What Is Virtual Bookkeeping?

In the past a bookkeeper had to have a physical location, where the clients came, to bring paperwork and to go over reports. Clients bring their paperwork to the bookkeeper whenever they have time, sometimes once a month, but usually longer and quite often only once a year, at tax time. The process is not very efficient and was very time consuming for everyone involved. It also means businesses seldom have access to important financial information about their company on a monthly basis. It’s hard to make critical business decisions, based on sound financial information in a timely fashion in this model. The financial information is often ‘assumed’ when decisions need to be made quickly, which is risky and often wrong.

This process also means all your information is usually in the bookkeeper’s hands, in a software package on their desktop computer, which you have no access to. If you want to change service providers or if they ‘disappear’, all your information is gone (I’m surprised and upset at how often we’ve heard this has happened).

Technology advancement has made it very easy to take any physical piece of paper and turn it into a digital record that can easily and quickly be transferred and stored anywhere in the world, in a matter of seconds. COVID-19 forced most businesses, as well as their clients and customers, to learn how to work without the physical interaction they were both accustomed to. The world moved to where everything is done online, rather than going to a ‘physical’ location, it is done at a ‘virtual’ location, through an online connection.

Due to the nature of a bookkeeping business, most bookkeepers and their clients have not been able to ‘see’ how bookkeeping can be done ‘virtually’. But really, with all the cool technological tools available today it is very easy to do all of the bookkeeping tasks ‘virtually’. Which means a bookkeeper doesn’t need a physical location to meet their clients, gather paperwork and share reports. It can all be done digitally, virtually, through online apps.

Star Taxes and Books has done extensive research to find the technologies and tools that enable our clients to easily and securely capture and collect all of their financial paperwork (receipts, invoices, statements, etc) and digitally transfer them to us. In many cases the transfer of information is done automatically (without client involvement), on a monthly basis.

For your protection, we put all your information into secure online tools and services and give you access to them. In the case of Quickbooks, we use Quickbooks Online, where we can create the account in our client’s name, with them as the owners. That way the client always has ownership and access to their information. You can login and look at your information anytime you want. Using our tools, receipts and invoices can easily be sent to us as you get them, with no need to collect them until you can bring them to us. Once we get these digital records, as in the past, we enter them into our bookkeeping system and then produce the appropriate reports for each of our clients’ businesses.

With your financial information coming to us on a regular basis we can provide detailed financial reports for a previous month (usually by the middle of the following month), so you can make timely financial decisions with more detailed information. It’s easier for you to meet with us on a regular basis because we ‘meet’ either by phone or via an online conference software, where we can virtually look over and talk about reports together. There is no need to take time away from your business to go to a physical office, because you can meet with us from anywhere you want to be, in your office, at home, or on the beach! This gives our clients more time to work with and support their customers, while still getting more detailed financial information than most bookkeeping services provide with in-person services. A nice bonus for our clients is they also now have a digital record of all their paperwork (receipts, invoices, statements, etc).

It doesn’t matter where you are physically located, or where we are physically located, we have tools that make it easy to get your paperwork to us and for us to get you the reports you need to run your business. Give us a call and let us show you how we can give you better data than you’re currently getting and do it all virtually, while freeing up more of your time as well!

What are the IRS rules for using e-signatures on tax returns?

How does the e-signature option work?

Taxpayers, who currently use Forms 8878 or 8879 to sign electronic Forms 1040 federal tax returns or filing extensions, can use an e-signature to sign and electronically submit these forms to their Electronic Return Originator (ERO).

Can all taxpayers use the e-signature option?

No. The e-signature option is only available to taxpayers e-filing their tax returns through an ERO, who uses software that provides identity verification and e-signature. To meet e-signature requirements, the ERO must be able to record the taxpayer’s name, social security number, address and date of birth electronically for identity verification purposes.

For more details regarding e-signatures please click the link below to see the IRS page defining their e-signature requirements.

IRS e-signature requirements

What should the customer know about your pricing (e.g. discounts, fees)?

Our target customers are small business owners.  Given that we focus on keeping our pricing affordable and easy to predict/budget.  Our pricing packages are based on the number of transactions you have each month, not just a flat hourly rate that’s hard to predict and budget for.

What is your typical process for working with a new customer?

The first step is a Discovery Call.  The purpose of this call is to get to know the client and their business. This is how I learn about their passion, why they are doing what they are doing and ways I can help them get insight to their business, as well as what reports would be beneficial, etc.

The next step is the Deep Dive.  This is where I ‘jump in’ to all of your accounts, files and receipts.   I’m entering and organizing all the information you gave me into my systems and building the first set of reports for your business.  While doing this, I keep open communication with you and we develop a workflow for collecting and reporting information.  We use sophisticated automation tools to help us collect and track your data, as well as keep it safe and secure.

