If you’re reading this article, I guess, you are also not aware of ecommerce accounting. If you’re someone running business online or running an accounting firm, you must know about how to manage ecommerce accounting. Believe it or not, accounting is the most crucial for any kind of business be it small or large. Why? Because every business has to maintain good health of their finances and face financial challenges as well. What exactly ecommerce accounting is, you ask? Is it challenging to manage? Let’s talk about all these in this article.
Without much ado, let’s explore this article and start from scratch.
What exactly ecommerce accounting is?
In crystal clear words, ecommerce accounting refers to collecting of business data, analysing, organizing, and reporting financial data pertaining to company’s transactions and assets within the ecommerce business.
Being an ecommerce entrepreneur, you can easily procure information about your business financial growth and thereby make financial decision in the future.
Have a look at the three important category of ecommerce accounting below:
- 1. Bookkeeping (recording every business transaction)
- 2. Reporting
- 3. Submitting tax returns
Now that you have read about ecommerce accounting, it’s time to know about the challenges associated with it.
Challenges you can face in ecommerce accounting
Now have a look at the challenges of virtual accounting given below.
☹ Inventory management
The challenge you can face during ecommerce accounting inventory management. There is no doubt that inventory requires full time to look after and becomes tricky task for sellers. When it comes to manage inventory, it doesn’t matter what type or size of business you’re running. New products and sales channels screw up the process further. But let me tell you that inventory management is the backbone of every online retailer’s cash flow. Therefore, it’s important to keep it under control so that you can manage it in the future as well.
☹ Manual data entry
Manual data entry is very overwhelming task. And when it comes to manual entry, human tend to make errors which can put business into jeopardy. Some companies choose to outsource accounting services in San Jose as their business grows. But if you don’t want to hire accounting services, you can choose to automate accounting tasks. And how do you do that? With the help of accounting automation software. With software, you can connect ecommerce store to your accounting solutions by posting all the transactions you made within the business.
☹ Less access to data analytics
With ecommerce accounting, you obviously get limited and less access to data analytics and reporting. And this becomes quite challenging part for some sellers who have limited data access to store performance data. With limited data access, they also get delayed response. Unless you have solid reporting of data, you can’t make up-to-date analytics report and business performance history.
☹ Sales tax liability challenge
If you aren’t aware then let me tell you that ecommerce sales tax has become complicated in recent years. Yes, for online stores, there are dozens of tax locations but for brick and mortar stores; they have only one tax location. Being an online accounting store, you have to file taxes monthly and quarterly based on the type of business they’re business. If you aren’t aware of tax accounting then it would be better if you take help of professional tax accountant or go with tax-focused software available in the market.
Are you aware of the ecommerce accounting tasks? If no, read below.
Some ecommerce accounting tasks at a glance
There are some crucial accounting tasks which every business has to manage on a daily basis. Here are some of the tasks which you need to manage on your own. Have a look at them below:-
- – Expense and transaction management
- – Inventory control
- – Track cash flow of the business
- – Calculate sales
- – Staying up to date with taxation
- – Track customer returns
- – Track expenses of business
The bottom line
There is no doubt that ecommerce accounting is kinda herculean business to manage. You have already read that it is online business that too has lots of challenges associated with it. Being an online business owner, you must learn new things and challenges associated with it so that you can handle ecommerce accounting easily without making any ruckus. Now that you have read the challenges associated with ecommerce accounting, it’s time to overcome with these challenges to grow your business in the future.
For more queries and information, Kayabooks is here to help. Don’t forget to get in touch.