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What is Online Bookkeeping?

Article Details
  • Written By: Jim B.
  • Edited By: Melissa Wiley
  • Last Modified Date: 16 April 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Online bookkeeping occurs when an individual keeps his financial records using a website that specializes in the service. This service may be offered free or for a small fee, and it can include tax preparation as well as basic bookkeeping features. These basic bookkeeping features include tracking of invoices, receipts, and payments made and received, allowing the individual to see all the money that is coming into and going out of an account. The people who choose online bookkeeping often work independently or own small businesses that don't require intricate financial record-keeping.

Keeping financial records is a necessary function that must be performed by both the biggest businesses employing hundreds and individuals who have a relatively small amount of financial transactions to track. Many people perform the service themselves, or they employ financial professionals who handle it for them. In the Internet age, companies and websites devoted to online bookkeeping services have sprung up. These services can take some of the responsibility of expense tracking from individuals and do so in a more cost-effective way than professional bookkeepers.

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Individuals should do the proper research to determine which website is the right fit for their online bookkeeping needs. First of all, the website should be reputable because the individual has to trust this site with important financial information. The individual should also decide what type of services she needs and how much she wants to spend on those services. If her needs are too complicated for an online application, a professional bookkeeping firm might be worth the extra cost.

Most online bookkeeping services offer the basics of bookkeeping. They can track all payments made from an account as well as all payments received. If the individual is an independent contractor of some kind or works in a freelance capacity, the sites can also track invoices. Depending on the site's capabilities and the amount paid by the individual, he also might be able to have his yearly taxes computed by the site as well.

It is important to note just what each site requires before an individual decides to proceed with online bookkeeping. For example, some sites may offer their services free up to a point, after which they start to charge. Some sites may base this on the number of transactions per month or per year that they are required to track. In addition, most sites require the individual to do some simple data entry to allow for the bookkeeping application to take place.

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