Bookkeeping is one aspect of business that’s often neglected—largely because many business owners don’t have the expertise or desire to deal with it. After all, you can passably squeak by without organized and accurate bookkeeping… until you try to file taxes, apply for a small business loan, or run payroll.
As businesses grow, bookkeeping becomes an even more integral part of healthy finances. Luckily, this is one task that’s easy to delegate—keeping finances flowing smoothly while freeing business owners up to focus on other aspects of growing the business.
Whether you’re a business owner who needs to delegate bookkeeping needs or a bookkeeping pro yourself, there’s a lot to know about hiring and getting hired in the field, especially if you’re focusing on online bookkeeping services.
Note: If you’re new to the world of bookkeeping, we’ve included a glossary of key bookkeeping terms to know. You may find this useful as you read through the rest of the guide.
As Pilot explains it, “A bookkeeper is someone who manages and records all the financial goings-on of your business. They track financial transactions and ensure your accounts and records are accurate and complete.” In other words, a bookkeeper documents financial transactions that take place within your business and ensures they’re all correct and accounted for.
That role includes a lot of smaller tasks required in order to maintain accurate and up-to-date records. There are 4 main tasks bookkeepers handle for business owners:
In addition to those primary duties, there are other tasks that most bookkeepers handle, as well. These include:
A quick note on bookkeeping vs. accounting:
While many accountants can handle bookkeeping, the reverse can’t be said. Bookkeepers don’t need to be licensed or certified to the same extent that accountants do. Partly as a result of that, there are certain tasks they can’t perform for you. For example, a virtual bookkeeper can prepare your documents for payroll, but they can’t run payroll. Similarly, bookkeepers can get your financial documents in order for tax season, but they can’t file your tax returns.
When business is booming, it’s easy to let (seemingly) smaller tasks like bookkeeping fall by the wayside. And when business isn’t booming, bookkeeping is probably the last thing on your mind. Unless you’re running an accounting firm, chances are you didn’t go into business to spend your time reconciling accounts and documenting expenses.
And that’s okay—your bookkeeping needs to get done, but you don’t have to be the one who does it.
If that sounds amazing, you have 3 main options for outsourcing bookkeeping tasks:
| In-house bookkeeper | Freelance bookkeeper | Bookkeeping (or VA) agency | |
|---|---|---|---|
| Pros |
- 100% dedicated to you
- Will become familiar with the ins and outs of your business - May be more invested in the business' success and growth |
- Can scale hours up or down as needed
- Often more flexible and cost effective - You can test the relationship before making a full commitment |
- Can often scale up (or down) with your business' need
- They handle the recruiting and vetting process - Continuity in service even if one bookkeeper leaves |
| Cons |
- Can be more than you need in the beginning
- You're responsible for recruiting, training, etc. - Costs can be higher and less flexible |
- May not be as invested in your business as you are
- Typically have other clients that may draw them away from you - You're responsible for vetting their bookkeeping skill/experience |
- Can be more costly than working one-on-one with a bookkeeper
- May require signing a longer contract (i.e. annual) - You may or may not have a bookkeeper dedicated to you |
| Costs |
- Recruiting
- Training - Salary - Benefits - Employment taxes |
Hourly, monthly, or project rate | Monthly or contract rate |
| Hiring Process | Resumes, interviews, references | Interviews, client testimonials, test projects, trial contracts | Interviews, client testimonials |
| Pricing | Annual salary: $40,000 and up plus training, benefits, taxes, etc. | Hourly rate: $19-$40 per hour | Monthly rate: Anywhere from $140 - $2500 per month (varies based on complexity, number and dollar value of transactions, etc.) |
| Availability and Dedication | 100% dedicated to your business and available to you full-time | Often will have additional clients and will be available to you for a set number of hours per week or month | May or may not include a dedicated bookkeeper and a set number of available hours per month |
| Contract | Employment | Typically month-to-month or a period of months | Monthly or annual |
|
|
If you decide to hire a virtual bookkeeper (read: someone who works remotely), there are a few tips you can follow toensure a smooth and productive working relationship.
If you’re looking for work in the bookkeeping field, it can be hard to find bookkeeping-specific roles and information. Not only is bookkeeping oft-confused with accounting, but there’s also a lot of legitimate overlap between the two fields.
