Do you want to know more about ecommerce bookkeeping services? You’ve come to the right place!
Any entrepreneur who wants to try their hand at a new and exciting business venture should consider opening an online store. If you have an online store, your products will be accessible to buyers from all over the world at any time of the day or night, throughout the entire year. You are able to reach a large number of people for a specific niche, drop-ship their orders, and do all of this while keeping a limited physical presence thanks to the World Wide Web.
Buying a domain name and hosting space for the website, in addition to establishing the online store itself, are all very significant stages to do in the process. Without careful budgeting and sound financial planning, though, your online store will struggle to succeed. When your brand-new online store is finally ready to welcome customers and has been made live on the internet, you will have a number of new responsibilities to take care of, including ensuring that your stock levels are adequate and keeping track of your business’s expenses.
The need to expand into new markets and locations with different compliance needs as your firm expands may complicate your eCommerce accounting, which is why you should think about contracting eCommerce bookkeeping services for your business.
“When you are establishing an accounting workflow for an e-commerce shop, there are a number of essential stages that you are required to perform.”
The process of keeping track of all of the money that enters and exits your company is referred to as bookkeeping. The management of an eCommerce is not drastically different from the management of a traditional brick-and-mortar store from the standpoint of bookkeeping and accounting procedures. Accounting for an online retail firm entails concentrating on your inventory and cash flow while relying on retail accounting software to assist you in filling in the gaps in your knowledge.
When you’re in the retail sector, your inventory is the cornerstone of your company, and practically everything you do is determined by how well it’s stocked. Because of this, a significant portion of the records and reports pertaining to your finances concentrate entirely on your stock.
Online businesses follow a pattern for bookkeeping and accounting that, at first glance, appears to be quite similar to the pattern used by other types of organizations. If you are familiar with the fundamentals of bookkeeping or have expertise in accounting gained from a previous job, you are well on your way to having a complete comprehension of this topic. You should be able to comprehend the essentials of retail bookkeeping even if you have no prior experience in this industry.
When you are establishing an accounting workflow for an e-commerce shop, there are a number of essential stages that you are required to perform. It’s possible that a streamlined version of this method could look something like this:
It is a good idea to make sure that you have a solid understanding of the fundamentals before beginning to calculate your revenue and costs with a calculator. The use of financial statements is the most effective way to begin.
For companies that do not engage in online commerce, if you notice a deposit of $220 in your bank account, you should report that amount as income. This is not some kind of advanced science. For eCommerce, it’s not nearly so simple.
It is not considered income if you get a deposit of $220 from Shopify, Amazon, or Walmart. It’s possible that it would result in $300 in revenue, $60 in returns, and $20 in merchant fees. It’s also possible that the $15 is the sales tax that the government says you owe them out of the total amount of $220. In other words, it’s complicated.
Utilizing technology that integrates with your online stores (such as Shopify), marketplaces (such as Amazon), payment processors (such as Paypal, Afterpay, or Stripe), or other apps can dramatically cut the number of errors you make and save you time when it comes to bookkeeping. When you tap into the potential of automation in this context, you will be able to extract the data immediately from your platforms and enter it into your books in real time.
Everyone will agree that knowing your gross profit, regardless of whether your retail business is online or not, is an essential statistic for establishing the health of your company, pinpointing the point at which you break even, and projecting your future profits. However, not everyone is aware that the components of this formula shift slightly when applied to enterprises engaged in e-commerce.
The calculation of the profit that is still in your possession after a transaction is what is meant to be represented by gross margin. The revenue minus the cost of goods sold, often known as COGS, is the key formula for calculating gross margin for traditional brick-and-mortar firms.
When running an eCommerce platform, it is important to take into consideration the variable expenses that are directly related with generating a transaction. These costs especially include merchant fees and the costs of shipping to customers.
There is a huge variety of financing solutions available for online retailers, including Shopify Capital, Stripe Capital, Amazon Lending, ClearCo, and Ondeck, to name just a few. The operation of these alternative forms of financing is distinct from that of conventional loans and frequently has an effect on the accounting and tax treatment.
For instance, a merchant cash advance obtained through Shopify Capital ought to be dealt with in a manner that is distinct from that of a conventional loan. It is essential to look for a solution for your bookkeeping needs that is aware of these subtleties.
The collection and reporting of sales tax is among the trickiest challenges faced by eCommerce sellers. Either having a “physical presence” in a state (such as an office, warehouse, or employees) or having a “economic nexus” in a state (such as selling a particular amount in that state) might result in the imposition of sales tax.
The collection and reporting of sales tax can be a significant burden on eCommerce businesses that target customers in all 50 states. Make sure that your bookkeeper or accountant is familiar with the intricacies of sales tax nexus as well as the methods for managing the obligations for compliance.
A good bookkeeper will ensure that all of your financial records are up to date, that all of your transactions are correctly categorized, and that they give out financial reports in a timely manner.
The average hourly rate for a bookkeeper ranges from $10 – $40 USD per hour.
When it comes to employing a bookkeeper, you have three options: you can engage one in-house as a full-time employee, you can utilize a freelance bookkeeper, or you can work with a bookkeeping service that is provided by a third party.
You should avoid making an investment in a bookkeeping system that is not tailored to meet the requirements of your eCommerce business. When it comes to selecting eCommerce bookkeeping services, what are the most significant considerations to make?
There’s a good probability that you will sell products on several platforms at once given the constantly shifting nature of the digital economy. Your specific needs will determine the eCommerce platform you pick, but some functionalities are required.
For instance, online clients require real-time inventory tracking and updates from eCommerce shops. If you can’t track inventory across different sales platforms, meeting consumer demand becomes all but impossible.
Give consideration to an eCommerce platform that can grow with your company. Your eCommerce platform will need to offer increasingly sophisticated capabilities that save you time as your business expands. The stability and profitability of your company will be considerably impacted by a platform that has capabilities that let you concentrate your business activities.
Every type of company needs to maintain some kind of accounting system. The preparation of financial reports is very important, and implementing reliable accounting systems will guarantee that your balance sheet is correct. If that doesn’t happen, your company is in danger. What you want the system to deliver will determine the accounting software that you choose with for your business.
Unfortunately, being a certified public accountant is not always sufficient evidence of reliability. Conduct background research and study client reviews before committing to a particular bookkeeper as your business partner. You also have the option to make an appointment for a free consultation with a bookkeeper. During a session, you and your business’s advisor can talk about your specific accounting requirements and find a solution that works for your company.
When you outsource the financial management of your company to an outside party, it can cause a lot of stress. Employing eCommerce bookkeeping services for your business will release up the time and resources that your organization needs to expand. If you have been considering contracting your bookkeeping work out to a third party, now is the ideal moment to do it.
The greatest accounting services cover not only the preparation of tax returns but also the management of accounting software, strategic planning, payroll, and far more.