7 Best Online Bookkeeping Services for Small Businesses
Tired of feeling disorganized around tax time? Or feel like you might be spending too much time on finance-related tasks?
Scrambling at the last second to gather documents for tax season is stressful, and rushing bookkeeping-related tasks can make you vulnerable to compliance issues and missed growth opportunities. Thankfully, online bookkeeping services have lowered the financial barrier to getting bookkeeping and tax-related help.
So, if you’re looking for bookkeeping help, this guide will introduce you to what exactly online bookkeeping services offer, the best seven solutions for small businesses, and what to consider when choosing the best virtual bookkeeping services for you.
- Online bookkeeping services can be a useful, affordable option for businesses, acting as a middle ground between hiring an bookkeeper and doing it yourself
- There are many options out there for online bookkeeping services, but not all may offer the features you might need
- Using online bookkeeping can free you up to spend more time on your own business—provided you choose the right one for your business
Here’s What We’ll Cover:
What Are Online Bookkeeping Services?
Online bookkeeping services typically give you a dedicated bookkeeper or team of financial experts to help you with basic bookkeeping tasks. A bookkeeper’s main responsibility is maintaining accurate financial records.
Bookkeeping is an unavoidable part of having a business because the IRS has certain rules around financial recordkeeping. Aside from staying compliant, having organized books helps you monitor the health of your business, prepare for tax time, and prepare key financial statements.
Save Money With Online Bookkeeping Services
Online bookkeeping services, also called virtual bookkeeping services, are a very affordable alternative to the traditional employee bookkeeper. To put this in perspective, a bookkeeper’s average salary is $44,527. On the other hand, most online bookkeeping services start at the $200-$400 per month range, with more advanced solutions in the $600-$800 range still being significantly cheaper than hiring a bookkeeping employee.
What to Expect From Online Bookkeeping Services
Every online bookkeeping service will offer a mixture of different features ranging from basic to advanced. As a result, a suite of features from one service will appeal more to very small businesses, while an entirely other set of features from another service might appeal to larger small businesses. That’s why there’s no standard one-size-fits-all solution.
Some of the common features to expect from an online bookkeeping service include:
- Payroll services
- Uses popular accounting software such as FreshBooks
- Dedicated virtual bookkeepers
- Monthly reconciliation of bank statements
- Accounts receivable and accounts payable
- Keeping your books balanced
- Quarterly and monthly reporting
- Tax services
- Billing and invoicing support
- Financial tracking
- Data entry
- Software training
Best Online Bookkeeping Services for Small Businesses
The solutions on our list start as low as $190 a month for basic bookkeeping help to around $350+ for more comprehensive solutions. Let’s review all six online services:
- Merritt Bookkeeping
FreshBooks’ online bookkeeping services help you protect your profits, save you time, and grow your business. In collaboration with Bench.co (more on them later), we offer expert virtual bookkeeping systems and tax services support. The two platforms work together seamlessly, allowing you to effortlessly bill and invoice with FreshBooks, and automatically see that income reflected in your bookkeeping.
In addition to being one of the best online bookkeeping services around, FreshBooks offers 100% compliant tax preparation, taking the stress out of this important but time-consuming process.
Other features of FreshBooks’ online bookkeeping services include:
- Dedicated virtual bookkeepers
- Seamless, efficient workflows between various features
- Clear, on-demand reporting on your business financial health
- The FreshBooks Accounting Partner Program, allows accountants, bookkeepers, and tax experts to work more efficiently with clients
- Monthly organized transaction reports
- Monthly financial statements
- Catch-up bookkeeping services to help you get your finances up-to-date
- Retro bookkeeping services, allow you to access 2+ years of historical bookkeeping, IRS correspondence, unfiled back taxes, and more
- Year-round tax services, including advisory and filing
- Seamless integration with more than 100 apps and add-on services
Because every client and their needs vary so widely, we provide flexible, unique pricing for every client. Get in touch with one of our specialists today to get your quote or click here to get started.
Bench is a popular small business choice because it’s an affordable bookkeeping service with an intuitive, easy-to-use platform. Bench gives you at-a-glance visual reports, which provide you with actionable insight that’ll help grow your small business. Another bonus is that you get to communicate with your bookkeeping service team via chat easily. In addition, Bench has raving online reviews and many integration options.
A downside of Bench is that it specializes in cash-basis accounting, although there is a custom accrual accounting plan on the Pro plan.
- Monthly financial statements
- Powerful financial reporting
- Tax filings and tax preparation if you’re a sole proprietor. Tax filing services are available as add-on services if you’re not a sole proprietor
- One-on-one support with an assigned professional bookkeeper and tax expert
- Bookkeeper organizes business transactions.
- Connect with most payroll platforms on the Flex and Pro plan. If you’re on the Core plan, you can only connect to Gusto.
- Connects with most major payment processors on the Flex and Pro plan. If you’re on the Core plan, you can still connect with FreshBooks, PayPal, Stripe, and a few others.