That said, there are tons of companies and agencies looking to hire virtual bookkeepers, so there’s plenty of work to be found in the field.
To help you score a piece of that work, we cover all the basics for current and aspiring virtual bookkeepers below,including:
Naturally, compensation and rates can vary a lot depending on experience, certifications, tenure, and more—and the same applies to bookkeeping roles. That said, we know it’s helpful to have some kind of benchmark when considering(or negotiating for) a bookkeeping role.
Let’s take a look at some of the information we do have available.
For part-time, contract, or freelance bookkeepers, pay is typically done on an hourly basis—based on an agreed upon per-hour rate.
According to ZipRecruiter’s research, the average hourly rate for a bookkeeper in the U.S. is around $19/hour. That’s the average hourly rate, but experienced bookkeepers can command closer to $35-$40 per hour. If you have or develop some accounting skills, you can even earn as much as $75/hour.
Full-time and in-house bookkeeper roles areusually compensated a little differently. If you’re looking for a full-timerole, you can expect to be paid based on a regular annual salary instead of anhourly rate. While there are lots of factors that affect bookkeeping salaries,too, ZipRecruiter notes that the average yearly salary for bookkeepers in theU.S. is $40,406.
As a virtual bookkeeper, you have two main options:
Let’s start with working for someone else—here are the biggest benefits and drawbacks to working for another company full-time or in-house.
The pros:
The cons:
If you find that the benefits outweigh the drawbacks, and you’re ready to find a bookkeeping job, this section is for you.
According to Accounting Today, bookkeepers are most often hired in these industries:
So if you’re looking for work as a bookkeeper, those industries are a great place to start your search. In addition, there are plenty of virtual assistant (VA) and virtual bookkeeping firms that tend to hire on a rolling basis. Here are a few of the bookkeeping roles currently available.
Building a resume for any kind of role means following a set of common best practices to help your resume talk you up—and virtual bookkeeping is no different. Here are a few key best practices to keep in mind when you build your resume:
We know those tips can seem a little ambiguous on their own, so let’s look at them in practice.
Sample and template from Monster:
Sample and templates from Indeed:
If you're an accounting professional and aren’t into working for someone else, the other option is to start your own virtual bookkeeping services business. It won't offer the same peace of mind as working in someone elses's company, but it can be far more rewarding if you're up to the task of managing bookkeeping work and your own business. If you go that route, you’ll be in good company. Data from IBISWorld shows there are nearly 300,000 bookkeeping businesses in the U.S. (as of May 2020)—and they employ over 713,000 people. Those numbers are in response to a booking bookkeeping industry with a market size of $69 billion.
According to IBISWorld, here’s what’s driving the trend upward:
Clients have increasingly subcontracted back-office administrative activities to take advantage of strengthening economic conditions, enabling them to focus efforts on core business functions. Additionally, the rising complexity of payroll and benefits payments has led businesses to increasingly outsource these functions to industry operators to ensure compliance.
To put it more succinctly, the financial world gets more complex every year, so business owners are offloading bookkeeping and accounting tasks in droves.
And to put it more directly, it’s a good time to start a bookkeeping business.
Like any role, there are pros and cons to starting your own business in the bookkeeping industry.
The pros:
Here’s what Veronica Wasek of 5 Minute Bookkeeping (one of the invaluable resources we highlight below) shares on the upside of starting your own bookkeeping business:
After spending almost 25 years working for others in the public accounting and corporate world, I was at a crossroads in my career. [...] Now, I am privileged to work with amazing employees and clients and to be able to make a difference in the small business world!
Seth David of Nerd Enterprises emphasizes the freedom of entrepreneurship, too, saying:
As long as I was working for someone else, I would be subject to their bad decisions and choices, not to mention poor leadership. [...] That's when Nerd Enterprises was born in 2003 [...] because it was clear to me. I would never want to work for someone else ever again.
The cons:
When you’re deciding between working for a bookkeeping company or striking out on your own, it’s important to consider the type of people and roles you’ll be working with. If you work for someone else, you’ll likely spend a lot of time working with internal colleagues—often managers or other bookkeepers and accountants.
But when you start your own bookkeeping business, you spend most of your time working directly with your clients—who are, by virtue of hiring you, usually not super experienced when it comes to bookkeeping.
