Nowadays, many activities can be carried out in the online environment. Digital technologies have not bypassed bookkeeping and accounting either. Online bookkeeping has become an effective way of keeping financial records, confidently replacing the traditional paper one. This way of running the financial processes of a company has its own specifics, advantages, and disadvantages.
Online vs Traditional Bookkeeping
At its core, virtual or online, as it is better known, bookkeeping is specialized software that enables organizations to remotely maintain bookkeeping and tax records. This is an accounting program with the maximum level of automation, a lot of tips, etc.
In terms of functionality, online bookkeeping is similar to using software that has been installed on business computers for a long time. The main difference from traditional bookkeeping is that bookkeeping and control of the company’s finances are performed online.
First of all, such a service is useful for small businesses, especially for beginners who find it expensive to maintain a full-time accountant. The cloud service is designed to help an entrepreneur independently solve financial problems without the need to involve a specialist. Large companies are turning to cloud services to streamline their workflow.
With virtual bookkeeping software, you can keep records completely online. They make it possible to make payments, generate primary documentation, draw up reports and submit them electronically to the appropriate parties.
Virtual bookkeeping is not just automated software. Real humans can also be a part of the whole virtual bookkeeping process. In other words, virtual bookkeeping is a type of service where an accountant or accounting company provides bookkeeping services remotely for a particular business. The clients of the virtual bookkeeping services have access to accounting consultations, the assistance of technical specialists, and so on.
The business owner becomes a client, and communication and data transfer take place online. This approach is more cost-effective, as it reduces the costs and expenses of hiring an employee on an ongoing basis and gives the business more room for development. In addition to this, such bookkeeping is safer and less time-consuming than traditional accounting methods.
Advantages and disadvantages of online bookkeeping
Due to the considerable benefits of this type of bookkeeping, more and more businesses are joining this trend. How does a virtual bookkeeper work? The main difference between a regular and a virtual bookkeeper is that the latter does not require an office. Accordingly, there is no need to occupy additional office space, which will also reduce the cost of renting it. Once a virtual bookkeeper has access to your transactions and other financial documents, they can easily complete bookkeeping tasks almost like an employee in the office would.
There are also no costs for maintaining your own server, wages of a system administrator, and so on. All these troubles fall on the shoulders of the service provider. It is enough for a business owner, bookkeeper, or any other party to sign in to their account from any device, after which they can immediately start working with it.
Another equally important advantage is the simplicity of online financial document management. This process does not require special skills and knowledge because all actions are performed through an intuitive interface. Moreover, online accounting services can be integrated with other tools, such as online banking, time tracking, and inventory management software, making it easier to keep track of all the processes going on in the business.
One cannot fail to note such a strong side as relevance. Any changes that take place in the field of accounting or related to taxes are almost immediately reflected in online accounting software. Software developers closely follow the innovations and promptly make adjustments to the functionality of the services.
Due to the fact that document management takes place directly in the cloud (online), there is no connection to the place. Unlike traditional bookkeeping where all the records are typically stored in the office, a bookkeeper or business owner can do virtual bookkeeping tasks from any location and at any time using a laptop or other mobile device. To do this, you only need an internet connection.
Finally, cloud services are much better protected than traditional bookkeeping records. They are located in secure data centers, where the latest encryption protocols and tools to combat viruses and hacker attacks are responsible for the safety of data. Some service providers use their own unique security controls.
Typically, those who use online bookkeeping are not professional accountants. Most often these are the heads of small companies or individual entrepreneurs. Nonetheless, after reading about the advantages of online bookkeeping over traditional, you probably see why large companies have already transferred their bookkeeping records online. The possibilities of bookkeeping and accounting software are expanding every year and are becoming an important piece in the whole puzzle of business growth and success.
Summarizing what has been said, the following advantages of online accounting can be highlighted:
- much cheaper than maintaining a traditional accounting department
- ease of document management
- maximum mobility
- reliable data protection
- compliance with all recent changes in accounting rules and regulations.
To be fair, it should be noted that online bookkeeping is not perfect and has its weak point. It is the technical implementation of the process. No one can guarantee uptime, and technical failures sometimes happen. If this happens while working with documents, there is a high probability of data loss. However, serious services take responsibility for technical failures and do their best to minimize them. The degree of responsibility is noted in the contract.
Author: Charles Lutwidge