E-COMMERCE ACCOUNTING: WHAT YOU NEED TO KNOW

THINGS YOU NEED TO KNOW ABOUT E-COMMERCE ACCOUNTING

For people who find it very difficult to select the right version for their business, the best measure is to consult professionals from the e-commerce accounting firms.

eCommerce is now a route where there are several business transactions. Customer satisfaction, updating them as well as getting ready for the competition is something that is necessary for such organizations.

Accounting is a very vital component of every successful business. However, on accounting, eCommerce businesses use an entirely different term and procedure from traditional retail businesses.

Accounting is a topic in e-commerce that so many people develop a hatred for. Alternatively, it is it is an unavoidable topic when you’re running a small business. You will be able to take care of all your expenses in order to manage to taxes and accounts. Business owners have many questions popping in their mind whenever accounting is discussed. Below, we have some solutions to the problems that people usually have to deal with.

How can I choose the right version of QuickBooks?

You must put into consideration the needs and nature of your business when you are selecting the version of QuickBooks. For the people who see it challenging when selecting the right version for their business, consulting the assistance of an expert from e-commerce accounting firms would be a good idea. The expert will have to conduct research on the accounting demands of your business and then recommend the perfect version that your business needs.

Among invoices, sales orders or sales receipts, what’s best for my business?

When you want to track an order that was delivered without you shipping it, the sales order is ideal. You will then convert them into invoices in your QuickBooks. It is where you record goods sold to customers, but it will have no record for payments. QuickBooks is where you record the payments against the invoices. In sales receipts, you can record both sales and payments. This is the best way to manage your business account.

Is it significant and relevant to get information related to customers?

So many people want to know the significance of recording the customers’ information in QuickBooks. It is very necessary for you to know that the only thing you need is the name of the customer and QuickBooks will manage all the accounts automatically. There would be no need of mixing any information because two or more people bear the same names.

How can I be certain that I have correct financial data?

Maintaining your charts of accounts and product list is very vital when you are creating the foundation of an account. That’s why there are different requirements for every business. But below are a few important aspects that require your attention:

1. Income accounts: Before you begin downloading the orders, your sales accounts should be properly defined. This will give you an opportunity to track sales by various types of products, and you can equally make use of sub-accounts if you want to handle the sales.
2. Cost of Sold Items: Differentiating goods according to their price tags is a good option. Therefore, all cost related items will special subaccounts.
3. Sales Taxes: Having accurate information about sales taxes is an ideal thing. There ought to be an accurate sales tax reporting system. Laws of your state are regularly changing; it would be better to take a number of advice from local CPA.

Successful tips that will help you on e-commerce accounting

• There should be a record of all expenses & revenues. Anyone that has a business that has run more than a year knows the significance of accurately recording expenses and revenues.

• Some expenses are tax permissible, which will reduce your business’s taxable income. Some examples of the things are things like the costs of shipping and website domain and hosting fees. Expenses for some services like bookkeepers and accountants are tax deductible as well, making them even have a better value.

• Ensure you get a receipt when you make any purchase. This cannot be overemphasized; the receipt is your evidence. It consists of the details of the date of the transaction, the information on product or service, and even the price. Please note: Ensure you secure the receipt. This would be a good move.

• It is recommended that you keep your receipts of 6 years ago, too. This may look irrelevant and unnecessary, but during an audition, you could be taken back to 6 years ago. Again, if you can’t manage to keep the paper copies, we have some newly developed apps that allow you to keep receipts the paperless way, e.g., Expensify and Evernote. So many business owners are happy with this system of keeping/storing invoices and records.

• Ensure you always reconcile your accounts. A lot of accounting software that is available on the market allow you to link your bank account, which then empowers you to download and sync transactions automatically. This proves to be a good measure, as it saves you the time and sweat of having to enter all banking transactions manually, which is indeed beneficial when integrating your accounts. Someone could be wondering what ‘integrating your account’ really means. Basically, it is the process of taking two sets of records (your bank and accounting software) and ensuring there is an alignment between the both. There are so many benefits it has as it can highlight transaction errors, duplicate and fraudulent charges, while simultaneously giving you a relaxed mind, having in mind that there has been a successful transaction, both credits, and debits. When your accounting software has been integrated with your bank, you will then be able to categorize all the transactions, both daily, week and month. And as soon as the month ends, you can run a report that will match your transactions automatically. If you do this often (at least monthly), you can easily highlight any disagreements when things don’t balance accurately, which can make you to quickly get things back on track.

• Your accounting software should be incorporated with your online store If you still work out your accounting in a notepad or draft, you need to be updated. There are some investigations in your business accounts that you don’t want, particularly when it’s now so easy to do correctly online. So many organizations use Cloud Bookkeeping software. It’s very simple and easy to use, can help you keep track of your money and even integrate with products. This is software you can use to easily generate and catalog invoices, record a running register of bank deposits and pay-outs and see your present inventory and past purchases with ease. Making use of such accounting software and then incorporating it with your store, keeps your books accurate and current. It is also used as a great system to save time from cutting down on you, inputting your own calculations manually, and this will allow to concentrate on another thing. In addition, if you want to hire an accountant, these different types of software will grant them simple access to your business information and reports, with your entire transaction located in one place.

Things to bear in mind when dealing with e-commerce accounting

• Accounting is a very difficult obligation. It’s also the boring side of every business, so many people don’t like dealing with it. But if you want the progress of your business, you can’t avoid it. When you understand that it is not as complex as one might fear, you never hire an accountant for everyday management. Even though you hire one, you will still have in mind that it is the basics of yourself. This way, you can be able to comprehend and question what someone is telling you.

• You might even try throwing your receipts into a shoebox and giving them to someone you aren’t familiar with, but you are offering them fiscal power. That means you are putting the success of your business at risk. Keep those safe!

• Don’t piece your account together using excel or a calculator. Software like Freshbooks is marketed to customers who run e-commerce businesses, or you can use Shopify. There are so many accounting software apps you can get right in their app store. If you are not sure of the one you want, test out a free one or even pick one with a limited free trial. The best decision will depend on your business and preferences. Again, search for an app that will review sales, inventory as well as cost; desist from using apps that create invoices only or just provide reports. A tool that can do a lot is essential for you.

• Track your cash flows. Every business owner ought to have a separate bank account for business. You need to know the timing and flow of transactions in your business. And the easiest way to see this is to watch your cash flow. And keep in mind any holds you have on your accounts. What payment options do you offer your customers? Is there a delay from the time a customer pays to the time the money arrives at your bank? These are some of the things need to ensure that there is a balance in your account

Conclusion

All those steps and terms that are involved in the accounting process above can be complex and confusing, especially for the ones who are new to eCommerce. Additionally, if there is no adequate balancing of accounting, you may have financial issues and tax problems. Therefore, a good number of people choose to outsource their accounting requirements to an experienced business.