Tips for selecting an accounting firm for your e-Commerce business

Therefore, this ecommerce accountant will remain in the company’s account for the time being—however, records should state that this expense was indeed incurred (and is due in a month’s time). Your tax accountant should have experience working with e-commerce businesses as the processes often differ from working with traditional mom-and-pop shops. The volume and nature of the information you need to track with every sales order can be overwhelming.

• Your general ledger shipping expense balance reads $15, the net cost of shipping ($25 actual shipping cost – $10 cost passed on to the customer).
• E-commerce order fulfillment should be one of the first processes you perfect.
• Your online business must have clear financial data to grow and to prevent nasty tax surprises.
• Basically, you leverage automated accounting software to continually track your business’s levels of inventory.
• Larger businesses generally follow this system as it makes it significantly easier to handle a large volume of transactions and a complex, ever-growing inventory.

When I’m not busy scaling up my own or other people’ businesses, you’ll find me trying out new things and discovering new places. In addition, working with an experienced accountant will ensure you may profit most from having peace of mind. Accounting professionals well-versed in ecommerce regulations can help with this process, as they can guide legal tax obligations and market trends that affect financials from quarter to quarter. This insight from an experienced professional is invaluable when understanding how best to manage your finances while taking advantage of available deductions and exemptions. You need to ensure that you fully understand your financial standing and, even more importantly, that your financial records are being accurately reported. Furthermore, they can provide insights into where improvements can be made to help boost profits or cut costs, as well as advice on how best to invest funds into growing the business.

Cost of Goods Sold (COGS)

Our team of retail and eCommerce accountants is lead by Blake and Kathe who have 30 years combined experience as online CPAs for retailers. Kathe has a Master of Accounting & Financial Management degree and Blake is a tax accountant extraordinaire. Kruze’s accounting and bookkeeping team combines experienced eCommerce accountants with industry leading – and custom built – accounting software. Kruze’s team automates everything that makes sense, but each of our clients gets an experienced, US-based accountant to look over the financials every month and catch any issues as they arise. Most ecommerce accountants in the industry today have only worked with a few of the big name channels . If they can’t name six sales channels, they don’t have experience beyond the big ones.

Accountants are also critical contributors to the success of e-commerce businesses, as taxes have the potential to be significant deterrents for shoppers considering purchases. Working with an experienced ecommerce accountant is likely to pay off quickly, both in terms of reducing financial headaches and creating new potential opportunities down the line. So, let’s explore why having an ecommerce accountant on board is essential for staying compliant in the ecommerce industry. Overall, it’s a safer, faster, and more efficient way to manage your finances. You’ll need to invest significantly less in hiring an accountant, as your bookkeeping will be continually updated and under control. Traditionally, e-commerce businesses would need to compile each transaction, which is a laborious task that could take hours .

The 3 Keys to Successful E-Commerce Accounting

These areas require different skill sets and services that some accountants won’t offer, making it important to know your business needs before going through the hiring process. One area that not all accountants will be able to understand is international sales taxes. The different obligations for sales taxes around the world can get extremely complicated for e-commerce businesses. Be ready to ask potential accountants about their experience managing international taxes for e-commerce businesses.

• If your company had a warehouse, headquarters, or retail stores in a state, you had tax nexus in the state.
• Business owners love Patriot’s award-winning payroll software.
• And when your business grows, this becomes even more difficult.
• Depending on the timing of money coming in and money going out, e-commerce sellers may report profits on their financial statements but have negative cash flow, or vice versa.

This should integrate with their platform and have functionality for the financial reports we discussed above. Most accounting software partners will do this for you when integrated with your ecommerce platform. This method impacts the kind of forecasting data you’ll have (or won’t have) for your business, and essentially, how accurate your understanding of its finances will be. Regardless of whether you are a seller or an ecommerce accountant needing an overview, this is the place to start. Don’t let the dread of accounting keep you from building a thriving e-commerce business. Once you master these six concepts, you can turn your attention to the creative side of running a business, like designing products and building an e-commerce marketing strategy.

to Grow Your eCommerce Business

Include taxes and shipping from the supplier to your factory in the direct materials cost. And our incredible team of accounting professionals and CPAs have a unique understanding of the eCommerce landscape. We know exactly how to navigate the complexities of your business allowing us set up a proper accounting system and become your Virtual Accounting Department and Virtual CFO.

By having a firmer grasp over these two areas, you can make more informed, sounder financial decisions going forward. Fortunately, you don’t have to keep accrual-based records manually. Understanding the balance between income and outgoings will allow businesses to remain economically feasible and profitable. Additionally, accountants can review all bills related to purchases from vendors and suppliers to ensure that only necessary expenses are being incurred. They can help build customer trust by illustrating that taxes and fees will be reflected accurately during checkout, so there are no surprises at final checkout.

Are they using cloud accounting and other cloud software?

If your accountant uses something else, you should probably move on. Another valuable resource is client testimonials on the accounting firm’s website itself. This can help you gauge their level of professionalism and customer service. This will give you greater peace of mind knowing that there aren’t any hidden fees or costs.