Online Bookkeeping for Your Ecommerce Small Business Bench Accounting

When calculating the cost of goods sold, the costs of the oldest inventory is used to determine profitability. Track your inventory on a monthly or quarterly basis to make sure it’s kept up to date. This is especially important if you process returns or store inventory in multiple locations. A bookkeeper records the day-to-day finances of your business.

We sync up with your other accounts to save time, improve accuracy, and keep your books up to date at all times. At xendoo, we integrate with the most popular inventory tracking apps to help support your business. Get caught up and keep your books with xendoo’s U.S.-based experts. Our flat monthly rate is what a traditional bookkeeper might charge per hour. There is a lot involved in bookkeeping, but even more so with an e-commerce business. We’re familiar with inventory software (including Inventory Labs and forecast.ly), we can get the information needed for bookkeeping directly, saving you time and frustration.

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A team of dedicated bookkeepers for your ecommerce business, plus online bookkeeping software to track your financials. Accrual accounting is more suitable for businesses dealing with inventory. This method requires you to record revenue from sales when they occur, not when the cash is received. Accrual accounting helps you understand the long-term impact of inventory purchases and sales on your financial performance. Good financial records, ensuring compliance, and meeting tax obligations are all essential tasks for an online business, regardless of size and stage. However, another part of ecommerce accounting is analyzing financial data to plan for expansion and growth.

A standard CoA may have some general marketing accounts but generally does not have sufficient breakdown necessary for you to manage the marketing spend for an ecommerce brand. Because when you expense inventory right when you purchase it, it becomes difficult to understand whether your business is profitable or not. The National Retail Federation found that merchandise worth $761 billion bought online got returned in 2021. A clear return refund and exchange policy will encourage online shoppers to purchase.

What are the best bookkeeping practices for ecommerce businesses?

We make sure your reports are easy to read and include key takeaways from the month specifically for your business. Bookkeeping becomes a laborious and time consuming task that is better to pass off to an eCommerce bookkeeping professional once the business can afford it. Plus, as an eCommerce business gets more complex, it will become harder and harder https://www.bookstime.com/ for the owner to keep the bookkeeping accurate and on time each month. Inventory management is an ongoing issue for eCommerce business owners and it gets even more confusing when incorporating it into your bookkeeping. Inventory management is a key part of the bookkeeping process because your inventory is considered an asset that holds value.

Inventory for an ecommerce business really affects two sides of the business. With that in mind, the first thing you’ve got to know is what to look for to do your ecommerce accounting correctly. Download our 5 Signs of Bookkeeping Trouble guide for what you need to pay attention to.

Why would you outsource your eCommerce bookkeeping?

An eCommerce bookkeeper will be able to free up a lot of time for managers. This will allow them to focus on tasks related to business growth. Virtual assistance agencies also provide a level of flexibility that in-house bookkeepers cannot match. You can communicate with your bookkeeper via email, phone, or video conference, making collaborating easier and getting the support you need.

If you make a sale on October 31st and receive payment on November 2nd, it is still an October sale. See what running a business is like with Bench on your side. Try us for free—we’ll do one prior month of your bookkeeping and prepare a set of financial statements for you to keep. As Mastery Level Profit First Professionals we can help you reduce your debt, pay yourself what you’re worth, and increase profits with proven cash flow management strategies. Good cash flow and the ability to increase order size gives you an advantage. Inventory management is also closely related to how well you manage your ecommerce finances.

We work with all eCommerce platforms

This way, you know exactly how much to buy and at what moment. There are even special inventory management software programs to take this out of your hands completely. You’ll also want to collect and store receipts in a safe place, and hold on to them for at least three years (the IRS’s typical audit duration). Save all your paperwork, including invoices, statements, orders, tax returns, forms, and applications. With bookkeeping, you can get an instant look at your company’s financial status. You’ll see how much money you have, how much you owe, and what trends may be right around the corner.

The data above suggests that most businesses are not confident in their financial situation and that most businesses do not succeed. Keeping proper track of your books and using professional accounting services will keep your business healthy and ready to grow. But with your busy schedule, the thought of trying to handle complex business accounting on your own can be overwhelming.

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This plan shows you how your business can grow its revenues and profits. Ecommerce accounting is complex and filled with uncertainties. You e-commerce bookkeeping need to work with a professional to make sure you’re not missing anything. Are there moments during the year your sales are going up a lot?

Accounting for ecommerce is different for all sales channels. It’s common for businesses to sell on multiple channels, and multi-channel sellers must be aware of the differences between them. When you think of accounting, your mind probably goes straight to taxes, but that’s only part of what ecommerce business accounting entails.