With more people buying online than ever before, now is the perfect time to take advantage and build that online empire you’ve always dreamed of. But, as you make efforts to increase the number of orders flying into your business and out of your warehouse, what are you doing about your eCommerce accounting?
It’s nothing to feel bad about – accounting falls to the bottom of most people’s to-do lists. But never is keeping on top more critical than it is for eCommerce businesses. Why? Because, eCommerce is busy – it involves different tax rates, payment methods, bank accounts, and regulations. And it’s very easy to fall behind and out of line – leading to ommissions, mistakes and, in the worse case, legal action.
So, what’s an online retailer like you meant to do? Well, the answer is easy and it lies in 6 simple tips.
1. Keep records
It’s so obvious that’s it worth repeating: keep records. By records we mean information on every sale you make including the items bought, the amount paid, the tax applied, and the destination country.
Online marketplaces (such as Amazon and eBay) and eCommerce platforms (such as Shopify and Magento) will do this automatically for you. If you’re selling in-store, over the phone, or via eMail, you’ll need to maintain these records yourself.
2. Keep records in the same format
If you’re selling over multiple sales channels, then it’s really helpful to have all of your records in the same format. Why? It makes it easier for you to look at, quicker for you to import into any accounting software, and less complicated to analyze.
While individual sales channels will have their own individual formats, you can use multi-channel management software to automatically collate cross-channel order information and put it into a uniform format.
3. Stop copying and pasting
Not only is it against certain laws and regulations (we’re looking at you MTD) but it’s hugely error-prone and time-consuming, which is bad for business and (if you get caught out) bad for your reputation. What to do instead?
4. Use eCommerce accounting software
There are two types of eCommerce accounting software that can really supercharge your online business:
Cloud accounting platforms
Xero, QuickBooks, and Sage all offer simple and intuitive software for managing your accounts. Built with the small but growing business in mind, you can view your financials at a glance, link directly with your bank accounts, give access to your team, and use tools than making accounting quicker and easier.
Sales channel integration software
Cloud accounting platforms are great but you need to get your order information to those platforms (and remember, no copying or pasting!) Sales channel integration software does exactly this – sending sales orders from channels such as Shopify or Amazon to Xero on an automatic basis. You can also pre-dictate the bank account and status based on channel and payment method.
Sounds expensive, huh?! It’s not. These pieces of kit are built for growing eCommerce brands just like you, with the sole intention of ROI.
5. Filter international sales orders
If you’re selling internationally, you’ve got an extra hurdle to jump when supercharging your eCommerce accounting: international sales tax. Speed up the identification of international orders and the application of international sales tax by using Xero’s tracking categories to filter orders by country and bulk apply the correct rates. Even better, pick Xero eCommerce integration software that automatically assigns orders to the correct tracking category.
6. Use an eCommerce accountant
Unless your background is in finance (and even then) we recommend using a specialized eCommerce accountant to save time, money, and hassle with your eCommerce accounts. Not only do they have the expertise and skills to complete your domestic and international finances quicker than you could, but they also have access to cloud accounting platforms and multi-channel software to help make the process even smoother – reducing your overall costs.
Don’t let your eCommerce finances hold you back – enlist the right practices, tools, and help to supercharge your eCommerce business even further.
About the author:
Alan Wilson is the CEO and founder of Expandly – the multi-channel management software making waves in the eCommerce and accounting industries. To find out more about how Expandly can streamline your eCommerce business, or about what Alan’s been up to, follow them on social media.
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