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Finance and accounting are vital for every business. eCommerce is no different. The importance of accounting for eCommerce cannot be overlooked. eCommerce accounting is essential for every eCommerce business owner. It allows business owners to keep track of the company's inventory, transactions, and other crucial financial data. It helps in properly maintaining the company's balance sheet and gaining a comprehensive idea of the expenses and revenues. However, eCommerce business accounting often seems to be complicated.
This blog post will teach you everything about making the accounting process easy for eCommerce businesses.
What Is eCommerce Accounting, And Why Does It Matters?
Ecommerce accounting is the process of tracking, managing, and reporting on the financial transactions of an online business. This includes everything from sales and revenue to expenses and payments.
Why does eCommerce accounting matter? Because without accurate and up-to-date financial information, it would be tough to make sound business decisions or track the progress of your business. Without good accounting, you might not know if your business is making a profit or not!
Related: 5 Strategies To Accelerate eCommerce Order fulfillment
How to Make Accounting for eCommerce Simple?
Want to get started with accounting for an online business? If yes, here are the essential tips that can help make the accounting process simple and easy.
Know What eCommerce Accounting Entails
One of the main reasons why eCommerce accounting seems to be complicated is the lack of understanding of the essential components. So, before you start with eCommerce accounting, it is vital to understand what it entails. Like any other business accounting, online business or eCommerce accounting includes planning, bookkeeping, and reporting functions. Mainly, areas such as growth planning, bookkeeping, and tax management are emphasized under eCommerce accounting.
Understand the Accounting Methods
Understanding critical accounting methods is vital when it comes to eCommerce accounting. There are two methods by which you can handle your eCommerce accounts. It includes accrual accounting and cash basis accounting. Cash basis accounting refers to the accounting method in which cash transfers are measured. That is pretty simple and easy to understand. On the other hand, accrual accounting is all about measuring transactions when the eCommerce business incurs an expense or earns any fund. You can use the proper accounting technique based on your eCommerce business's specific requirements and professional skills.
Forecast Major Expenses
An effective way of simplifying eCommerce accounting is to forecast the significant expenses of your business. Try to maintain a spreadsheet consisting of records of the regular accounts payable. This can help you gain a better idea about your dues. It will enable you to effectively work with the remaining income and accommodate the necessary expenses. The expenses can be anything, right from the need for more advertising to additional inventory to meet unexpected customer needs and warehouse building.
Leverage the Accounting Software
It is hard to do accurate and precise accounting eCommerce without using accounting solutions. To ensure accurate, fast, and convenient eCommerce accounting, business owners must start leveraging modern accounting solutions. The best thing is that several accounting software is available online. All you need to do is leverage the best one depending on your accounting goals and specific business needs. Some of the top accounting software you can use include Sage, QuickBooks, Xero, and more.
Related: Order fulfillment Software for eCommerce Businesses-Save Time and Money
Understand The Different Types Of Financial Statements
There are four main types of financial statements: balance sheets, income statements, cash flow statements, and statements of changes in equity. Each one provides different information that can be very useful in running your business.
Hire A Qualified Accountant
If you're not comfortable managing your finances, it's worth hiring someone who is. A good accountant can help you set up a system, keep track of transactions, prepare financial statements, and offer advice when needed.
Conclusion
Accounting can be daunting, but it doesn't have to be. Following these simple tips can make the process easier and less time-consuming. And if you need help with the fulfillment or any other aspect of your eCommerce business, our team at Simpl is here to assist you. Contact us today to get started!
Recommended: 4 Tips to Automate eCommerce Operations
