Good business bookkeeping is vital for any successful company, both for legal and financial reasons. Accurate information from bookkeeping is not only necessary to know where your business stands financially at a given moment, but it is also essential for strategy planning, managing cash flow, and predicting profitability.
There are a lot of reasons why business bookkeeping is useful. It gives you organized, financial information that is essential to your ability to make sound business decisions and to budget accurately.
It is also necessary to meet government regulations and for proper tax preparation. Finally, good business bookkeeping provides data so you can use it to analyze financial trends, costs, profits, and more.
Careful bookkeeping takes time, and if you are busy running your business, having an online bookkeeper can be a huge time-saver.
Some top online bookkeeping services employ excellent online bookkeepers who can provide the necessary online accounting services to successfully handle your business bookkeeping. An online bookkeeping service can help you manage:
- Financial statements
- Corporate tax preparation
- Payroll and more
Even from this shortlist, it is clear bookkeeping involves meticulously keeping track of a lot of financial information!
Why Use an Online Accounting Service?
Online accounting services are useful and convenient, particularly if you are a small business owner with limited staff and resources.
Online bookkeeping means that your financial information is instantly available to you. Online bookkeeping is especially useful if your business deals with a lot of digital transactions instead of cash. Perhaps best of all, online bookkeeping increases your work efficiency.
Using an online accounting service instead of doing everything yourself will free up your time to look after your business. Not only that, but online bookkeepers are also experts in financial matters; it is their job to be on top of financial regulations.
Additionally, a professional online bookkeeper can prevent financial mistakes and increase your business credibility more than in a do-it-yourself approach.
Top Online Bookkeeping Services
There are so many options for online accounting services, so how do you know where to find a top online bookkeeping service?
This article provides a list of top online bookkeeping services so you can choose the right online accounting service to not only manage your company’s finances but also to grow your business to the next level.
Bench is a cost-effective, no-frills online accounting service that offers bookkeeping, payroll, and other services. It is generally low cost with a monthly payment.
If you sign up with Bench, your bookkeeper will analyze your finances and start supplying you with monthly financial reports.
Bench has several different plans ranging in price. All plans include:
- A business bank account
- Real-time account information
- Tax preparation services
- Payroll service via Gusto
The company also includes access to a mobile app to access your account data online.
Bench offers historical bookkeeping. If you are behind on your bookkeeping, your online bookkeeper will organize your historical financial data and help you get caught up.
There are a few things to note about Bench. Although Bench has a knowledgeable support staff, it can take up to 24 hours to get a response, which isn’t overly convenient if you have urgent financial questions or concerns.
Also, Bench won’t sync up with your Quickbooks; instead, Bench’s online bookkeepers use the company’s in-house, proprietary software.
Pilot’s online account services are more expensive than some of the other options on this list. Their services are tailored to startup companies with venture capitalist backing. They also cater to professional service and eCommerce companies.
If you sign up with Pilot, you will be assigned a dedicated online bookkeeper who can reconcile historical financial data if you need it.
Depending on your plan, you can include these services:
- Industry-specific statements like burn reports (for startups)
- Inventory management (for eCommerce companies)
- Invoices for your customers
All of Pilot’s options include accrual accounting, as well as financial support and advice. Pilot’s default method is accrual-based bookkeeping because investors and venture-capitalists prefer it, but they can provide cash-based bookkeeping if you request it.
Pilot does not have month-to-month plans; instead, you prepay annually for the services. Additionally, the fees for services are based on your monthly expenses.
Xendoo’s passion is for small businesses and startups with limited resources. They offer affordable online accounting services. Xendo uses the online platform Xero for bookkeeping.
When you sign up, you will receive a free Xero account. This top online bookkeeping service can provide bookkeeping services for a single company or for multiple companies if you are a serial entrepreneur.
Among its services, Xendoo includes:
- Tax preparation and consulting
- Bookkeeping via bank and credit card accounts
- Weekly and monthly reports
Like other online account services, Xendoo provides historical accounting services, so if you need catch-up bookkeeping, they can bring your bookkeeping up-to-date.
