How to Start a Thriving Virtual Accounting Firm

A thriving virtual accounting firm is built on good clients, capable accounting staff, and everything in between.

For instance, the exodus of 300,000 accountants from the profession has increased the pressure on available talent, causing accountants to change jobs, while accounting firms struggle to retain their team.

The Big Question is: How do you make your firm different so that accounting talents and clients will stay with you long enough to build a scalable firm?

Casey recommends building trust, flexibility, accountability, and client convenience into your work systems and processes.

Although virtual accounting offers flexibility, if you’re not intentional about it, you can repeat the mistakes of the old traditional accounting system, which will cost you your team and clients.

In this article, we examine ideas and best practices that have helped firm owners like Casey Haynes, CPA, Nayo Carter-Gray, EA, and Blake Oliver, CPA, scale their virtual accounting firms to help you replicate their success and avoid common mistakes.

What is a Virtual Accounting Firm?

A virtual accounting firm is everything a traditional accounting firm is, only that client services are delivered remotely, instead of requiring your staff (and clients) to come to a physical office.

It relies on accounting technology to manage every aspect of team, client, and workflow coordination, saving your staff and clients the need to commute to a brick-and-mortar office every day.

Why Go Virtual? Key Benefits

a. Reduced overhead and office costs

Virtual accounting doesn’t require an office space, which reduces their operational expenses on office rent, utility, and stationery.

This enables virtual accounting firms to reallocate resources to items that directly translate to growing their firm, such as technology, marketing, or expanded service offerings.

b. Access to clients outside your geographic area

Taking your firm online enables you to replicate your physical office space online. Only that, instead of traveling across the city, clients can now interact, share documents, and discuss their projects with your team from the comfort of their bedroom.

With cloud-based technology, you can serve clients outside of your physical location, which also allows you to provide services that clients in your immediate physical environment do not need.

c. Ability to hire remote talent

With the accounting talent shortage in the U.S., virtual accounting allows you to hire team members from anywhere in the world, which includes hiring specialized accounting experts that typically wouldn’t be available to come into your physical office.

This is why more and more accounting firms are now relying on accounting talent from places like India, the Philippines, and Latin America to take pressure off their in-house teams, which helps their in-house teams to focus on high-value work.

d. Flexibility for both the team and clients

While traditional accounting forces everyone in your team to work at specific hours of the day, virtual accounting enables them to work whenever they want to work, provided they meet their deliverables.

The same applies to busy clients, who may not be able to drive to your office to drop off documents during business hours.

With virtual accounting, clients can access your firm’s client portal to share the files and information you need or ask questions anytime and from anywhere, making their lives easier and more convenient.

e. Cloud-based tools enabling real-time collaboration

Files and information-sharing are the most important requirements of running a service-based business like an accounting firm.

Cloud-based solutions like Financial Cents and QuickBooks Online make that easier by ensuring that your staff and clients can share data in real-time, allowing your virtual team members to work simultaneously on financial reports, tax filings, or any other project.

Differences between a traditional and virtual accounting firm

• Team, Work, and Client Management

Traditional accounting firms operate from one physical location, rented and maintained by the firm. Staff members go to the office to get work done, and clients visit the office to provide required files, sign documents, and collaborate with your team.

In-office client meetings help to build stronger personal relationships, but the cost (in terms of the client’s time and inconvenience) may not be worth it.

After all, clients are not necessarily looking to be your best friends, according to Casey Haynes.

Virtual accounting firms operate online, usually in an accounting practice management software solution, where team members can complete their tasks, communicate, and collaborate from different cities and countries. This saves them the time and money spent commuting to work.

Client collaboration is more flexible as clients, especially busy clients, can interact with your team via digital channels, making it easier for them to provide necessary files and information even outside of standard business hours.

• Technology and Tools

Traditional accounting firms primarily combine desktop-based software (such as QuickBooks Desktop) with paper-based systems in their day-to-day operation. Access to these systems requires team members’ presence in the office. This slows down accounting workflows.

Usually, client information is stored in spreadsheets and paper-based systems that must also be accessed on-site, making information retrieval difficult and time-consuming.

