Accounting for eCommerce businesses requires a specialist financial professional who has experience in the online business sector.
After all, eCommerce businesses are very different to brick-and-mortar businesses and they face challenges that the methods used by traditional accountants may not be able to solve.
Not quite convinced by that? Here are some reasons why your eCommerce business needs a specialised eCommerce accountant.
Expertise in accounting for eCommerce businesses
eCommerce accounting and bookkeeping is not the same as traditional accounting — there are lots of unique considerations to take into account.
For example, many online businesses have multiple income streams, which makes their tax returns and annual accounts more complex to do than usual.
They also tend to have a lot of allowable expenses to track, from platform fees and online advertising to shipping costs. Having someone who can spot and claim every penny you can to reduce your tax bill will, therefore, be beneficial to the business.
But tax can get a whole lot more complicated than that. If you sell goods to customers in the EU, for instance, you may have to register for VAT in each EU member state you sell to, if the rules apply to you.
A seasoned eCommerce accountant will be able to tell you whether you need to register and help you do so.
Financial management and advice
Proper accounting for eCommerce businesses is about more than just compliance work.
First, it’s about financial management. On top of multiple revenue streams complicating cashflow management, online sellers also have a lot of complex costs, including:
- fees for using sales channels, like Amazon or Etsy
- payment processing gateways fees
- shipping
- raw materials or stock to resell
- digital marketing.
All these kinds of unique costs are difficult to track, but someone who has experience in the sector will be able to help you manage them to ultimately help save you time and money.
Second, eCommerce accounting is about providing online businesses with the advice they need to accomplish their goals.
As such, a specialist can advise you on ways to increase profits, reduce costs, and improve cashflow. They can also provide advice on financial forecasting and budgeting to help online sellers make well-informed decisions.
eCommerce accountants will be able to go into even more depth that just that, though. They can advise you on the best eCommerce platforms to use, how to manage inventory, and how to set up a payment gateway, for example.
They’ll also be able to provide guidance on how to deal with international taxes, currency exchange rates and shipping costs.
Understanding the software
One of the more daunting aspects of starting an eCommerce business is knowing which online selling platform is right for you and how to use it. This is something else specialist eCommerce accountants can help with.
There are various eCommerce platforms, such as Shopify and Woocommerce, along with a variety of payment providers, including Sagepay, Paypal and Klarna.
Each software provider generates reports but always presents them differently from one another. Therefore, it’s important to have a business adviser who knows what they’re looking at so they can properly guide you through your finances.
Their familiarity with the software will also allow them to easily link your selling platform(s) to your cloud accounting software, such as Xero, to allow full visibility and free-flowing information from one system to the other.
Not only will this save you time manually providing information, it will also mean that your accountant will have full visibility of real time data, helping them give better and more timely advice.
Run an online business and need help with your accounting and bookkeeping? Get in touch today. We can help you with all things related to accounting for eCommerce businesses.