Common Mistakes to Avoid When Doing Etsy Seller Accounting
Accounting plays a vital role in keeping a business afloat. Accounting tracks income and expenses and ensures accurate financial information that you can refer to as you grow your business on your Etsy online store. Whether you’re an established store owner or just getting started on the e-commerce platform, you will want to maintain an orderly accounting record of your Etsy account. This preparation ensures you have all the required information to issue a refund, meet your tax deadlines, provide a buyer receipt, or analyse your current profit margins.
Do you need help gathering a clear image of your financial situation for your Etsy accounting records? Take precautions from these common mistakes when you are managing your Etsy seller accounting.
Not Considering All Service Fees
Overlooking service fees is one of the biggest mistakes you can make. As an Etsy seller and business owner, it’s crucial to keep track of all of the costs and fees involved in creating a product in addition to selling it to ensure you gain a profit. It’s best if you keep your Etsy seller accounting accurate and consistent to ensure your correctly notating your earnings. You will need to estimate and keep a record of all service fees you’ve paid to Etsy accounting. Etsy charges its sellers different expenses on their platform, such as:
- Listing Fees
- Payment Processing Fees
- Platform Transaction Fees
- Shipping Transaction Fees
- Onsite and Offsite Platform Ads
By gathering a detailed record of what you are paying to sell your high-quality merchandise, you can garner what needed expenses are coming out of your account and what fees you can reduce to improve your business finance’s cost efficiency.
Not Keeping Personal and Business Finances Separate
If you have found that you are frequently making mistakes when doing Etsy seller accounting, you may benefit from separating your personal and business finances. When you draw the line between your financial expenditure and income, you gather a better idea of what you are spending your money on. This organisation will also improve your time efficiency when filing taxes with HMRC. You will be able to protect your personal assets in the emergence of legal action against your company. Be proactive in putting division between your financial records with a few easy steps.
Open a Business Checking Account
Distinguish your Etsy accounting by opening a business checking account with the bank. This is a healthy step for any business owner as you will be able to keep a reliable record of your financial payoff. A separate business account can indicate to the HMRC that your business is legitimate, which may help you save more on your tax deductible.
Apply For a Business Credit Card
An excellent way to reduce business transactions impacting your personal financial record is by obtaining a business card. You will be able to build your credit history as you use this card for your expenses. Streamline your accounting Etsy process by having a credit card or debit card exclusively for your online store purchases and fees.
Set a Company Budget
If you need to separate your personal and business expenses, a budget may help you stay ahead of your estimated payments. Once you have established an accurate track record of your Etsy seller accounting fees, you can deduce if you are spending too much money on shipping costs and product composition. Creating a calculated and understandable business budget will help you reduce the risk of overspending and delving into your personal finances.
While it’s not always possible to avoid mixing your personal and business finances at the beginning of your Etsy store, setting a clear boundary between the two early on will help you manage your money. This will keep you from overexerting your personal funds and it can safeguard you from potential losses.
Not Calculating Your Business’s Prices Correctly
A common mistake you may be making when Etsy seller accounting is miscalculating your online store prices. If you are serious about creating a business model on Etsy that will provide you with income to support yourself, you will need to deduce your expenses accurately. How much money are you spending to create your products? This price should include the materials, labour, shipping, and seller fees from Etsy accounting. If you have yet to account on Etsy accurately, you may be losing money rather than making a profit. That’s certainly not a sustainable business strategy.
The price of your products is an essential factor in determining how successful your business is, and it’s important to calculate your Etsy store prices correctly. If Etsy raises its seller’s prices, you should account for that change by raising your prices too. Remember, consumers are typically willing to pay a higher cost for high-end products they value. Be sure your product is something that provides value they can recognize. Accurately estimate your total production costs per item to determine a livable fee you can charge your buyers while keeping a record of your accounting on Etsy.
Not Utilising Digital Documentation
Etsy is an online marketplace for e-commerce sellers like yourself to sell high-quality, handmade items. Match your online store’s design with digital documentation. Digital documentation has many advantages over traditional paper filing. You are more likely to make errors or lose paperwork when organising your business expenditures with material paperwork.
Not only are digital databases more secure, the continuous improvements in technology mean you can access your Etsy accounting anywhere in real-time. You will save time and money when you keep a record of your store’s accounting transactions on a digital platform. Instead of spending time digging through paper forms to find a transaction fee, you can boost your efficiency with accounting software designed to help you keep track of your online store’s financial records.
Not Using Accounting Software
Do you need a time-efficient, reliable, automatic, scalable, and secure solution to avoid common Etsy seller accounting mistakes? Accounting software helps you manage day-to-day financial transactions for your online business. Gain assistance in the following areas of accounting:
- Fixed Asset Management
- Expense Management
- Revenue Management
- Accounts Receivable
- Accounts Payable
- Subledger Accounting
Accounting software will aid you in recording and reporting your Etsy store financial transactions in a manner that is easy to understand and analyse. If you want real-time data analysis of detailed tracking of your monetary payoff, you should invest in reliable accounting software like Link My Books.
Are you ready to get help managing your Etsy accounting records? Link My Books helps you connect to your preferred e-commerce platform. We help you save time documenting your business expenses so you can spend more time adding or refining your high-quality products on your Etsy page. Whether you are looking to sell on Amazon, eBay, Etsy, or Shopify, you can rely on us to help you keep your financial records secure and accurate.