Virtual accounting firms rely on cloud-based software that allows remote access and collaboration via instant messaging, video conferencing, digital file-sharing, and client portals. Virtual accounting tools use advanced data security technology to protect client data.

Client information is centralized in the client profile for Financial Cents users, allowing team members to find the file and information they need to complete their tasks.

• Cost Structure

Running a traditional accounting firm is more expensive in terms of operational expenses, resulting from office rent, utilities, and facility management.

As you can imagine, these firms spend a significant portion of their revenue on operating expenses. They are more likely to price their services higher and make less profit compared to their virtual counterparts.

In a virtual accounting firm, there’s no physical office to maintain, so rent, utilities, and other overhead costs are nonexistent.

This increases their profit margin and ability to reinvest in tools that improve client acquisition, service, and relationships.

• Scalability and Adaptability

Scaling a traditional accounting firm means doubling down on operational costs by making more space in the offices or opening new locations to accommodate new hires, recruiting more local talent (which is getting more difficult), and providing more stationery.

This makes them less adaptable to sudden changes in client demands or workload.

Virtual accounting firms are easily scalable. All you need to do is hire more remote staff (who are more available) and focus on settling them into your systems, processes, and best practices.

How to Know You’re Ready to Go Virtual

• Strong Adoption of Cloud-Based Tools:

Many traditional, brick-and-mortar firms already operate cloud-based accounting systems. If you’re one of those, you are more ready for remote work than you may think.

So, how do you know you’re one of them?

If you already record and report your clients’ finances in cloud accounting software (such as QuickBooks Online and Xero), communicate with your team and clients with digital tools (Slack, Zoom, client portals, etc.), and manage projects in accounting project management software like Financial Cents, your tech stack is already there. That’s more than half the requirements for a virtual accounting operation.

• Client Demand for Flexible, Remote Services

A good number of accounting clients likely already use digital work and communication tools (for video calls, chats, E-signature, and file-sharing) and would want to maintain that same level of convenience and remote access in their engagement with their accountant.

If your clients, who are arguably the most important component of your firm, want it, it only makes sense to make the switch to retain them.

You may be interested in: Can accountants work from home? Here’s how.

Five (5) Things You Need to Start a Thriving Virtual Accounting Firm:

I. Standardize Your Systems and Processes

Having standard systems and processes for work gives your team members the confidence to complete their tasks efficiently and repeatably.

Standardizing your processing requires outlining the steps needed to complete each process so that any team member assigned the tasks will know what to do at each point, reducing confusion and increasing overall team productivity.

This is easier to do with an accounting workflow management tool like Financial Cents, where you’ll get pre-built workflow checklists for your accounting processes. All you have to do is customize the checklist templates to suit your unique procedures, and you’ll be good to go.

II. Get the Right Tech

Your tech stack should cover every function your firm performs, which, at a minimum, includes general ledger software, a project management tool, a secure file-sharing platform, and a communication app.

When combined well, these tools enable real-time access to work information, streamline workflows, and automate manual tasks to improve accuracy, productivity, and efficiency at scale.

III. Hire the Right People

Skills and cultural fit are crucial factors to consider when hiring for your virtual accounting firm.

Unlike traditional accounting, where team members get motivated to work just by being in the office, remote work requires more self-motivation and the ability to work independently. Otherwise, the absence of in-person supervision can affect your staff’s productivity.

Your staff should also be proficient in technology to navigate the apps they’ll use for their daily work. Prioritize candidates with not just the accounting expertise, but also the experience using digital tools to work remotely.

IV. Create A Solid Marketing and Sales Strategy

Virtual accounting allows you to serve clients on a global scale, but you need a strong digital presence to find the right clients for you.

To achieve that, you need a strong digital presence to appeal to clients in the places you want to serve, and that starts by creating a professional website and social media accounts that tell potential clients about your expertise, services, and why they should work with you.

This doesn’t discount the importance of online and physical networking events. The idea is to understand where your ideal clients spend their time and channel your marketing and sales messages there.

While at it, use clear messaging that explains your value proposition in a way that helps clients achieve their goals and address their pain points.