Depending on which plan you choose, in addition to handling your corporate taxes, Xendoo will also prepare your personal returns.
With this company, you pay an affordable monthly subscription and can select from various options. A free trial is also available from Xendoo.
Lastly, Xendoo also provides a convenient mobile app for customers and 24/7 reliable customer service via chat, email, and phone.
1-800-Accountant provides an online bookkeeping service for small businesses. This company will pair you with an online bookkeeper who has expertise in your state and industry. They can also assist with entity formation.
1-800-Accountant also provides the standard range of bookkeeping services, including:
- Financial overviews and reports
- Tax preparation (with the option to include personal taxes for a fee)
- Financial advice
1-800-Accountant’s services also include access to an online mobile app.
Pricing plans are designed to be paid monthly, starting with a set rate. Business owners are charged a set rate for each additional employee.
It should be noted that 1-800-Accountant provides very basic services — if your needs are more complex, another option might be more suitable.
Back Office provides accounting services through Quickbooks and Xero. If you don’t have such software, they will provide it with their services. Back Office specializes in account payable processing and accounts receivable.
As with other online account services, Back Office provides standard bookkeeping services like:
- Account reconciliation
- Financial reports and balance statements
- Tax preparation services.
Back Office also offers a periodic business review with a customized report.
Back Office’s pricing is “hourly per month,” which means you pay a set fee per month and get a certain number of hours of financial services per month at a given hourly rate (posted on the company’s website).
Back Office specializes in small and new businesses, so if your business is bigger, with more complex needs, this may not be the best option for you.
Botkeeper specializes in assisting accounting companies. Botkeeper takes an interesting approach: The company uses artificial intelligence and machine learning to automate a lot of the bookkeeping process. The idea is you get back a “pre-accounting solution” with most of the work done.
However, you will still need to have your staff review and make adjustments as necessary.
This unique online bookkeeping service features:
- Automation: Humans “train” the system to categorize expenses
- Synchronization: Verified transactions are transferred to client books
- Integration: Banking, payroll, and credit cards are integrated
Botkeeper also provides up-to-date financial reports.
The Botkeeper fee is paid annually, and it can be expensive. The pricing consists of a platform fee and a per-client fee.
InDinero specializes in providing online accounting services for established startups. Its services are scalable. The company uses cash-basis accounting (geared for startups), and their services sync with Quickbooks or Netsuite.
Along with standard bookkeeping services, their plans include:
- Direct employee reimbursements
- Payroll assistance
- Dedicated account manager
InDinero also offers some inventory management services and other add-ons.
InDinero has flexible payment plans; you can pay monthly, quarterly, or annually. They have an executive plan with customized pricing that’s designed for larger companies that need chief financial officer services.
There are a number of small business online accounting firms and online bookkeepers all over the country. Their pricing, the services they provide, and the quality of customer service varies greatly. Some are limited in the number of new clients they accept.
What to look when hiring an online bookkeeping service
With so many online accounting services out there, it can be difficult to know how to find the right one for your business. There are some things you can consider to help you narrow the field. Having an online bookkeeping service that is the right fit for your business bookkeeping needs is important, and it can save you time and relieve stress.
Some things that you should consider when looking for a top online bookkeeping service to handle your business bookkeeping include:
- Cash or accrual accounting
- Reports and other deliverables
- Data safety
- Process and client care
- Track record
When you’re considering an online accounting service, make sure to ask questions so you know whether the company you choose will align with your business needs.
Cash Basis and Accrual Basis Accounting
Among the things to consider is which one of the two main types of accounting is best for your business bookkeeping: accrual basis accounting or cash basis accounting.
Some online bookkeeping services specialize in one or the other, and some have online bookkeepers who will handle either. Therefore, if you have a preference, it is important to know that up front!
What are accrual basis accounting and cash basis accounting? Cash basis accounting recognizes expenses and revenue exactly when it leaves or enters your account. In contrast, accrual basis accounting generally recognizes expenses and revenue when they are incurred or earned. The main difference between the two is time.
