Not only can accurate recordkeeping help your business stay on track, but it can also help you track growth and stay on top of unexpected changes from month to month.
There are, unfortunately, always going to be challenges you'll face with accounting for e-commerce business. That doesn't mean you can't take steps to overcome them, though. What kind of challenges are there, and how can you ensure they won't affect your business?
Luckily, we're here to help you get started. Read on to learn everything you need to know.
Whether it's Amazon seller fees, Etsy seller fees, or eBay seller fees, these are something you'll have to deal with when you own an e-commerce business. If you’re selling internationally, you might end up paying other fees like an exchange rate.
How to Overcome
When you’re building your business, make sure to do research on the fees you’ll be facing. If you plan on using multiple reseller markets, be sure to familiarize yourself with their rates and flat monthly fees. The same goes for any expense accounts your business will own.
An e-commerce accounting software like Link My Books can be helpful when you’re learning about these expenses. The fees aren’t possible to avoid, but accounting software can give you easy access to a suite of tools complete with tax reports, inventory and margin reports, and even confirmed and pending returns.
You’ll be able to track any extra charges you might’ve faced, and then have an easier time looking into and tracking down the cause.
Different Types of Taxes
As a business owner, you'll also need to know about the different types of taxes. In the US, you'll typically have to take care of state and federal taxes. Your responsibilities will vary by state, and some states don't even have an income tax to worry about.
Sales tax is another thing you'll need to consider. It's smart to add this to the amount that customers will have to pay so you can then pay them accordingly.
Taxes can be a burden for small business owners, but it's important to track things from the very beginning. Neglecting this can lead to further problems down the road, especially if you face an IRS audit in the future.
How to Overcome
Investing in good e-commerce accounting software is a great way to help yourself get ahead. Programs like Link My Books can help you keep track of everything from sales tax to tax forms as needed, and it makes it easy to automate the process instead of keeping track of everything manually.
It's also essential to educate yourself on these laws and your responsibilities before tax season rolls around.
Your business's inventory management process can be a tricky thing to keep track of. You'll need to know how to forecast estimated sales in order to meet demand. You'll also have to know how to prepare it all and organize things so orders can be packed quickly and efficiently once they start rolling in.
There are a few ways you can stay on top of this process from the beginning, though.
How to Overcome
If you're selling products on multiple platforms, it's best to have one place where you record and track inventory. It's important to make sure you have enough on hand without stocking up an unnecessary amount of supplies.
With too much inventory, you'll begin seeing profit loss. With too little inventory, you might notice that demand decreases when customers can't get their hands on your products. Knowing where your middle ground lies is essential for your business and its success.
That's why investing in an e-commerce business accounting software from the beginning is so important. It can help you save time and money later down the line.
Shipping can be a confusing and costly venture. Since it's so expensive, it can be difficult to charge customers the necessary amount when starting out. If it's cheap, it can feel too good to be true.
If you're using a third-party platform, they'll likely have an integrated shipping platform they use to manage the product. It can make things easier for a lot of small businesses, especially when you look at the built-in inventory tracking tools they often include.
These tools won't work for everyone, though, and it's important to know whether you'd like to work with it before committing.
How to Overcome
The best thing to do when it comes to shipping is research. Develop a deep understanding of the things your business needs, and then work to find a platform that meets your needs.
Many third-party markets have simple platforms that make it easy for business owners to get started, but you'll need to know how to navigate those platforms, and how they can work for your business. If you're using more than one, it's essential for them all to work together so you're accurately tracking expenses and inventory.
Accounting for E-commerce Business Doesn't Have to Be a Headache
When it comes to accounting for your e-commerce business, you don’t have to face a hassle every time you log in to check your books. In fact, investing in proper e-commerce accounting software can make things a lot easier each month. Not only will you have an easier time keeping track of your spending, but you’ll be able to see where you can save, and how you might be able to improve processes.
Luckily, Link My Books is here to help every step of the way. Get started with our 14-day free trial today.