Bookkeeping is the act of tracking your company’s financial transactions (in and out) by recording them digitally in accounting software or physically in a ledger. This financial information reveals insights into where you’re spending money and how your business makes revenue. Also, having detailed financial records makes tax season less of a headache. By doing so, you can ensure that your financial records are accurate, up-to-date, and compliant with tax laws, allowing you to focus on growing your eCommerce business. Bookkeeping is the process of recording financial transactions and maintaining accurate and up-to-date financial records.
It can be a pretty seamless process when you partner with an ecommerce accountant who has multi-state sales tax experience. They also impact your future forecasting as you won’t have an accurate picture of what really sold in December. Over time, as your business grows, not having accurate timing of transactions (sales, expenses, liabilities, etc.) will become very significant. They want to live in the bank account and track those transactions, calling it good (the poor dears!). The inaccuracies that this method causes can have a dramatic impact on your business’s success. You don’t need to be an accounting expert to open an e-commerce business.
Having up-to-date books matters because it allows you to know how your business is performing at any given time. You might also want to use CFO services from https://www.bookstime.com/ Lyfe Accounting to help you with your business needs. And when tax season rolls around, and you file your tax returns, make sure they’re correct and complete.
In addition to purchase and maintenance costs, you must track your actual sales as well as any inventory losses. Losses can result from theft, spoilage, damage, or other factors that make a piece of inventory unsellable. While of course you want to prevent inventory loss as much as possible, you should nevertheless be prepared to deal with it if and when it does occur. Calculating cash flow specifically for your inventory is essential. In an inventory cash flow document for example, costs listed should be exclusively inventory-related.
The responsibilities handled by a service will depend on the provider, so be sure to discuss the scope of work and compare options to find the right fit. Outsourcing your bookkeeping is another option, and this guide on how to find the best virtual bookkeeping service can help you get the process started. Finally, consider integrating a bookkeeping app like FreshBooks into Shopify.
Manually tracking via spreadsheets is doable when you’re small, but it’s a problematic bookkeeping method to keep as you scale your business. The balance sheet is incredibly important, especially if you have a warehouse, if you’re buying lots of inventory. You need to know the health of your business, your assets versus your liability. To start, you should never be doing your own bookkeeping as an entrepreneur.
Inventory count and management are the lifeblood of all ecommerce companies. Accurate inventory tracking lets you know when to reorder products. Recording your financial data is the most fundamental part of bookkeeping, but it won’t do you much good if you can’t access and understand your records. Bookkeeping entails correctly categorizing, organising, and storing your financial transactions to help with taxes and audits and to provide business insights. So it’s important, not only do you get the mentality of hiring a good eCommerce bookkeeper, but you also have the right set up behind it.
Sales tax is added to the retail price of every online sale and is settled at checkout. In Australia, NewZealand and most ecommerce bookkeeping European markets, Xero is more popular. Either way, you want to use a full functioning software to do your numbers right.