What Is a Virtual Accountant? (And How to Become One)

Learn what it takes to become a virtual accountant IRL and whether it’s time for your firm to embrace virtual accounting.

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Are you thinking about going online-only with your firm? If so, here’s what to consider about becoming a virtual accountant.

The U.S. Bureau of Labor Statistics expects the employment of accountants and auditors to grow by 7% from 2020 to 2030. That’s about average for all occupations, but accounting tends to be an extremely stable career as well. According to AccountingWEB, during recessions, unemployment rates for accountants are usually lower than those for other workers.

Starting a virtual accounting firm provides a flexible career and the freedom to choose where you work and who you want to work with. To help you decide whether this is the right move, here’s what you need to know about becoming a virtual accountant, the benefits of starting a virtual accounting firm, and how to get started.

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    What Is a Virtual Accountant?

    A virtual accountant is simply an accountant who works online rather than in a traditional office. Instead of meeting with clients face to face, they leverage cloud accounting software and mobile apps to offer a range of accounting services to small businesses and self-employed individuals, such as:

    • Bookkeeping services
    • Bill pay services
    • Accounts receivable and accounts payable
    • Preparing financial reports and financial statements
    • Tax filing services
    • Virtual CFO services
    • Cash flow forecasting
    • Advice on business processes
    • Payroll services

    What Does It Take To Become a Virtual Accountant?

    The qualifications to become a virtual accountant depend on the services you want to offer. If you intend to provide basic bookkeeping services, you don’t necessarily need a college degree or professional certifications—relevant experience and knowledge of accounting and bookkeeping principles are enough.

    On the other hand, if you intend to offer higher-level accounting services, such as representing clients during an audit by the IRS or another tax authority, auditing financial statements, or offering outsourced CFO services, you need a college degree and a CPA designation.

    How Do Virtual Accountants Work With Clients?

    Many virtual accountants have a dedicated home office, but their office can be anywhere they have a laptop or mobile device and an internet connection.

    Virtual bookkeepers and accountants communicate via phone, email, video conference, or messaging platforms like Microsoft Teams and Slack.

    They collaborate and handle bookkeeping, tax preparation, and other services using cloud-based software. Often, they send and receive documents, including receipts, bank statements, financial reports, and other records, via a secure online portal rather than sending paperwork through the mail.

    Benefits of Starting a Virtual Accounting Firm

    While offering virtual accounting services isn’t for everyone, it does come with several benefits.

    Low Overhead Costs

    Renting, furnishing, and maintaining office space is expensive. As a virtual accountant, you can cut costs by working from home. While you might need to invest more into technology and security than a brick-and-mortar office, it’s typically cost-effective to forego traditional office space and the monthly expenses that come with it.

    No Commute

    Depending on where you live, commuting can take hours of your day. As a virtual accountant, you can work from home, in a hotel room, coworking space, or coffee shop. Your office is wherever you are, so you don’t waste hours of your day commuting to the office or driving to a client’s office.

    Low Startup Costs

    Virtual accounting firms are much less expensive to start than local accountant offices. According to Starter Story, the average startup cost for an accounting firm is $19,815, but that includes a lot of expenses that virtual bookkeeping offices don’t need to worry about, such as renting, building, decorating, or furnishing an office space.

    Step by Step Business states the average expenses for online accounting firms include:

    • Setting up a business name and incorporating: $175
    • Business licenses and permits: $200
    • Insurance: $200
    • Website setup, domain name, and hosting: $2,000
    • Initial marketing: $750
    • Computer hardware and software: $1,750

    The total startup costs for virtual bookkeeping are a fraction of the costs of setting up a brick-and-mortar business.

    Larger Client Base

    Before cloud-based accounting software and collaboration tools, accountants were generally limited to working with small business owners in their geographical area. While working with small businesses in other locations was possible, it typically meant sending files back and forth via mail or courier service—a time-consuming process that exposed client data to theft.

    As a virtual accountant, you can work with companies anywhere—all you need is internet access and the right software to quickly and securely serve small and medium-sized businesses worldwide.

    How Much Does a Virtual Accountant Make?

    How much you can make as a virtual accountant depends on your services and how you charge for them.

    According to Thumbtack, accountants charge $30 to $300 per hour, depending on the services they offer and the size of the businesses they serve.

    However, the accounting profession is moving away from charging by the hour in favor of subscription pricing. For example, you might bundle monthly bookkeeping and annual tax services and charge anywhere from $250 to $1,000 per month, depending on the number of bank accounts or transactions a client has each month. Adding on higher value CFO services, advisory services, budgeting, and cash flow planning might allow you to earn even more.

    How to Become a Virtual Accountant

    If you’re ready to start, here are the steps to set up your online business. Of course, legal and licensing requirements vary, so discuss your plans with your attorney or advisor.

    1. Identify your niche and the services you’ll offer. Who do you want to work with, and what services will you offer? You might want to start by providing a few services to a specific niche of clients and expand your offerings once you’re established.
    2. Set up your business. Select a business name and legal structure, register your business with the state or local government authorities, and apply for any necessary business licenses.
    3. Invest in technology. At a minimum, you’ll need a laptop or desktop computer, cloud accounting software, and a secure portal for sending and receiving documents and financial reports. Collaboration tools like Zoom or Microsoft Teams allow you to have “face-to-face meetings” with remote clients. As your business grows, you may want to subscribe to tools that help you book appointments, manage projects, run payroll, time tracking, and more.
    4. Market your services. Every small business needs marketing to make itself known, and there are many ways to approach it. Here are a few to consider:
      • Share your expertise and engage with prospects on social media
      • Work on your website’s SEO to help you show up in online services
      • Consider online advertising on search engines or social media networks
      • Join online and offline networking organizations to build connections
      • Attend small business trade shows and conferences
      • Ask family and friends for referrals
    FreshBooks certification for accounting professionals

    Overcoming the Challenges of Becoming a Virtual Accountant

    Running a virtual business might be more common than it used to be, but it still comes with challenges. For example, you might work with small business owners in different time zones, which means you’re fielding emails in the early morning or late evening hours.

    Working virtually can make it tough to separate your work and personal life because your office is always with you. Or, if you’re used to having coworkers, going out on your own can get lonely.

    The good news is that many virtual accountants have learned to overcome these challenges. That’s why connecting with a network of peers like with the FreshBooks Accounting Partner Program is essential. When you get advice and best practices from other virtual accountants who have “been there, done that,” starting and growing your virtual accounting firm will be smooth sailing.

    Janet Berry-Johnson

    Written by Janet Berry-Johnson, CPA and Freelance Contributor

    Posted on July 11, 2022