All businesses are responsible for keeping accurate books. If you start losing track of your financial health, your organisation is flying blind. Plus, you could end up with serious tax penalties.
Online stores have additional needs and challenges. E-commerce bookkeeping requires more than the profit and loss statements, general ledger, and bank reconciliations that all businesses use. You’ll also have to navigate tricky situations like foreign sales and website merchant fees that brick and mortar businesses can often avoid. And who is handling your off-site inventory management?
An outsourced bookkeeping service may be the answer to your hand-wringing. With the help of an off-site financial expert at the helm of your accounts, you can get back to marketing and customer relations.
What is Bookkeeping?
Simply put, bookkeeping is the process of keeping records about your business’ financial transactions. This includes your expenses, revenue, debt, and more. Bookkeeping records everything from your monthly shipping costs to the fees you pay to third-party payment processors. Then, your bookkeeper analyses the numbers to create insights into your overall financial wellbeing.
E-commerce bookkeeping requires regular reports. Your financial staff will need to regularly create and analyse documents that include:
- Profit and loss statements that track your expenses and income over a set period of time.
- Cash flow statements that summarise the money you have coming in and out of your e-commerce business.
- Balance sheets that provide a snapshot of your organisation’s financial health at a given point in time.
Your bookkeeper may also track your personnel costs, bad debts, and lodge your annual taxes. These tasks all fall under the umbrella of bookkeeping.
Why Bookkeeping Matters for e-Commerce Businesses
As someone running an e-commerce store, you may not have eyes on your inventory or your customers. Ever. This makes tracking receipts and invoices all the more important. They are the only tangible evidence of your sales.
Not only does honest, accurate bookkeeping help you understand the true health of your company, but it keeps you in good standing with the government. The Australian Taxation Office (ATO) requires specific records from each e-commerce business. Tax requirements include:
- Records that have not been altered and are stored in a way that restricts the information from being changed or damaged. You can often meet this requirement by using secure accounting software.
- A minimum of five years of records for your business must be available. The government wants you to keep records five years from the date the records were prepared or obtained.
- The ability to produce financial records for the ATO on-demand. You must have the ability to produce any and all records relating to your income and expenses if the ATO wants to verify the information.
Bookkeeping for e-commerce allows you to meet the minimum legislative requirements set by the government. But other entities may also need to see your records. Business accounting documents may also be required for the following situations.
- Obtaining credit. If you need a business loan or want to bring on an investor to your e-commerce business, they are sure to ask for current financial statements.
- Selling your business. If someone wants to buy your business, your bookkeeping records can convince them of how profitable your online store really is.
- Working with a CFO. Whether you hire an in-house or virtual CFO, your new executive will need access to financial reports. It’s the only way for them to offer meaningful insights and propose changes.
Why Should You Outsource Bookkeeping
As an e-commerce business, you’re dealing with enough. Website design, shopping cart glitches, and new product photo shoots – this is where your attention needs to go. If bank account reconciliation and month-end cash flow reports start to get in the way, you need help.
Outsourcing your e-commerce bookkeeping has several advantages over hiring in-house staff. Not only can you save money, but you can access an entire team of savvy financial experts instead of relying on a single person to juggle it all.
Benefits of Hiring a Bookkeeping Service
Here are some of the reasons you might want to hire a virtual e-commerce bookkeeping team.
- You’ll save on payroll costs. You can hire a flexible contract bookkeeper who only works as many hours as you need them and/or can afford. You won’t put your e-commerce business in the red paying for a full-time staff member you don’t always know what to do with.
- Finding the right person is easier. A bookkeeping service has access to hundreds of experts. They can connect you with someone who knows the e-commerce industry, so you don’t have to personally conduct a tonne of interviews to find a good candidate.
- Turnover is a breeze. When you go virtual, you will probably have a few people on your account. If one person moves on, your bookkeeping service will still be familiar with your organisation and can seamlessly transition a new bookkeeper into place. You won’t have a gap between bookkeepers.
- It’s a major time saver. Running an e-commerce business is time-consuming enough without having to track your own receipts. Turning to a bookkeeping service frees up many hours each week for your back office staff.
How To Hire a Bookkeeping Service for Your e-Commerce Business
Does the idea of trusting someone with your bookkeeping and accounting have you nervous? Fear not. When you connect with an experienced team, your books will be in good hands. Not only does a virtual bookkeeping team have an obligation to absolute transparency, but they can automatically create any reports you need.
You’ll want to start the process of hiring a remote e-commerce bookkeeping team by finding a service that knows e-commerce up and down. Interview your potential account manager and let them give you a customised quote and bookkeeping plan. You want to feel comfortable, because this relationship can last for years and have major implications for your business.
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