In this wired age, accounting software are prevalent, and almost every organization, despite their scale, uses some kind of accounting software.
The topic of discussion isn’t whether you should go for an accounting software or not. What we’re discussing here is whether you should go for an online one or an offline one. And what is the best strategy to conduct bookkeeping and accounting with any of the two?
For TLDR, online accounting software is the best foot forward for businesses.
Online accounting software can save you time by allowing you to send invoices, automatically backup and secure your data with 128-bit encryption, and access your data anywhere with an internet connection. In other words, you can save hours by automating tasks that offline accounting software makes you perform manually.
Now, let’s dive deep into comparing online vs. offline bookkeeping.
What is Online Bookkeeping?
Also called cloud or virtual accounting, online bookkeeping is a technique where the accounting service provider works with clients remotely. Using accounting software, the company and its accountant can share transactions and other financial information.
Using the same accounting software, the accountant can post financial transactions, review and modify statements, reconcile statements, and perform other accounting duties without having to meet with the stakeholders in person.
Benefits of Online Bookkeeping
The following are the most common benefits of virtual bookkeeping:
Virtual bookkeepers use cloud accounting software to view your bank statements, receipts, and invoices, thereby updating your books in almost no time and without having to wait for paper documents.
Because an online bookkeeper provides you with a dedicated resource for daily bookkeeping, you won’t have to scramble to organize your records before tax season or when your business is audited.
Accurate Financial Reporting
Online bookkeeping services and cloud-based accounting programs are a great team. Using QuickBooks Online or Xero, your virtual bookkeeper can integrate third-party services like Stripe and Dext Prepare.
Online bookkeeping systems like these help reduce human error-related mistakes by reducing the time virtual bookkeepers would spend on manual data entry.
Cost Efficiency and Flexibility
Working with accounting professionals outside your geographical area using virtual bookkeeping allows you to find the right fit for your needs and budget. Virtual bookkeeping is a necessary expense if you keep your books (which is inevitable), so hiring a company like IBN Tech for accounting services is the most economical option.
You only pay for the bookkeeping services your business requires. As your business grows or your accounting complexities increase, these virtual bookkeeping companies can provide a more extensive range of expertise and virtual bookkeeping services.
Allow You to Focus on Your Core Business Operations
Do you wish you could focus more on the things that matter?
Virtual bookkeeping services allow you to switch time spent on bookkeeping and worrying about tax season for greater peace of mind and more time to grow your business since you probably didn’t start your company to be a bookkeeper.
With a virtual bookkeeper like us, you also save time on training and managing employees. During the onboarding process, we learn everything about your company so we can smoothly transition to online accounting.
Every coin has two sides, which also goes with virtual bookkeeping. There are some cons to virtual bookkeeping, especially if you’ve chosen the wrong bookkeeping service provider.
Let’s know them.
Disadvantages of Virtual Bookkeeping
Following are the cons you may realize if you’ve chosen an incompatible virtual bookkeeping service provider for your business.
Lack of Insider knowledge
Virtual bookkeeping services are staffed with knowledgeable and experienced individuals. Although they may be excellent at what they do, they are not your employees or a big part of your company.
Therefore, you cannot expect them to grasp the intricacies of your vendors or customers the way one of your employees would. You may, however, prevent potential issues by requiring your bookkeeper to get your approval before sending out receipts and other documents to your clients or vendors directly.
Whenever you outsource virtual accounting services, you have no choice but to transmit private financial information over the internet. That is precisely what you would call an unappealing scenario.
Because these companies are usually reliable and take adequate security measures to safeguard your information, you typically must accept them as trustworthy.
However, there is always the possibility that a sophisticated hacker will acquire your financial data as soon as it leaves your company’s internal network. You should, therefore, discuss the safety measures they have in place with your accounting expert and service providers must ensure data security.
Virtual collaboration has both advantages and disadvantages. A major difficulty with this situation is the inherent difficulty in communicating.
Online discussions aren’t as good as face-to-face ones. A communication gap will likely occur, resulting in incorrect assumptions, incorrect assumptions, and unpleasant conflicts that may affect your accounts during tax season.
You may avoid such situations by creating a schedule and conducting monthly reviews right from the beginning after hiring a virtual bookkeeping firm. That will help you avoid a lot of miscommunication.
What is Offline Bookkeeping?
Offline bookkeeping is a traditional accounting technique that can be practiced without the internet. With offline bookkeeping, you mail your financial transactions and receipts to your bookkeeping service provider, and they take care of the accounting for you.
The bookkeeping service provider uses offline accounting software without an internet connection since that’s what the name implies. Offline accounting software can be downloaded onto your system and accessed just like any other software. You do not need to be connected to the network to use it.
Offline accounting software is usually hosted on-premises. It is protected, and you do not have to worry about your data being stolen. You will also not have to worry about your monthly fees with accounting software because you will own the tools.
Benefits of Offline Bookkeeping
Here are the benefits you can realize if you opt for offline bookkeeping:
Many businesses put off adopting online bookkeeping because they are concerned about losing control over data entry and records. It takes a lot of trust to give vital and private data to a nonphysical entity like online accounting software,
You may switch to online bookkeeping if you believe that your accounting process takes too long since you have to physically mail your receipts and transactions to your accounting service provider. Offline bookkeeping is still a good option if you have the time.
Some online bookkeeping services are quick, provided you select the right one. However, if you opt for a poor and inexperienced service provider, you’ll be better off with offline bookkeeping—and not internet-dependent.
Some online bookkeeping services can be rigid and costly. Therefore, offline bookkeeping is cheaper – but keep in mind that not all accountants provide a suite of accounting and bookkeeping services, which would require you to find a separate accountant and spend more money.
This is why, if you want to opt for offline bookkeeping, you should partner with a service provider like IBN Tech. We provide the entire suite of accounting services, including bookkeeping, controller, and accounting system & integration.
Drawbacks of Offline Bookkeeping
The list of offline bookkeeping disadvantages is long, but here we’re restricting to the common ones:
Prone to Errors
Keeping records offline is extremely time-consuming. It may also require more paperwork and data input, which would be inefficient and result in human error. Even with paper, you would still need a device to input all the data into spreadsheets and the like.
Offline bookkeeping does not offer real-time data, so there can be issues with communication and overall sluggish processing. This is particularly significant when you must handle a multitude of data-handling processes, such as tax and payroll, since these processes usually require real-time data.
Using desktop programs offline limits you from sorting your accounting data. These programs are not usually designed for group collaboration, restricting employees from meeting at specific times and places.
Even if you’ve outsourced your accounting operations to a service provider like us, there will be restrictions in terms of data accessibility.
The Key is to Find the Right Service Provider
We’ve discussed online vs. offline bookkeeping in detail, and the choice is yours to make.
However, if you’re opting for any of these techniques for your accounting operations, we’d recommend you partner with the right accounting service provider.
We at IBN Tech are experts in bookkeeping services and leverage best-in-class accountants and modern practices to help our clients with their finances.
Get in touch with us to know more.