V. Build an Aligned Team

Employee engagement motivates your team members to take care of your clients, and employee engagement results from quality team building.

While technology can help build better relationships through events like virtual happy hour, your team members will always want that in-person human connection. That is why Casey Haynes recommends building team retreats and getaways into your remote work culture.

You may be interested in: Virtual Accounting: 5 Ways to Set Up Processes that Work.

The Step-by-Step Process of Building a Thriving Virtual Accounting Firm:

Step 1: Lay the Groundwork

The difference between a successful and a struggling business is clarity. How well do you know who you serve? What services do you offer? How do you price them?

The answers to these questions will form the basis of your positioning and determine how you’ll make your hiring decisions, execute your marketing ideas, and most other things you’ll do in your virtual accounting firm.

Once you’re clear on the kind of business you want to run, you can articulate it in a document and include everything you’ll need to get to the level of success you desire. This is where business plans help, but don’t overthink it. Write your imperfect ideas and strategies and refine them as you go.

Step 2: Register Your Business

Register your business with the relevant agency. Choose your preferred business structure, secure your tax IDs/EIN, and set up a business bank account (and insurance).

In choosing a business name, we’ve found that many firms struggle to get one that is professional, memorable, and captures the essence of their business.

That is why we created the Accounting Business Name Generator tool to help accounting, bookkeeping and tax firms find a name that is not unique to their niche, style, and brand, but also gives them more visibility online.

This tool works by asking you a few questions about your firm to understand the ideas driving your business and recommend a name that you’ll be proud of even after decades. Plus, you can generate as many names as you want to increase your options. We also have over 1200 accounting firm name ideas to inspire yours today.

Step 3: Create Processes for Common Tasks

There’s no thriving virtual accounting without repeatable workflows to help their team deliver consistent work quality while maintaining efficiency in a remote environment.

Identify the tasks your remote team will be handling and create checklists that capture the standard procedures (SOPs) for completing them. This includes everything your firm does. Payroll, month-end close, tax returns, and client onboarding. You name it!

This process is easier with the prebuilt templates in your workflow management software. With Financial Cents, you don’t have to brainstorm the steps in your process from scratch. You have checklist templates created for standard accounting workflows that you can customize to suit your unique procedures.

This is important for distributed teams, where it is easier for team members to execute assigned tasks in ways that make client service and experience unpredictable.

Step 4: Build Your Virtual Tech Stack

Since technology holds virtual accounting firms together, the quality of your tech stack can determine the quality of work and client experience your team will deliver.

List out all your firm’s functions (E-signature, client communication, task management, billing, etc.) and choose the software to handle them. While at it, prioritize tools that integrate with the other tools in your tech stack so your team won’t spend hours every week managing the tools individually and making costly errors that delay and compromise client service.

You can go one better. Get your team to perform as many of your firm’s functions as possible in one software solution. It’ll make your firm more accurate, efficient, and profitable.

That is why we recommend all-in-one accounting practice management software all day, every day. A solution like Financial Cents gives you one place to manage your workflows, organize client information, measure (and balance) team capacity, and bill clients, among other functions.

These all-in-one tools reduce friction, improve data security, eliminate manual data entry, automate repetitive tasks, and centralize internal (team) and external (client) collaboration.

Read more about building a suitable tech stack in this article.

Step 5: Build a Client Acquisition Strategy

A client acquisition strategy defines how you’ll add clients to your firm, and the first step to doing that successfully is defining your ideal client profile (ICP).

Knowing your ideal client will help you optimize your marketing and sales process for that client type, which enables you to tell them what they need to know to know, like, and trust you.

With a clear ICP, figure out where to meet them and what to say to them. This is where you determine whether organic marketing, paid, or a combination of both will be most effective for your ideal clients.

Step 6: Create a Remote Work Culture & Workflow

Most virtual accounting firms fail due to a lack of processes and structure. A good remote work culture and workflow system clarifies task order priority, establishes communication systems, and keeps the distributed team engaged, productive, and accountable.