- Backed up on your books? Get historical bookkeeping as an optional add-on. You can use this feature even if you’re years behind.
- Real-time accounting when you use LendingClub.
- Connect to non-LendingClub bank accounts, credit cards, and debit cards with the Flex and Pro plan.
- Year-End Financial Package which includes a Profit & Loss Statement, Balance Sheet, Trial Balance, Journal Entry Summary, and General Ledger
- Mobile app on the go
- Pay As You Go – Essential Plan: $349/month billed monthly
- Essential Plan: $299 monthly or $249/month if you commit to a year
- Premium: $499 monthly or $399/month if you commit to a year
Bench offers a free trial for each plan that includes one prior month of bookkeeping, and whether you choose to continue using Bench or not, you get to keep the income statement and balance sheet for that month.
Bookkeeper is one of the pricier business bookkeeping services on our list, but it comes with many possible add-on services. If you’re looking for a bookkeeping solution you can stick with for the long run, Bookkeeper has most bookkeeping features you could possibly want as an add-on. Possible add-ons include payroll services, individual and business tax returns, and financial performance reporting with key performance indicators.
- Dedicated bookkeeper and dedicated account manager
- Monthly bank reconciliation
- Monthly statements, including the statement of cash flows
- Cash and accrual accounting
- Unlimited support on the Small Business Plus plan and above. Limited support on the Small Business plan.
- 30-minute-monthly scheduled meeting on the Small Business Plus plan and 45 minutes on the Small Business Advanced Plan. Custom on the Custom Plan.
- Lite Virtual Chief Financial Officer services on the Small Business Plus plan and above.
- Historical bookkeeping add-on
- Small Business: $449/month up to 100 transactions per month
- Small Business Plus: $649/month up to 200 transactions per month
- Small Business Advanced: $849/month up to 300 transactions per month
- Custom pricing
Sunrise, by Lendio, used to be called Billy until it was acquired. It’s known for its easy-to-use interface and its simplification of accounting jargon. Sunrise is a good bookkeeping services solution for sole proprietors and freelancers without employees, and it’s good for invoicing customers, income and expense tracking, and basic reporting capabilities.
However, if you want more advanced reporting and a more robust mobile experience, you’re better off looking at other solutions on this list. Billy/Sunrise also got some bad reps for its choices regarding customer loyalty when it was acquired.
- Monthly financial statements
- Monthly financial reporting
- Personal bookkeeper
- One-on-one support
- Expense tracking
- Bank reconciliation
- Access to tools to simplify tax preparation for your annual filing
- Early plan: $149 up to 120 monthly transactions
- Growing plan: $299/month up to 200 monthly transactions
- Corporate plan: $499/month up to 500 monthly transactions
Pilot offers a large set of basic bookkeeping and accounting services and features, including access to a chart of accounts and financial statements, but many services and features are only available as add-on services or only through the custom plan. For businesses with over $200,000 of monthly expenses, this might offer the type of customization you’d need. Some additional services you may have access to include inventory tracking, BillPay, CFO services, and tax services.
A downside of Pilot is that the main way to communicate with finance experts is via email, which can make it harder to get quick replies. They are available through the phone in most circumstances, though. You also can’t pay on a month-to-month basis, unlike a few others on our list.
- Dedicated finance expert on all plans
- Accrual basis bookkeeping
- Financial statements
- Automatic transactions import
- Payroll and balance sheet reconciliation
- Burn rate calculations
On the Core plan and above, you get:
- Expedited books delivery
- Monthly phone reviews
- Priority support
- Core: $599-$899 per month with annual billing
- Select: $849-$1149 per month with annual billing
- Plus: Custom pricing
For the core and select plan, prices increase gradually as a business’s monthly expenses increase. Businesses with over $200,000 in monthly expenses will need a custom plan. The following transactions are included in total expenses: payroll, COGS, and distributions.
Merritt Bookkeeping has the most competitive pricing on our list and is the only one to offer a flat rate for all types of businesses. Unfortunately, if flexibility is what you’re looking for, Merritt Bookkeeping may not be for you since you can only import data from QuickBooks Online. If you’re looking for something very cheap and simple and your business is in its very early stages, the affordability of Merritt Bookkeeping makes it a good choice.
- Historical/catch-up bookkeeping add-on to make your books current
- Issues 1099s
- Automatic statement retrieval from your bank accounts
- Easy-to-use interface
- Monthly financial report
- Connects with your QuickBooks Online account
- Flat rate of $190/month
- 90-day money-back guarantee
InDinero is known for being a scalable bookkeeping solution for small business owners, so if the ability to stay with one service as you grow is important for you, then InDinero would be one of the best online bookkeeping services to consider along with Bench.
Although InDinero offers scalable plans, they’re not very transparent about what exactly they include in each plan until you talk to a salesperson. Unfortunately, InDinero doesn’t have many integration options, but if you already use the software they integrate with, it’s a very robust solution.