Cash Basis Accounting
Cash basis accounting is most often used by startups and small businesses that need to keep careful track of their cash flow at all times.
This method of accounting lets you see what cash you have at your disposal when you check your balance. Because most small businesses have limited cash flow, there is less to track, so this system generally works well.
With cash basis accounting, revenue is generally not subject to tax until the cash is in the bank.
Though this system is simple and easy to maintain, it may not show an accurate picture of the true financial state of your business. For example, your business may appear to have a lot of cash, but if there are large amounts of expenses yet to be paid, the picture may not be accurate.
Accrual Basis Accounting
In contrast to cash basis accounting, accrual basis accounting is usually used by larger businesses that have more complicated finances and greater cash flow than startups or small businesses; it is also typically more labor-intensive.
This type of accounting recognizes revenue when it is earned and expenses when they are invoiced. For example, if you invoice someone for a product, the amount due to you would be recognized as revenue, even though you have yet to receive the actual funds.
Over the long term, accrual basis accounting is considered to provide a more accurate picture of the finances of a business. Additionally, it is considered to be the more helpful method of accounting for businesses with large inventories.
There are some drawbacks to this method of business bookkeeping, however. Accrual basis accounting does not actively track cash flow, which can be very problematic if your business experiences a cash flow shortage.
While there may be a lot of revenue listed on the books, in actuality, there may be very little cash in the account. Therefore, it is imperative that someone tracks incoming and outgoing cash carefully and understands the actual cash position of the business at any given time (which is why the right bookkeeper is crucial).
Know Your Business Bookkeeping Needs
Knowing what you need in an online bookkeeping service is important. For example, will you need a daily bookkeeper or an occasional one? Will you need payroll, invoicing, reports, financial advice, and more? You’ll need to find a bookkeeping service that offers services and pricing that are compatible for the specific things that your business needs.
On-time monthly reports
Reports are a common product offered by online accounting services. Make sure the service you choose offers reports with the level of detail and frequency you need.
Ask about the deliverables you need and make sure the online accounting service you choose will meet those needs on time.
24/7 Technology Platform
Another thing to consider when you’re looking for an online accounting service is the availability of your bookkeeper. Not all online bookkeeping services have a bookkeeper available 24/7. Some services can take 24 hours to respond, and others give you only a limited amount of hours of your bookkeeper’s time.
While you might not always need an immediate answer to your financial questions, there may be times when you do.
Communication your way
Clear communication is important when accounting is concerned! You want to know that the online bookkeeping service you chose will not only be available but will also communicate with you clearly and effectively.
Consider whether your bookkeeper will be available to communicate via text, email, chat, or remote web conferences if need be.
The online bookkeeping service that you choose will have access to very sensitive data about your business and employees. You’ll want to know that your data is completely secure.
It’s a good idea to ask about a non-disclosure agreement and to delve into the cybersecurity and data backup measures the company takes.
Not all online accounting services use the same software; some use proprietary software that is not compatible with common bookkeeping software packages like Quickbooks in the way that Xero is, for example.
If the platform isn’t one you have, will they provide a free account as Xendoo does with Xero, for example? Does the company offer a mobile app so you can check your financial information anytime and from anywhere?
Real People that Care
When you’re starting to work with an online accounting service, it is a good idea to know about the company’s onboarding process for new clients. You want a service that is responsive and efficient. Do they offer a trial period? If the company is responsive and engaging, it is a good sign.
Finally, you will want to consider the company’s track record. Are they one of the top online accounting services? Do they have a record of positive customer feedback?
You will also want to know whether the bookkeeping service employs quality bookkeepers that are well qualified to meet your business bookkeeping needs.
There are many clear advantages to selecting an online bookkeeping service. Having a qualified, professional online bookkeeper manage your finances can free up your time and provide peace of mind.
Moreover, it will ensure that your financial records and information are well organized and accessible. Knowing where your business stands financially can help you to more effectively plan your business strategies and track cash flow and profitability.
There is a lot to think about when you’re selecting an online bookkeeping and accounting service. You’ll want to find an online service that will provide you with the online bookkeeping services that you need for a price that you can afford!