These steps will help you build a working remote work culture and workflow:

• Create a structured staff onboarding template to help you settle new team members into your systems and processes.
• Assign every task to give your team members a sense of ownership and hold them accountable without micromanagement.
• Promote work-life balance and team socials to champion a sense of belonging, inclusiveness, and job satisfaction in your virtual accounting firm.

According to Casey Haynes,

• Encourage open communication, which makes employees feel seen, heard, and valued. Organize team building activities, including monthly, quarterly, or annual retreats and social events such as accounting conferences, that help your team bond together (Working remotely can get lonely).
• You should also encourage them to learn and acquire new knowledge to grow in the job. They can do that by taking courses online. We created a list of the free online accounting courses with certificates, as well as the best free and paid online bookkeeping courses, you can look through and see if there’s any they may be interested in.

Step 7: Set Up Systems for Scalability

You might be doing well today, but do your workflows, team size, and tech stack support growth? Can you comfortably add clients and service lines without overwhelming your existing resources, or how quickly can you adjust to meet growing demand?

While you shouldn’t hire more staff than you need, you should keep your eyes on your team’s capacity and workflow processes to ensure your service quality stays consistent as you add more clients and workload.

Build a capacity model that determines the maximum clients or hours each employee can handle. This is easy with tools like the Financial Cents’ capacity limit. It’ll help you to identify which employee is overworking and enable you to prevent team burnout.

For example, Shannon Theis uses the Financial Cents capacity management feature to track team members’ hours. Once everyone is consistently doing 28 hours of work every week, she knows it’s time to hire more hands.

Another way to set up scalable systems is by using automation. Automating manual tasks (like recurring projects, client data collection, etc.) frees your team members up to take on more work, enabling your firm to grow revenue faster than headcount.

Step 8: Set Expectations with Staff and Clients

Establish clear guidelines for your engagement with clients to prevent misunderstandings and resentment over unmet expectations.

In your engagement letters and service-level agreements (SLAs), clarify your deliverable calendars, response time, performance metrics, and communication protocols for your clients.

You also need an internal policy that guides your team on how to treat and communicate with clients to make them feel seen and valued.

Step 9: Make client satisfaction front and center

If client satisfaction seems expensive, remember the cost of client churn, negative reviews, and getting a new one.

The first step to making your clients front and center of your firm (after an efficient onboarding process) is to prioritize exceptional client services and experiences. Client satisfaction builds loyalty, drives referrals, and differentiates your firm in a competitive market.

Another way to ensure continuous client satisfaction is by creating regular feedback loops (onboarding surveys, periodic check-ins, quarterly reviews) to measure what’s working and what needs improvement. By so doing, you’re more likely to satisfy and upsell your existing clients.

Common Mistakes to Avoid

• Not Defining Your Niche Early

Virtual firms struggle to stand out from the crowd when they fail to specialize in a specific industry or service area.

That is because each industry or area of service has unique financial reporting and regulatory needs that require a slightly different application of accounting expertise.

For example, it is harder to convince construction businesses that you can serve them in much the same way you serve restaurants, software as a service (SaaS), and non-profit organizations.

Unlike Zane Stevens, CA, it will be significantly harder to speak to their unique needs in your marketing and sales efforts, to start with.

To define your niche, identify industries (or service areas) that are in high demand, align with your accounting expertise, and generate enough revenues to keep you profitable. Build your sales and marketing messages around them and create standard operating procedures that ensure quality service delivery and client experiences.

• Using Too Many Disconnected Tools

Technology is the backbone of virtual accounting, but like everything else in life, too much of it can become counterproductive.

Were you to have separate tools for each of your firm’s functions (workflow, client communication, E-signature, document management, time tracking, email, etc.), your financial resources would be stretched too thin paying for all these apps. But that’s not all.

Your staff will spend more time than necessary shuttling between these tools (to access data or perform tasks) for their focus and productivity.

The manual work of transferring data between the various tools will also waste their time and increase the chances of errors, especially during the accounting busy season when a 24-hour day seems insufficient for accountants.

App integration offers a good solution, but most virtual firm owners have found that using an all-in-one practice management software that has as many of these tools as possible saves their team the stress of managing the apps, which can waste the time they’re trying to save.

