Last Updated on January 5, 2023 by admin
Whether you are selling on famous eCommerce sites like Amazon, Shopify, Woocommerce, eBay, Etsy, and Walmart, or you have launched an independent online store, keeping track of your finances is a must. This includes tracking your sales and expenses and making sure you’re tax compliant. Fortunately, a few basic bookkeeping techniques can make this process much easier.
Let us help you get started by sharing with you the basics of eCommerce bookkeeping. When you go through the list, you’ll realize that it isn’t that difficult with the right knowledge, tools, and assistance. So whether you’re new to online selling or you just want to optimize your company’s bookkeeping process, read on for our advice!
Begin Bookkeeping the Moment You Launch Your Store
eCommerce beginners like you must wonder about the right time to start bookkeeping. While you’ll see advice that you can do it just before tax time, the ideal time to start it is when you launch your business. Start tracking income and expenses when you open your store to save you from backtracking when tax season approaches.
When your bookkeeping is in order, you can pay taxes on time and avoid repercussions from your tax bureau. Not only that, but you can also get real-time insights into your business’s finances through reports derived from updated books.
Invest in Document-Capturing Software
Although many transactions these days are done online, there are still many deals done using printed receipts and documents. Do not let these financial papers pile up in filing cabinets by investing in document-capturing software.
Using this software is easy: simply take a snapshot of receipts and documents, and the tool will automatically turn the details into text. This eliminates the time needed for you or your bookkeeper to type in the information manually. It minimizes human error too.
You can save the file in the system and pull it out quickly if your business gets audited. The data saved in these software are protected from hacking, corruption, or getting lost.
Get the Best Bookkeeping Software
Another important tool you must invest in is bookkeeping software. Bookkeeping software makes you and your bookkeeper’s lives easier because of the following features:
- Tracking of income and expenses
- Integration of various payment methods
- Invoice creation
- Bank reconciliation
- Tax computation
- Payroll processing
- Integration of different accounting software
- eCommerce store integration
- Inventory management
- Financial report generation
Software like QuickBooks, Xero, Sage50 Cloud, and Peachtree have all or some of these features. You can connect Shopify to QuickBooks Online, connect your Amazon analytics data on Xero, and do the same wherever you are selling. Aside from the convenience, you can be sure that your confidential financial information is protected in the cloud. You can also control who accesses the information in the software.
Delegate Bookkeeping to Experts
As a startup business owner, you might think it is best to handle your bookkeeping yourself as it saves costs. However, partnering with experts is still a better choice, has plenty of business benefits, and is investment-worthy.
When you have trained bookkeepers handling your books, you know that there is someone who keeps an eye on all your business transactions, and there is also someone recording everything. You’ll know your books are always up-to-date and accurate.
With that, tax computation, after-tax income knowledge, payroll processing, and report generation will be a piece of cake. This is especially true if the bookkeeper you hire is experienced in the eCommerce field.
Know Your Role as a Business Owner
Despite delegating the task of bookkeeping to experts, you also have a role in bookkeeping as a business owner. Make it a part of your daily routine to check the books to ensure accuracy. This also gives you the chance to raise a red flag immediately for any discrepancy. If there are any mistakes, you can address them right away.
You can also get into the details of your income and expenses when you keep an eye on your books. You’ll immediately know if you’ve spent too much on ad campaigns and product manufacturing. Or you’ll also see whether your sales are soaring. As a result, you can maintain best practices or have a meeting with your team to create action plans for the areas you still need to improve on.
Ecommerce Bookkeeping Done Right
Bookkeeping for your eCommerce business doesn’t have to be daunting. With the right tools and a little effort, you can keep your finances in check and make sure your business is on track for success. Following the tips in this post, you can set yourself up for success and keep your books in order without sacrificing too much of your valuable time, money, and resources.
Have you tried any of these methods for eCommerce bookkeeping? Let us know how they worked out for you in the comments below!
Mike Pignatelli, CPA, is the CEO of Unloop Accounting, an agency built to meet the accounting needs of modern ecommerce businesses. As an experienced financial controller, Mike has worked with various seven-figure inventory businesses. Mike and his team are your go-to accountants if you need reliable data to make sound financial decisions.
Apart from that if you want to know about 4 Big Online Business Tasks for Running a Small Business then please visit our BUSINESS Category.