While finances are the heart of any enterprise’s success, entrepreneurs are often advised against micromanaging them personally. The main reason behind this (seemingly counterintuitive) piece of advice is the fact that there are so many transactions and financial processes going on that they would consume all your time. As an alternative, you’re advised to outsource/delegate these tasks to accountants or bookkeepers.
Nowadays, in the digital workspace, you can outsource to virtual accountants or online bookkeepers, thus making this collaboration simpler, more convenient, and more efficient than ever before. Still, how do you choose which of the two expert types to hire? What are the differences between virtual accountants and online bookkeepers? Is there any difference to begin with, or is this just one profession with two titles? Let’s find out!
An online bookkeeper is a professional bookkeeper working remotely for your enterprise. While some prefer to keep their bookkeepers on-site, the truth is that remote work has so many benefits in this field. First of all, all the communication with an online bookkeeper stays recorded in a digital format. Seeing as how one of the first tasks of a virtual bookkeeper is to keep track of data, it makes their job a lot easier.
Some of the key tasks of online bookkeepers are to keep track of your account payables and receivables. In other words, they’re responsible for all the transactions made in the name of your company. Then, they’re in charge of your banking processes (like bank deposits, bank statements, and discovering banking discrepancies).
A virtual bookkeeper is a person in charge of your general ledger. They will enter information there and prepare detailed journal entries about this. For those who see keeping their books clean at the end of each month, there’s probably no simpler way to do it than to collaborate with online bookkeepers.
A virtual accountant is a remote employee in charge of monitoring, handling, and providing advice on your financial processes. The fact that this service is now performed in the digital environment makes some processes a lot simpler, but it also expands a much larger talent pool to smaller enterprises.
Moreover, the majority of virtual accountants increase job security and diversify their income by working on a plethora of smaller projects. This means that even the smallest of enterprises have access to some of the most esteemed professionals in the field.
Typical tasks of virtual accountants are examining and verifying financial statements, as well as preparing and filing all sorts of tax-related works (like tax returns). Other than this, their advisory role puts them at the forefront of any decision-making process in the enterprise. One of the roles of an online accountant is to help an enterprise trim various costs so that it can run more efficiently.
An accountant is also an investment advisor. This means that when looking to diversify your income through alternative investments, having a virtual accountant on your side can make quite the difference.
An accountant also oversees payroll operations, which means that, in a way, virtual accountants are even involved in the company’s HR processes. Also, they’re there to make sure that all the accounting procedures used in your enterprise (which you would have to use even as a DIY accountant) are the best (most efficient) practices.
An online bookkeeper makes an average of $43,886 per year in the United States. Still, this is just a median that we’re talking about, seeing as how the possible salary range for an online bookkeeper goes as high as $337,000 per year. The average pay for a senior bookkeeper can have an average pay of $74,540 annually, which is a substantial improvement.
A virtual accountant will make a nationwide average of $52,372 per year, with an earning potential that is much higher than this. Now, keep in mind that job security in this field is pretty high, seeing as how both individuals and enterprises need the services of an online accountant. Moreover, there are a lot of online accountants who make as much as $96,500 annually.
As you can see, while virtual accountants are paid more on average, when it comes to salaries, averages are merely there as a reference point. There are many online bookkeepers who make more money than many virtual accountants (even though the averages suggest otherwise). Moreover, both of these career paths offer a decent chance of advancement. This comes with a substantial salary increase by default.
In order to become a bookkeeper, you need to get some basic training, invest in proper bookkeeping tools, and find employment. The obvious first stop is some bookkeeping courses. You see, unlike an accountant, you can become a bookkeeper with a high school degree. It’s more about skills than certificates, which is why you’ll have to be good with numbers, pay attention to detail, and work on your communication skills.
On the other hand, in order to become a virtual accountant, you need a bachelor’s degree in accounting or business to start working in this field. Then, you need to get licensed by passing a CPA exam. This will open up the job market for you and make the task of seeking your first employment a lot simpler. As you can see, being a virtual accountant requires you to spend a longer time on the traditional education route.
Also, remember that accounting is accounting, and bookkeeping is still bookkeeping, which means that if they ever choose to transition into a more traditional form of employment, they won’t start from scratch.
They will already have previous experience, recommendations, and a formidable previous salary to boast with. Therefore, they have some leverage on their CV that will allow you to skip starting from the bottom. This is one of the main reasons why more and more accountants in 2022 are starting their career paths online (with some transitioning later on).
While the majority of people try to figure out whether they need an accountant or a bookkeeper, the truth is that, depending on the needs of your enterprise, you should hire both. After all, they focus on different fields, which means that, potentially, you could hire two professionals with different specializations to make task delegation simpler and more intuitive.
An accountant is there to look at the big financial picture, while a bookkeeper focuses on day-to-day tasks. In other words, if your company has a lot of financial processes going on, an ideal way to structure an in-house accounting department would be to hire a single accountant and a couple of bookkeepers. This works in a digital environment, as well.
Just keep in mind that accounting is a field that the majority of enterprises (especially small enterprises) choose to outsource. In other words, you probably won’t be the one structuring departments.
The short answer is – no, online bookkeepers and virtual accountants are not the same. Sure, you don’t need to know much about virtual accounting or online bookkeeping in order to employ professionals, but you do need to learn how to recognize which one to hire. As we’ve already stated, their areas of expertise will differ, and their hiring costs are different, as well. Therefore, to get the most value out of this decision, you need to know exactly what you’re dealing with.