Neither of us these options is inherently better than the other, but they do have an impact on your role, and you may find yourself leaning toward one or the other. When working with your own clients, for example, you have more control over the personalities and types of clients you work with. However, you may also find yourself spending more time explaining bookkeeping and finances to these clients versus other professional bookkeepers.
If you choose to open your own bookkeeping shop, it can be helpful to think of how you can position yourself to the business owners you work with—there’s a huge opportunity to become a trusted business partner and advisor, which can elevate your value to the business.
Whether you’re new to virtual bookkeeping or new to starting a bookkeeping business (or both!), getting started can feel a little daunting. To help, we recommend checking out the resources below:
Whether you’re doing your own bookkeeping, managing someone else’s, or just keeping tabs on your books, there’s no shortage of bookkeeping and accounting software to make it easier. Below are our top picks for free bookkeeping, advanced bookkeeping, and doing it all from your smartphone.
Intuit QuickBooks is one of the most popular bookkeeping and accounting tools on the market today. The software includes streamlined bookkeeping features that make it easy to scale up to payroll and payments or down to simple expense tracking.
Read more about QuickBooks Online on G2 >>
Xero offers bookkeeping and accounting software built for small businesses in particular. The tool lets you connect bank and other financial accounts to automatically record your transactions. From there, you can categorize and reconcile as needed. Xero even supports inventory tracking, sales tax, and multi-currency bookkeeping—so it’s perfect for ecommerce brands.
Another small business specialist, FreshBooks accounting software includes simple expense tracking and categorization plus time-tracking features and powerful reporting. FreshBooks promises reports that are “simple enough for you to understand but powerful enough for your accountant to love.”
Read more about FreshBooks on G2 >>
Wave offers a whole suite of products that include invoicing, connecting financial accounts, categorizing transactions, and more. You can use Wave to pull all your transactions into one tool, categorize and reconcile each. Their bookkeeping features are 100% free forever, plus you can add on additional features (like payroll) when and if you need them.
AND.CO is a bookkeeping and accounting software built for independent contractors and solopreneurs. Their software combines key bookkeeping features like automated expense tracking and time tracking. Plus, the tool includes access to key financial reports (like Income Statements) and visualized data on income and expenses.
Read more about AND.CO on G2 >>
If you’re on the go often, several bookkeeping tools also offer mobile apps to help you manage your books directly from your phone. Our top 3 picks for mobile users are below.
Chart of accounts
According to Investopedia: “A chart of accounts (COA) is an index of all the financial accounts in the general ledger of a company. In short, it is an organizational tool that provides a digestible breakdown of all the financial transactions that a company conducted during a specific accounting period, broken down into subcategories.”
General ledger
The general ledger (also called the journal) is a singular record of all the financial transactions that happen inside of a company. This is where credit and debit entries are made to keep track of transactions.
Financial statements
Various documents that detail the financial activities and state of a business. Most notably, these include the Income (or Profit & Loss) Statement, Balance Sheet, and Statement of Cash Flows. They can also include time-based statements (like month-end and year-end reports) and other more specialized statements (like Burn Reports for startups).
Reconciliation
Per Investopedia: “An accounting process that compares two sets of records to check that figures are correct and in agreement. Account reconciliation also confirms that accounts in the general ledger are consistent, accurate, and complete.”
Expenses
Any outflow of money from a business.
Accounts payable (AP) and accounts receivable (AR)
Accounts payable is a type of account in a business’ general ledger. The AP account records the money a business is liable to pay in the short-term (like supplier or contractor invoices). Similar to AP, accounts receivable (or AR) is a type of account in a business’ general ledger—this one records the money a business is owed (like an outstanding invoice awaiting payment).
Billing vs. invoicing
You may find some variation between how “billing” and “invoicing” are used (depending on who you talk to), but most people typically use both terms interchangeably to mean: Sending clients or customers a description of the products or services used and the charges incurred.
Assets
In its simplest form: Any resource owned by a business or an economic entity. Equipment is one example.
Liabilities
Economic benefits a company is obliged to pay to account for previous transactions. For example, wages owed to employees for work already done.
Equity (or owner’s equity)
The owner’s (or shareholder’s) stake in a company.
Certified Public Accountant (or CPA)
This is a certification that accountants must get in order to legally provide accounting services to the general public. It’s required for things like filing taxes, and is one of the main distinctions between a bookkeeper and an accountant.
