If you're running an eCommerce business, then it's important for you to understand the basics of bookkeeping. Bookkeeping is the process of keeping track of all financial transactions and making sure that your accounting books are up-to-date. By understanding the fundamentals of bookkeeping, you can be sure that your finances are in order and that your business is functioning at its peak performance. This also can guide you in selecting your ecommerce accounting staff in the future.
What is Book Keeping?
Bookkeeping is a critical component of any successful eCommerce business as it helps you keep track of income and expenses. It also allows you to identify any discrepancies in your accounts or unexpected costs that may arise. This gives you the insight necessary to make informed decisions on how best to invest and grow your business.
Basics Steps in Bookkeeping for an eCommerce
When it comes to bookkeeping for an eCommerce business, there are a few different steps involved:
Set Up Your Accounting System:
Before beginning any bookkeeping tasks, you'll want to make sure that you have set up an appropriate accounting system so that all transactions are accounted for properly. This will typically involve signing up with a recognized online accounting provider or finding an accountant or bookkeeper with experience in eCommerce businesses.
Record Transactions Accurately:
You'll also need to make sure that all transactions are recorded accurately and on time - including sales, purchases, returns, refunds etc - so that these can be tracked and relevant taxes paid as required by law. To do this easily and accurately, you might opt to use specialized platforms like QuickBooks or Xero which help streamline the recording process by automating certain tasks such as tracking invoices, generating reports, filing taxes etc..
Monitor Your Cash Flow:
Cash flow is one of the most important things for any eCommerce business - so monitoring this closely should be a key component of any bookkeeper's job description (this includes tracking payments from customers as well as invoices). As cash flow can fluctuate regularly depending on orders/sales patterns etc., being able to identify problems quickly can help prevent serious issues from arising in future weeks/months/years.
Analyze Your Financial Data:
Once all transactions are documented correctly and cash flow has been monitored effectively, analyzing both current and past financial data can offer valuable insights into areas where improvement is needed or where potential opportunities lie ahead (such as identifying trends in customer buying habits). This information can then be used to inform future decisions regarding marketing strategies or product development plans.
File Taxes on Time:
Last but certainly not least; filing taxes must be done accurately and promptly each year - otherwise significant penalties could apply which would hurt your profits significantly! Fortunately, most accounting systems available nowadays have excellent tax refund features allowing this entire process to run relatively smoothly without much extra effort required on behalf of the user (though double-checking everything before submitting is still recommended).
Is Hiring an Ecommerce Accounting Staff Expensive?
The cost of hiring an eCommerce accounting staff depends on the size of your business and the complexity of your bookkeeping needs. There are a variety of options available, including outsourcing to freelance professionals or partnering with an established accounting firm - both of which have their advantages. However, it's worth noting that these fees can quickly add up if you're not careful so it's important to factor in the cost of bookkeeping when forecasting future expenses.
Investing in a qualified accounting staff (or outsourcing professional services) can save you time and money in the long run as they will be able to handle all your financial data accurately and efficiently - with minimal effort required on your part. This will free up more time and resources to be devoted to other areas of your business - such as product sourcing, marketing etc. - allowing you to reach the next level with ease. Additionally, having a professional accountant or bookkeeper in charge can help ensure that taxes are filed correctly and on time so that you avoid any unnecessary fines or penalties. So all in all, it definitely pays to invest in a dependable eCommerce accounting staff.
Good luck and happy bookkeeping!