Plenty of start-up online businesses think that hiring accountants for eCommerce is too costly, not knowing how massive the latter’s role is in their financial health. Given that the competition in the e-Commerce sector is continuously increasing, the only way to stand out amongst the many competitors is to excel in every aspect.
However, especially for e-Commerce solopreneurs, getting too caught up in the business operations is inevitable, and before they know it, they are already neglecting their tax obligations and financial matters. Running a business means you also have to deal with the intricacies in finance and hassles in managing your taxes, especially when revenues start rolling in.
Having an accountant specialising in e-Commerce will prove to be very helpful in the long run. Take note that business and e-Commerce accountants are different. E-commerce accountants have additional responsibilities than regular business accountants as the former also deals with international sales tax, inventory tracking, strategic tax planning, complex e-Commerce fees, and more.
This article will discuss the scope of e-Commerce accounting and the role that e-Commerce accountants have in your online business.
What E-Commerce Accounting Entails
E-commerce accounting involves a lot of complex tasks, in which e-Commerce accounting software and expert can handle smoothly and efficiently. Specifically, here are some accounting-related tasks that every e-Commerce business will have to deal with:
Corporation tax, VAT, international sales taxes, and complex fees are some of the taxes every UK e-Commerce business will handle. Tax planning, management, and preparation are crucial, as the UK tax authority has been more watchful over individual and business taxpayers. The other countries you transact with have different tax legislations. E-commerce accounting deals with these different tax laws, as well as your domestic tax obligations.
E-commerce accounting also includes both basic and e-Commerce-related bookkeeping affairs. Whilst basic bookkeeping simply produces a balance sheet, income statement, profit and loss statement, net income calculations, payroll, or warehousing, eCommerce bookkeeping deals with more, such as tracking overseas customer returns.
Stock Inventory and Tracking
E-commerce businesses rarely store their stock in one place. Usually, they use several platforms to promote their goods, to the point of partnering with third-party logistics firms to warehouse and ship their goods. Good inventory management, which includes tracking stocks in production, en route, at warehoused, customs, or for returns, massively helps with your business’ cashflow.
Managing Complex Data
There is much complex information to process for e-Commerce businesses, such as complex shipping and listing fees, tracking of sales orders, and working out profit margins. Calculating profit margins itself already requires detailed historical data analysis. It takes e-Commerce accounting to track down transactions for some span of time.
The Role of an E-Commerce Accountant in Your Business
Just like every business, your goal is to maintain a healthy cashflow. Hiring an e-Commerce accountant helps you reach this goal, even if it seems expensive on the get-go. Here are some ways they help your online business:
Product costing considers a lot of factors, such as the prices of competitors, e-Commerce fees, discounts, and more, and it can be a really complicated task. E-commerce accountants take these into account and help you work out the pricing of your product by taking the average cost for every unit, net product costs, costs of sold goods, shipping, insurance, and other factors that affect the product’s price, all the whilst making sure that you stay competitive in the market.
Using several e-Commerce platforms can be very hassling, but e-Commerce accountants make the job easier as they help you create a smoother system for tracking sales and inventory. Inventory management is crucial as you need to know when new stocks should be ordered to prevent your stocks from running out in cases of massive or unforeseen orders. E-Commerce accountants use accounting software efficiently, integrate, and manage inventory management system seamlessly.
Projecting Sales Volum
E-Commerce accountants will help you with estimating sales volume by analysing past data and predicting future sales. They also assist you with pointing out the risks of your products and minimising their impact by taking into account the competition, cost, and customer service, as well as provide strategies on how you can increase your sales.
Dealing with Cash Flow Problems
Understanding your cash flow better—how much comes out and into your business—helps you get on track with how much you are spending and earning. It’s crucial that you have adequate cash flow to keep your business running and avoid problems such as running out of cash for payroll, restocking, tax bills, and more. E-Commerce accountants can help you make the right decisions for your businesses, such as if you have to decrease your expenses and strategies on how you can increase your revenue.
Tax Preparation and Compliance
E-Commerce transactions have tax implications too, such as the taxes you pay for certain purchases or sales. E-Commerce accountants know the ins and out of domestic and international taxes, specifically taxes that online businesses deal with.
On the other hand, they help you be compliant with your tax obligations, as they not only handle finances but your overall tax obligations as well. They investigate where you fall short in managing your taxes, and so, calculate your dues, make sure you submit tax returns and pay on time, and religiously comply with your tax duties overall.
Save You Money and Time
It is true that accounting fees can be very expensive but the price is nothing compared to how much e-Commerce accountants can help your business. Their main aim is to help increase your revenue and their strategies revolve around that goal. Aside from offering advice on how you can increase your sales or profits, they also find ways to reduce your tax bills through legal means by maximising reliefs, thresholds, and more.
Working behind the scenes, e-Commerce accountants allow you to spend more of your precious time into your business’ operations. The role they play into your business will prove to have a massive impact in the long run. E-Commerce-specialising accountants, such as from Legend Financial, can greatly boost your sales over time. Reach us today!