Bookkeeping for online stores

E-commerce has been demystified especially amongst the developing countries, in the past two years since the trade constraints that came with Covid-19 pandemic e-commerce has made tremendous strides. With this in mind many entrepreneurs in Kenya and the region have ventured into the e-commerce retail business. Though with its opportunities, e-commerce business comes with its management challenges. Because we are 100% remote, we understand how to serve our ecommerce clients.

That’s why tax management (including both tax planning and preparation) is a core service of many accounting firms. There’s the day your product is market-ready, the day you open your online store to the world, and the day you make your first sale—a major step that calls for celebration. Few things are more exciting, however, than watching the money start to roll into your bank account. Simple bookkeeping is the process of recording financial transactions. Accounting involves recording, plus, classifying, interpreting, analyzing, reporting, and summarizing financial data. This means, to master your bookkeeping and accounting system, you should have excellent communication and organization skills.

Balance sheet

Accounting and inventory management systems should work together to help your supply chain run smoothly. Some eCommerce platforms have inventory management features built-in, so they will automatically track inventory for ecommerce bookkeeping you. From an accounting perspective though, more payment options come with more sophisticated bookkeeping needs. Since most eCommerce stores accept payments through third-party payment processors, there are various fees.

• This article about why cash flow can be even more important than profit includes a handy spreadsheet you can use.
• However, the rules and rates vary by state, and businesses must stay up-to-date with the latest changes and requirements.
• And the numbers behind the business are critically important, helping founders avoid cash crunches, unwanted excess inventory, unexpected return ratios and more.

To help you decide on the right software for your business, we are going to present you with some of the best of breed options available on the market. If you have an eCommerce business and the inventory is too large for your personal space or small office, you should consider other ways to manage your inventory. There are two fundamental ways that eCommerce companies can manage their inventory.

What to do monthly

In most cases, many small business owners rely on Microsoft Excel which only keeps track of things and is subject to errors because it’s not an automatic entry. If Shopify deposits $100,000 as your July sales and ecommerce platform charge is $20,000, but will be deducted in August. Accrual accounting method recognizes both the Expense and the Revenue in July and deposits $80,000, whereas cash accounting records $100,000 in January and waits till February before deducting the $20,000. Almost half of small business owners rank it as their least favorite task. When you were daydreaming about building your ecommerce empire, tracking your income and expenses likely wasn’t part of the fantasy.

• Accounting platforms help online business owners keep their books up to date, monitor their spending, and comply with tax laws.
• Our full-stack financial services save you money at tax time and give you access to a CPA all year.
• “When doing tax bookkeeping for your Shopify business, it’s not enough just to record the sales.
• One of the primary reasons why accounting and bookkeeping services are so vital for eCommerce businesses is that they have a lot of transactions.
• They may accomplish this by keeping track of your revenue and spending, classifying your transactions, updating your chart of accounts, and generating your financial statements.
• With SaasAnt Transactions, businesses can generate financial reports, manage their cash flow, and track expenses.
• ECommerce is a rapidly growing industry, with global sales predicted to reach $5.8 trillion by 2022.

Monitoring inventory is an essential part of ecommerce accounting. When you have an online business, it’s important to keep track of inventory so that you can accurately manage sales and purchases. Ecommerce accounting https://www.bookstime.com/ allows you to easily monitor your inventory through automated processes, which makes it easier to stay on top of stock levels. Ecommerce accounting needs particular inventory and cash flow management.

Sales Tax Assessment

What a good accountant would do, like us at Kruze, is we go into that invoice and we break out the platform fees. And then we break out the second line item, which is shipping fees. Startup, early-stage and fast growth eCommerce businesses need more than just a “bot” bookkeeper – they need a real accountant who understands their working capital needs and growth plans. High-growth online retailers and DTC companies often have thousands of transactions.

• You’ll need to make sure you pay that money to the proper tax authority.
• If tracking and managing your expenses and revenue sounds intimidating, you’re not alone.
• Or, track the right metrics and use your books as an asset to better grow your ecommerce business.
• When growth matters, and accurate margins are critical, find a team that delivers numbers you trust.
• The basic rule of bookkeeping is to maintain accurate and complete records of all financial transactions using the double-entry accounting system.
• Therefore, bookkeeping is the starting point for accounting, providing the necessary financial data that accounting relies on.

E commerce bookkeeping is the same but addresses the unique needs of businesses that operate online. Because e-commerce businesses operate online, financial information can be recorded digitally and integrated with accounting software. This can provide insight into how you make revenue and spend money. Ecommerce accounting also includes running financial reports such as profit and loss statements and a statement of cash flows.

Data on your business’s financial health.

Unfortunately, being a certified accountant does not always prove reliability. Before you partner with a specific bookkeeper, do prior research and read reviews. You can also schedule a free consultation to talk to a bookkeeper. In a consultation, you can discuss your unique business needs and an accounting solution that fits them. Bookkeeping solutions make it easy to prepare sales tax without doing any guesswork. Good documentation for all deductions is essential to keep what you earn and not what you owe.