One of the important things that can help your e-commerce business flourish is accurate and efficient management of your books of accounts. The right e-commerce accounting system will help you stay on top of your finances and get your taxes ready.
E-commerce accounting is different from traditional business accounting. Here are some accounting tips for e-commerce sellers that they should be aware of.
Five Accounting Tips for e-commerce
1. Invest in cloud accounting software:
The right accounting software can simplify and streamline the accounting for e-commerce to the next level. The accounting software must be compatible with the website and sales process. Here are some best accounting software that you can pick as per your business needs,
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Xero:
Xero is the best choice for eBay or amazon sellers. Inventory holds an important place in e-commerce selling. This software integrates inventory well and gets a dual advantage over others. For Amazon sellers, it provides easy reconciliation and cash flow integration.
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QuickBooks:
It is best for eBay or drops shippers. It is a popular choice by most accountants as it is easy to set up and user-friendly. You can also link your eBay accounts with the desktop version and get a responsive team for queries.
Aside from these, there is a variety of eCommerce accounting software available; you can either buy it or use a free trial version. Investing in accounting software enables the automation of billing and invoicing.
2. Track and manage your cash flow:
Cash is the lifeline for any business. Apart from tracking revenue and expenses, cash flow forecasting plays a very crucial role in the business. It aids in identifying sales trends, margins, target setting, available lines of credit, and business expansion.
Without tracking and documentation of the flow of cash in and out of the business, you cannot determine actual income, which may lead to a shortfall in cash to meet the short-term obligation. Moreover, a clear and fair view of the financials is necessary to make an informed decision.
Hiring a professional and experienced accountant can help you in managing cash flows well.
3. Keep your business and personal finances separate:
Always remember this golden rule:
Don’t use money from your business account for personal expenses.
It is always advisable to have two separate accounts for business and personal finances. Having a specific, dedicated accountant for business makes it easy to control your finances. You can use your personal fund to cover reasonable business expenses and claim them back.
Some important things to consider are transaction charges, internet banking access, or any introductory offers while opening a business bank account.
4. Effective management of inventory:
A well-organized inventory is crucial for the successful running of eCommerce. Initially, e-commerce sellers restricted their resources and budgets. So, they need to manage inventory wisely. The movement of each and every piece of inventory must be tracked and documented. An e-commerce seller places a substantial investment in inventory, so effective control over inventory helps to overcome the problems of inventory shrinkage.
Implementation of inventory control like tracking goods usage, regular inventory audits, and controlled access to inventory helps to avoid any chances of theft, bad goods, or expirations.
5. Stay tax compliant:
Tax compliance is indispensable for every business. Paying your taxes accurately and at the right time is important for eCommerce sellers. We recommend hiring a professional tax expert because keeping up with changing regulations and tax compliances can be difficult.
Conclusion
Professional tax experts like Meru Accounting are up-to-date with tax laws and regulations to get your taxes ready. We can help with financial planning and management, budgeting, and taxes. outsource your accounting for eCommerce to us.
Contact us now for all your accounting needs for online selling.