- Dedicated bookkeeping team
- On the Essential plan, you have access to cash-basis accounting software
- On the Growth plan, controllers manage accrual accounting for you
The following features are customized to your needs after talking to a salesperson:
- Monthly reconciliation of bank statements
- Payroll services
- Monthly financial reports
- Accounts receivable/ Accounts payable processing and reporting
- Employee reimbursements
- Cash flow statement and forecast
- Revenue recognition
- Some inventory management services
- Essential: Starting at $300/month
- Growth: Starting at $900/month
- Executive: Custom pricing
InDinero offers monthly, quarterly, and annual pricing but differs from the rest on our list because you have to talk to a salesperson to get an actual price.
Spend More Time on Your Main Business
When your business is still growing, bookkeeping isn’t such a cumbersome task. But as the business gets larger, it can start to become a very time-consuming job. When deciding whether to use online bookkeeping services, it’s best to consider the amount of time (and therefore, the amount of money) that you’ll save with accounting software and a dedicated bookkeeper.
Virtual bookkeeping services can also save you money through tax preparation services and tax filing, providing peace of mind that you’re 100% compliant with all tax rules.
How often are you looking at your total current income and total current expenses? If it’s only once a year, you’re not alone. Leveraging bookkeeping services allows you to look at your income and expenses in real-time frequently. Having access to robust reports and financial statements allows you to make better decisions for your business leading to an increased ROI from investing in online bookkeeping services. Bookkeeping services can also help small business owners save more through tax preparation and tax filing.
How to Choose Your Online Bookkeeping Services
Here are some questions to ask yourself as you decide on the best accounting software and bookkeeping service solution for your small business:
Features: What features and services do you value most in an online bookkeeping service?
Budget: What’s your budget for bookkeeping services?
Scale: Do you want a scalable solution, or are you just happy choosing the best solution for this specific stage of your business?
Services: Are you looking for tax preparation, payroll services, a dedicated finance expert, or all of the above in one online accounting service?
Support: Are you willing to pay for more support but fewer features and services? Or more features and services but less support?
Transactions: How many monthly transactions does your business have? Will that increase significantly by the end of the week?
Catch-up: Do you need to do any catch-up bookkeeping? Are you months or years behind on your books?
Expenses: What are the totals of your monthly expenses?
It’s common for owners of small businesses to attempt bookkeeping on their own, but it’s easy for bookkeeping to become an afterthought until tax time approaches. Leaving taxes to the last second causes businesses to lose out on opportunities that come with frequent expense and revenue tracking, accurate balance sheets, accrual accounting, financial reports, and much more. Choosing the right bookkeeping services for your small business will also free up time for you to focus on your company, easing a lot of stress.
FAQs On Online Bookkeeping Services
More questions about accounting software, online tax and payroll services, or anything else to do with bookkeeping services? Here are a few frequently asked questions.
Is it worth paying a bookkeeper?
While there are certain scenarios where it makes sense to have a dedicated bookkeeper (or several) on your staff, this is typically reserved for very large companies. For the vast majority of businesses, the job of bookkeeping is too small for a department but too much for the owner.
How do I start virtual bookkeeping?
The first thing to do when beginning with bookkeeping services is to thoroughly research the many available options. There are countless features, price ranges, and functions for every service out there. Click here to see what FreshBooks’ free trial has to offer and get started today!
What are common bookkeeping mistakes?
The most common mistakes are mixing personal and business finances, leaving taxes to the last minute, missing out on deductions, and not retaining records for long enough.
For a full breakdown of the most common bookkeeping mistakes, read our article on the subject.
Can a bookkeeper do tax returns?
Typically, bookkeepers cannot file tax returns on behalf of other companies on their own. Bookkeepers will usually prepare relevant records and tax documents, and then forward this information to an accountant, who will then prepare the actual tax return.
What is the golden rule of bookkeeping?
There are several key rules of bookkeeping to keep in mind, but one of the most important is regarding debits and credits. The rule goes ‘debit the receiver, credit the giver’. In other words, debit is all incoming money, while credit is all outgoing money. This is often called the golden rule of bookkeeping.
Is a CPA the same as a bookkeeper?
No. A bookkeeper is not required to have any special certifications or education, while a Chartered Professional Accountant (CPA) is required to have completed a relevant certification in order to offer CPA services.
More Resources on Small Business Accounting
- How to Choose the Best Accounting Software for Your Small Business?
- How to Organize a Business in 5 Steps
About the author
Jason Ding is a seasoned accountant with over 15 years of progressive experience in senior finance and accounting across multiple industries. Jason holds a BBA from Simon Fraser University and is a designated CPA. Jason’s firm, Notion CPA, is an accounting firm with a business-first focus. The firm specializes in preparing personal and corporate taxation while providing fractional CFO work and leading the accounting and finance function for several small-to-medium-sized businesses. In his free time, you’ll find Jason on the basketball court, travelling, and spending quality time with family.