The next step is Maintenance Mode.  I’ve collected and entered all of your information.  I’ve provided you with a first set of reports.  We’ve gone over the reports and made any adjustments you desire, helping you get an even better insight into your business.  We have a ‘system’ for collecting, entering and reporting your information on a monthly basis.  At the beginning of each month we have a one-on-one call to go over the previous month’s reports and answer any  questions.

We use sophisticated tools with which you collect your receipts, make any required notes on them, then using your phone you take a picture of your receipts and send them to us.  We have tools that  link to your online accounts and pull statements each month (they can only pull statements, they can’t access or spend in any other way).

Using our automation tools allows us to minimize the time you spend collecting and sending us information, as well as the amount of time we spend entering and organizing the information.  This helps us keep the costs lower, making our services more affordable for small businesses owners.

What types of customers have you worked with?

I’ve worked with lots of small, online retail and local service businesses, small real estate businesses, large real estate businesses, HOAs, trucking companies, construction contractors, fix-n-flippers, lawyers, salons, and property managers.  Pretty much any small business is a good fit for me, which makes me a good fit for them.

Describe a recent project you are fond of. How long did it take?

A recent fun one was a small salon that switched their bookkeeping and tax preparation over to me.  The reason it was fun is because I was able to make a real difference in their business (as happens in most of the businesses I work with).  I was able to help them see how much they were actually making on each of their services, what percentage each service was of their overall business and where their clients were coming from.  I was also able to show them how this better tracking and detail saved them money on their taxes and that in fact a couple things the previous person had them reporting would cause them a problem in an audit.  I find it exciting to help a business owner get this kind of insight into their business.

We could share similar stories from many of our clients, about how the reports and information we provide them has made a huge difference in their decision making and processes for their business.

What advice would you give a customer looking to hire a provider in your area of work?

I think one of the most important things to consider is how and what does communication look like with this provider? Can you ask them questions? Do they answer and explain in a way that you understand and that helps you. Do you have regular, ongoing communication, so you know work is being done and you won’t have any big surprises at the end of the year. It’s been shocking to me how many clients have come to me saying they had been paying someone to do their bookkeeping all year, but when it came to tax time the books weren’t really done, or weren’t done in a way that the tax preparer could use. Which caused huge delays and more expense when it came to tax time.

How did you get started doing this type of work?

I started out doing books for a large retail chain.  I was very good at breaking things down, allowing me to find and fix problems.  I became the person they liked to send to stores that had loss problems they couldn’t figure out.  I could always figure it out and help them fix it.  Usually the problems were caused by a lack of training and the bookkeeper not having a clear understanding of bookkeeping and its processes.  Sometimes it was someone stealing and covering it up by manipulating the books.  I found the troubleshooting process fun and exciting.  I really felt good to leave a store knowing I had helped them solve a problem, have better insight into how their store was performing and knowing the on-site bookkeeper was now prepared to keep the process going.  I could see how that type insight into their business was critical for all small business owners and I could see how I could make a difference in lots of businesses and lots of peoples lives.

What education and/or training do you have that relates to your work?

See the next question as to how I got started for part of this answer.  I’ve been doing this successfully for 12 years.  I am QuickBooks certified, which requires me to take continuing education and update classes every year.  I take federal and state tax preparation update classes every year.

What questions should customers think through before talking to professionals about their project?

Are you ready to listen to this expert you want to hire to help you? They are an expert at what they do, just like you are an expert at what you do. There’s not a real point in hiring someone if you’re not going to provide them the information they need, or if you’re going to second guess and argue about what and how they’re doing it. Let them be the expert you’re hiring them to be.

I would like a background check on you.

Once in a while a prospective client says they want to run a background check on me before they’ll hire me.

I understand and appreciate the fact that they want to be sure the person they’re giving intimate access to their business and accounts is trustworthy.  It can be a scary world out there these days.  The fact that it is a scary world out there these days is one of the top reasons why I decline to give my personal information to some person who calls, says they are interested in my business and want all my personal details.  There’s just too much risk for me and my business in this situation.

So, how do we cover the risk for both of us?  And yes, I know and understand there are a lot of ‘sketchy’ bookkeepers out there, just like there are in pretty much every line of work and/or profession.

Here is what I have done and do to help reassure and protect my clients.

  • I am registered with the IRS as an Electronic Return Originator (ERO).  In order for the IRS to approve me for this, they require I get fingerprinted and pass a detailed background check.  I have done this and passed.  Now my fingerprints are on file and if anything were to ever happen I’d immediately lose this designation.
  • I have an IRS Preparer Tax Identification Number (PTIN).  In order to get and maintain this number, I must pass a background check by the IRS.  In addition, this number must be renewed each year, which means the background check gets run once a year.

So, while you can’t run your own background check on me, please understand the IRS runs one on me EVERY YEAR.

This is one of the many things that sets me apart from most bookkeepers, as most bookkeepers do not go through the process with the IRS to get these approvals.

Hopefully that helps you understand why I won’t let just anyone run a background check and that I do understand your concerns and have taken significant steps to offset them.

Thank you for understanding.