By bringing everything into one place, accounting practice management software helps your virtual team focus on delivering client services and managing client relationships.

• Neglecting Cybersecurity or Compliance

Data security is everything in virtual accounting, and moving your firm online can feel like you’re exposing your work and client information to cybersecurity threats. Plus, non-compliance with data security regulations attracts financial penalties and damage to reputation.

That is why you should invest in advanced cybersecurity measures that provide encryption technology, multi-factor authentication, and secure cloud platforms.

For example, Financial Cents uses two-factor authentication to block unauthorized access, AES-256 and AES-128 encryption to protect all stored files, and Message Authentication Code (MAC) to prevent files from being modified once encrypted, among other security measures.

Your staff’s security awareness also matters. Train your staff on data security best practices. Implementing a WISP template can also go a long way. You can also partner with cybersecurity experts to conduct regular security audits to keep you updated on evolving threats.

• Overpromising Without the Capacity to Deliver

This does not only apply to virtual accounting, but to all kinds of businesses.

Overpromising is good for the moment, but bad for your long-term growth. Taking on more clients without the team and systems to deliver as promised, you’ll risk overworking your team and damaging your firm’s reputation in the long term.

Always assess your team’s expertise and workload capacity to set realistic client expectations using clear service-level agreements (SLA).

This gives you a better chance of delivering quality results consistently and keeping your clients satisfied in the long term.

• Trying to Grow without Documented Processes

Until you document a checklist for completing each of your firm’s tasks, growth will only cause you, your team, and your clients more problems.

Every staff member you add will use their unique procedures for completing these tasks, which will lead to inconsistent client services and experience at best. It gets worse.

Your team members will waste valuable time second-guessing themselves, and client onboarding will be inefficient, which could leave clients feeling unimpressed. Your team will also deliver work they are not proud of, which will disrupt growth.

Documenting your processes requires creating detailed SOPs for all core tasks (client onboarding, tax filing, bookkeeping, month-end, etc.) so that whoever is assigned any of the tasks knows exactly what to do at each stage of the work.

This makes it easy to add more clients and service lines and grow your virtual accounting firm.

Bonus:

Join a community of like-minded owners for support and learning

Running a virtual firm in isolation is limiting. It denies you access to the insights and resources you’ll need to address client, workflow, and team management challenges down the road.

That is why we encourage accounting firm owners to join our Facebook user group, where accounting firm owners share strategies, tools, and experiences that you might need sooner than you think.

The Financial Cents’ Firm Founders group allows you to not only understand how to make the most of Financial Cents practice management features, but also to participate in discussions that keep you informed on virtual accounting trends, innovation, and changing client demands.

Build A Strong Virtual Accounting Firm with Financial Cents’ Practice Management Features

Going virtual may feel risky and unnerving, but staying traditional is worse. Most accounting clients and professionals already want the flexibility it affords them. More accountants are leaving their jobs due to a lack of remote work.

All you need to do is combine standardized processes, reliable technology, and a positive workplace culture to create a scalable and client-focused firm that will not only get your ideal clients and team members but also retain them for the long haul.

You don’t need to overhaul everything overnight. Start where you are, and that might be taking one process or client entirely remote this week.

Get an all-in-one practice management software to centralize your work, client relationship management, and team information and integrate your project management needs in one place.

Casey Haynes, CPA, Nayo Carter-Gray, EA, and Black Oliver, CPA, have all built thriving virtual accounting firms using Financial Cents to organize client information, streamline workflows, automate manual tasks, and support overall firm growth.

Consider Christi!

Christi’s accounting practice, like most businesses, had to shut its office at two different times during the COVID-19 pandemic.

With Financial Cents, the team transitioned to virtual accounting operations without disrupting workflows.

An excited Christi said, “Financial Cents holds not just my brain and not just my to-do list, but everybody on my team. I have everything I need right at my fingertips with absolutely zero transition time.”

“If there’s one piece of software outside of my tax software and QuickBooks that I could not live without, it’s Financial Cents,” she added.

Click here to manage your remote firm with the Financial Cents accounting practice management solution.