The majority of e-commerce business owners are passionate specialist in their particular product or service, and this doesn’t always leave time to give the bookkeeping and accounting side of e-commerce the full attention it deserves.

Due to the nature of e-commerce, it is fast paced and exciting and full of opportunities. This can mean high volumes of transactions, in different tax regions on multiple different e-commerce platforms. This is why it is vital to keep your ecommerce bookkeeping and accounting up to date and running smoothly.

This might all sound a little daunting, but the great news is when you use a specialist e-commerce accountant for your e-commerce bookkeeping and accounting the majority of the processes can be streamlined and automated, so it is no longer a headache.

It’s not just about keeping tax compliant though, the right accounting foundations set in place gives you strong financial management information helping you grow and scale your e-commerce business.

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Keeping Track of Cash Flow in Your E-commerce Business

E-commerce businesses are often dealing with high transaction volumes often coming in waves and via multiple different e-commerce or marketplace platforms. It’s never that straight forward though there are returns, refunds and chargebacks all to be accounted for within your e-commerce bookkeeping system.

With the proper e-commerce bookkeeping in place all of this will be properly automated, and the data will be at your fingertips, so you know what your cash flow position is not only at the time of looking but predicted for the coming months. Meaning you can re-invest in stock, marketing or other new business expenditure without the stress of running short.

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Making Sure Your E-commerce Accounting is Tax Compliant 

Making sure you are declaring your taxes properly is arguably the most difficult part of e-commerce bookkeeping and accounting. Sales are likely occurring in different tax regions where different VAT rules can apply. Also, due to the HMRC initiative Making Tax Digital how you record your bookkeeping and accounts is also important with restrictions on how data can be used.

Using a specialist e-commerce accountant for your e-commerce bookkeeping ensures your information is being recorded and declared properly and reduces the risk of fines and surprise lump sum payments.

One of the more complex areas of compliance is e-commerce businesses VAT requirements when selling in the EU you can find more information in our blog covering this topic.

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Using Your E-commerce Accounting & Bookkeeping Data to Make Decisions

It’s not just about the cash flow of your e-commerce business being able to drill down into that data is another major benefit of using an e-commerce accountant and will undoubtably help your business grow. Your bookkeeping will provide the data to understand which products are the most profitable, when to run promotions and when not to.

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Managing Inventory Effectively

Inventory and storage costs is often one of the biggest costs associated with e-commerce businesses. All the data that you gather helps you to manage your stock forecasting and holding.

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Building Investor and Lender Confidence

A number of businesses come to us when they need to raise credit for their business, or their own bank has requested information about their business for mortgage purposes, and they cannot move forward without the proper bookkeeping and accounts. The more streamlined your e-commerce accounting practices the easier this process will be.

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Saving Time and Reducing Stress

It’s common for e-commerce entrepreneurs to start out doing all of their bookkeeping and accounting by themselves but it can become overwhelming and complex as the business grows. Also, with increased sales values and multi-platform transactions the propensity for mistakes and the consequences of errors can grow. Outsourcing to a specialist e-commerce accountant and bookkeeper can reduce stress and free up more time for the side of the business you are more passionate about.

At MWA accounting we can support you in doing as much or as little as you like. We aim to automate as much as possible for you so that you can remain self-sufficient for the day to day and focus us on areas to help you achieve growth and reduce tax liabilities.

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Final Thoughts

Whatever stage your business is at as specialist e-commerce accountants MWA can support you with a bespoke package to suit your business needs and make your e-commerce bookkeeping and accounting as stress free as possible.