountants can achieve by helping their clients work effectively and increase productivity.
Small companies in the United States may not always be able to afford a full-time CFO or controller, and regular accountants may not have the specialized knowledge to meet all of a company's accounting and finance needs. Hence, hiring a virtual accountant will give the company the extra expertise that it needs to keep the business going.
4. Improved data security and confidentiality
Since many businesses rely heavily on paper records, it's common for thieves to target filing cabinets first. Petty criminals usually don't bother hacking into digital systems because it's risky and often not worth the effort for them.
There are still dishonest people that work within the organization who might try to steal paper documents. Data theft is a real concern nowadays. Transitioning to a virtual accounting service can offer enhanced security and reassurance that sensitive information is safeguarded against theft or unauthorized access.
A reliable virtual data storage provider will use top-notch software to maintain a secure server, including bank-grade encryption and daily data backup. Indeed, having data stored on individual client servers enhances security and decreases the likelihood of insider theft.
When a business hires people for data entry, they often have access to sensitive information. But with a virtual service, it's easier to monitor who's accessing what data and when.
One major security risk is the physical theft of hardware and data. With a virtual service, there are fewer people handling your information compared to a traditional accounting service, and there's no risk of data being taken offsite.
5. Enhanced scalability and growth opportunities
Finance plays a crucial role for businesses that are facing the challenges of expansion. Therefore, outsourcing your accounting services to a virtual accountant gives you access to professionals who have the experience to support your business growth.
As a new small business owner, you might think that you can't afford a full-time accountant just yet since you are trying to find your footing. A virtual accountant is ideal in this situation because they can fill the gap between handling your own accounting and hiring someone full-time.
Furthermore, a virtual accountant can handle tasks for you, so you can focus on one thing: growing your new business. And if you've already got a full-time bookkeeper or accountant, just think about having all those reports, budgets, and analyses right there whenever you need them, without needing to hire anyone else.
Virtual accountants can efficiently handle these services at a lower cost and might even help with more advanced strategic planning and analysis. Whether you're just starting out or growing rapidly, a virtual accountant can meet your current needs and adapt to handle all your accounting needs as your business expands.
Factors to Consider When Choosing a Virtual Accountant
When choosing a virtual accountant, consider factors such as:
- Experience and qualifications of the accountant: Ensure they have relevant experience and qualifications in accounting and finance.
- The types of services they offer: Make sure they offer the specific services you need, such as bookkeeping, tax preparation, or financial analysis.
- Technology and accounting software they use: Check if they use up-to-date accounting software and if it's compatible with your systems.
- Methods of communication and availability: Evaluate their communication methods and availability to ensure they can meet your needs.
- Security measures: Verify their security protocols to protect your financial data.
- Pricing structure: Understand their pricing model and ensure it fits your budget.
- Client online reviews and general reputation: Look for testimonials or reviews from previous clients to gauge their reputation and reliability.
- Specific industry specialization: Consider if they have experience working with businesses similar to yours or in your industry.
- Availability of support: Confirm the availability of customer support in case you have questions or issues.
- Terms and conditions of contract: Review contract terms carefully, including termination policies and service guarantees.
Conclusion: Why Every Business Needs a Virtual Accountant
Hiring a virtual accountant is the new trend, especially for small businesses that can't afford to employ a full-time accountant.
When you use a virtual accounting service, all communications happen online or over the phone. You can easily create documents and send them to the accountants. Just have their email address to communicate whenever you need to.
With a virtual accounting service, the entire accounting function can be handled off-site. There's no need to coordinate bringing an accountant to your office since everything can be managed remotely.
