What is Virtual Accounting?
Accounting refers to the process of recording, summarizing, analyzing, and reporting data that concerns the financial transactions of a business. Companies and businesses hire in-house accountants and bookkeepers for preparing financial statements.
Virtual accounting refers to accounting/bookkeeping that is done virtually. Virtual accountants and bookkeepers perform all of the tasks and responsibilities that a normal accountant would, but virtual accountants do it without physically being present at the place of business.
Virtual accounting services are virtual accounting and bookkeeping service providers. Virtual accounting services prepare financial reports according to their client's needs and requirements. Virtual accounting services are considered beneficial for business owners, especially small business owners, because they are cheaper than traditional accountant services and because virtual accounting services are convenient.
How do virtual accounting services work?
Businesses provide information regarding financial transactions to the virtual accountant remotely. Businesses provide this information by giving virtual accountants access to their servers and software to record these transactions. The accountant will access this raw data, analyze and summarise it to prepare financial reports.
Small businesses or new businesses are usually tight for funds, and traditional accounting services can be too expensive for them. Not only are virtual accounting services less expensive, and they are also convenient as they help your business with important tasks like payroll and preparing tax reports and financial statements.
How do virtual accounting services help your business?
Virtual accountants perform a lot of vital accounting/bookkeeping functions. These are-
- Payroll- Payroll is compensation that businesses pay their employees in return for their services. Virtual accountants provide payroll support by calculating payroll after considering deductions, adjustments, taxes, and other company policies.
- Account payable and account receivable- Virtual accountants manage accounts payable and account receivable for businesses.
- Maintaining accounting ledger- Virtual accountants prepare general ledgers. These ledgers are then used to prepare financial reports and for further analysis by chartered accountants.
- Prepares invoices- Many accounting services provide services for preparing invoices for payments due to the business. They can send invoices and make collection calls on behalf of the business.
- Preparing financial statements- Virtual accountants services prepare financial statements and ensure that they are accurate and in compliance with company policies and relevant laws and regulations.
- Evaluating financial operations- Virtual accountant services evaluate financial operations, provide guidance on revenue enhancement and profit maximization, and assess risk.
Benefits of virtual accounting services
- Legal compliance- Every business has to follow laws and regulations while conducting its business. Businesses have to comply with these laws; otherwise, they have to pay heft fines and penalties or be criminally charged. In accounting, compliance with laws and regulations is a must while preparing payroll and for preparing taxes.
This is a tedious task that requires expertise. Therefore, availing of virtual accounting services for preparing financial records, statements, and reports is beneficial for a business because they comply with the land laws.
- Efficient and Convenient- Virtual accounting services are more efficient and convenient because everything is recorded on a single server or software. This reduces reporting discrepancies, requires less paperwork, and makes it convenient for the accounting services and for the business to access past tax returns and financial reports.
- Cost-effective- An in-house accountant and accounting team can be expensive. This is because an in-house accountant is your employee, and you have to pay their salary, insurance, and company benefits. However, when you avail of the services of virtual accounting services, you are paying them an agreed-upon amount for their accounting services.
Virtual accounting services are cost-effective for small businesses because the business wouldn’t have to invest in expensive accounting software and invest in training of the staff.
- Accessibility to financial records- The business and the virtual accounts can access the financial records from anywhere. This is because all of the financial records are easily accessible to anyone with access to the cloud server.
- Unbiased accounting services- When you avail of the services of a virtual accountant, there are fewer chances of biased and fraudulent accounting. This is because a remote bookkeeper is less likely to have any direct interest in the company’s affairs.
- Customer support services- Virtual accounting services provide around-the-clock customer support services to their clients. Many virtual accounting services have set in place well-trained customer service representatives that are available to answer your queries via emails, phone calls, and chats.
- Time effective- Because traditional bookkeeping and accounting services are expensive, many small business owners take it upon themselves to record all financial transactions. Accounting is a very tedious job that requires professional expertise; not only this, but it also shifts the business owner's attention away from important matters.
That is why by availing of virtual accounting services, which are cheaper than traditional accounting services, businesses can save a lot of time and effort.
Cons of Virtual accounting services
There are also some concerns while availing the services of virtual accounting services like data security and privacy concerns. While outsourcing your company's accounting requirements from a third party, the company must ensure that their data remains private, confidential, and never shared with another foreign party.
There can also be a delay in communication while dealing with a virtual accountant as the working hours of the business and the accountant might clash with one another. Not only that, but grievances that require immediate action might face delays due to the delay in communication.
Another disadvantage of virtual accounting services is that sometimes to perform certain accounting and bookkeeping functions, the accountant must be present at the place of business. However, that is not possible with virtual accounting services. On the flip side, this can be easily solved by appointing an in-house employee with hands-on tasks.
Virtual accounting services have the same perks as having an in-house accountant and more. These services have increased the flexibility with which accounting services are practiced and availed.
Countless companies rely completely on outsourcing accounting firms for a long time. In this way, they have saved a lot of money as well as time. Hopefully, the article was helpful to you. And has helped you show all the positives of outsourcing accounting. For more details or any queries, reach us at hgoyal@especia.co.in or 9310165114.
