Between strategic financial planning and bookkeeping, accounting work for an eCommerce business doesn’t slow after tax season. The IRS doesn’t believe in vacationing either; the so-called "off season" is when they’ll issue audits, point out mistakes or unpaid bills, and generally be too close for comfort.
Career accountants aside, accounting is a job for everyone in an eCommerce business. You’ll need to track the cost of goods sold, sales receipts, and sales tax. Fortunately, virtually no one uses pen and paper to tally their expenses and losses anymore. E-commerce accounting software automates a large part of the process, ensuring that your accountant can accurately file taxes in April.
Basics of Accounting in eCommerce
Remember that the purpose of accounting isn’t simply to avoid a tax audit (or survive one), but to keep track of how well your business is doing. If you’re not certain of every expense and loss, it’s not possible to know how profitable your company truly is.
QuickBooks is a favorite among small businesses. It’s an old name but reliable. The best part of using a well-known accounting software is that most inventory management software offers integration. For example, SkuVault pushes purchase orders into QuickBooks so you don’t have to download a report and then upload it into QuickBooks.
If you’re selling through eBay or Amazon, both companies offer basic report generation, although this alone won’t be enough to calculate how well a business is doing. With QuickBooks, business owners can track more than purchases, sales, and returns; payroll and expense billing like mileage and business lunches are easily handled. Payroll, and complying with the strict laws that go along with it, will consume a significant percentage of your gross. So it’s important to have reputable software that can do it right. Users can also enter their monthly bills and print checks directly from the software. Some people scoff at QuickBooks, claiming it’s too clunky or too much of a hassle, but for a small business, it’s an inexpensive solution to accounting.
Hiring an Accountant
As a small business, taking on another employee is a major decision because it’s also a major expense. Even the largest companies in the world, like Walmart, take hiring a new employee so seriously that they cap the number of employees and hours each store can have. Fortunately, unless the business has experienced tremendous growth into a medium or large business, there’s rarely any point in hiring a full-time accountant. Accountants take on temporary work all the time, and you can use this to your advantage.
There’s a lot to grasp when it comes to accounting in ecommerce. If you’re growing the business from scratch, however, you’ll learn the nuances as the business grows. Once the finances become too complex, don’t be afraid to hire someone to do your taxes or audit you. Some businesses fail solely because they didn’t understand their expenses, or worse, they didn’t account for taxes.
When a business begins to grow, new methods or techniques may need to be implemented in order to accommodate for expansion. SkuVault is inventory management software that is capable of capable of helping your company grow, and simultaneously, growing with your company.