What is a virtual accountant? How might they help your company?
Before the COVID-19 pandemic made virtual or remote work the norm, virtual accountants were already using their expertise to provide accounting services remotely as businesses needed them. Whether handling all the accounting for a small business or taking on tasks a la carte to lighten a client’s accounting load, virtual accountants remain a great option for businesses and nonprofits requiring help with their internal finances and accounting.
Typical accounting challenges
Depending on business leadership, the type of company, the size of a company, in addition to other factors, accounting challenges differ from company to company. Some of the classic accounting issues that a business may encounter include:
Lack of understanding. Whether it’s taxes, payroll, managing accounts, or managing a budget, not having an assigned staffer who completely understands the complexities of accounting can present major issues for a company. Often someone within the company will end up spending a lot of company time attempting to figure out accounting problems, or a major omission will occur and the company will have to face the potentially costly repercussions of that mistake. Regardless, not having a dedicated and knowledgeable accounting staff member can lead to big problems.
Payroll. Every company deals with things like withholding taxes and on-time payments to make sure operations run smoothly. No matter the type of business– small, large, for-profit, or nonprofit–payroll can become a problem if not completed accurately. Nonprofits have the added complication of allocating payroll expenditures to grants and programs.
Managing accounts. Combining or mixing up business and personal accounts and expenses is a common issue, especially for those who are attempting to manage finances on their own, rather than outsourcing to an accounting or bookkeeping professional. Using business funds as personal funds, or “commingling,” can occur, increasing the likelihood of IRS audits and potential fraud investigations.
Taxes. Filing taxes correctly and efficiently can be tough for businesses, especially nonprofits. Pay too much, and it hurts the business; pay too little, the IRS may come knocking. Either way, understanding federal, state, and local taxes is necessary for any business. Energy efficiency incentives, tax relief for certain businesses such as pandemic relief funds or natural disaster relief funds, deductions for charitable donations… an expert knows how to make the most of tax incentive opportunities.
Financial reporting. A lack of sound accounting processes and expertise can hinder the ability of the business to prepare meaningful financial reports. Timely, accurate and relevant financial reports are a key ingredient to managing the business.
Cash flow issues. One of the main cash flow issues for a business or nonprofit is when an emergency or unexpected expense arises and the business is unprepared with enough in cash reserves. High overhead expenses, a slow or delayed invoicing process, and a mismanaged inventory also can become problems for a company’s cash flow.
Why should I get a virtual accountant?
You might wonder why you should hire a virtual accountant, or what a virtual accountant does specifically. A virtual accountant is an alternative to hiring a full-time accountant as an employee or paying for a subscription to a software service. Often contract-based, a virtual accountant can be the most efficient way to tackle your company’s accounting needs. Whether your business is already facing problems or simply trying to figure out the best way to handle finances, a virtual accountant could be the solution. And there is a myriad of customized services a virtual accountant can offer to ensure everything is running smoothly for your specific business needs.
More time for your business & running your programs
Aside from solving the issues named earlier in this article, there are two areas where virtual accountants excel: 1. taking the pressure off executives or employees who otherwise would be dealing with financial issues, and 2. managing and organizing company finances into clear and usable information.
Bookkeepers and accountants regularly explain in blogs and other marketing materials how time -consuming and complicated handling a company’s finances can be. This is especially true for employees who are not finance experts and must figure things out as they go. Benefits to outsourcing accounting work to a virtual accountant include allowing an expert to quickly and correctly file taxes, manage payroll, and neatly report on everything they have done.
Reporting is a huge benefit of hiring a virtual accountant. Not only do virtual accountants handle the time-consuming number crunching, but they also make sense of the variety of financial documents and statements, and collate these data into easy-to-understand reports. This is truly invaluable when it comes to managing and growing a business. The virtual accountant keeps your data available and ready when you need it to present to business associates, investors, and stakeholders. Keeping an eye on your financial statements is the best way to stay current and make informed decisions, but most importantly, it can provide insight to prevent major problems. As unbiased outsiders, virtual accountants can often see what someone from within the company might miss.
What to look for in a virtual accountant
When hiring a virtual accountant, a company should consider several factors. For example, in the time zone of the virtual accountant; their preferred method of communication; how their rates compare with other virtual accountants; etc. Due diligence when it comes to the competency of a virtual accountant as a virtual worker, in general, will help in choosing the right fit for your company.
More specifically to accounting, businesses should ask if the virtual accountant will sign a non-disclosure agreement before sharing financial data with them; if they will create a Client Procedures Manual describing their duties, timelines, and other deliverables; if they provide a Service Level Agreement to ensure follow-through; and if they have insurance to protect their clients.
While these are a few ways to choose a competent virtual accountant, it also is a good idea to hear from previous clients. Ask for a list of current or previous clients and prepare a few questions in advance. Ask what type of company or industry the accountant typically assists to consider if this virtual accountant will be a good fit for your company.
Temple Management: your accounting solution
Temple Management offers many different services for businesses of all kinds, but specifically serves nonprofits. We help businesses take the pressure out of the financial side of things so that companies can serve others, grow, and expand their scope of influence.
Contact us today at (770) 892-2087 for a consultation to see if we can take some or even all of your accounting needs off your hands!