Accounting and bookkeeping best practices for e-commerce

Keep reading to find out accounting and bookkeeping best practices for e-commerce stores to boost business and streamline success.

Good bookkeeping and accounting practices are essential for any business. For e-commerce store and business owners, established accounting and bookkeeping processes can provide stability, profits, and success.

When running an e-commerce store, there is a lot to think about, from email marketing and branding to your business finances and everything in between.

Whether you have recently launched a new online venture or are a seasoned e-commerce entrepreneur looking to tidy up your back-end business operations, in this guide, you will find out the accounting and bookkeeping best practices for e-commerce businesses.

Monitor cashflow

Keeping a close eye on your cashflow is important to ensure you have a good understanding about how much money is coming into your business. It also helps you track outgoings such as bills, salaries, and overheads to ensure a positive cash flow.

Cash flow management ensures you have enough money to pay your bills and make a profit. Failure to monitor your cash flow can cause significant problems and put your business at financial risk.

To improve your business cash flow, you can produce a cash flow forecast, provide cash flow training to employees, and be sure to always chase late payments.

Use accounting software

Accounting software eliminates manual processes to reduce the risk natural human error and improve financial accuracy in your business. Companies that leverage accounting software, like Xero, are able to save time and other resources by streamlining and automating management and reports.

Cloud based software can record information automatically to produce a clear picture of business expenses so business owners can see where to cut costs and identify opportunity for growth.

At Unicorn Accounting, we convert your old accounting and bookkeeping set up to the latest accounting software as standard so you can receive a specialised service and take a real time approach to your accounting.

Implement inventory management system

Using inventory management systems and software will provide you with insights into your products. With access to the latest trends, you can accurately forecast your inventory to save on storage costs and ensure you are not left with excess stock.

Additionally, with inventory management software your business is likely to see an increase in productivity and efficiency while experiencing a lower rate of returns and lost inventory thanks to streamlined inventory controls.

Ensure data security

To remain complaint with regulations and laws, e-commerce stores need to ensure both business and customer data is secure. For this reason, data security should be a top concern for your e-commerce store.

Cyber-attacks can lead to a loss of money, data, and viability for businesses. To prevent attacks on customer and business data ensure to implement secure systems and limit access to authorised users.

Prepare for tax obligations

Late or incorrect tax payments to HMRC can result in unexpected fines and penalties. That’s why it is important to stay informed about tax regulations and deadlines. To reduce financial stress during tax season, be sure to prepare in advance.

It is your businesses responsibility to keep accounting records up to date and prepare and submit a tax return by the deadline date. For e-commerce stores that trade outside of the UK, it is also important to also consider any international tax obligations.

Why is accounting important in e-commerce?

Accounting is important in every industry to keep track of finances and keep on top of financial management. However, it is especially important when it comes to e-commerce and you must consider shipping costs, VAT requirements, international tax schemes, and payment processing fees.

But not only this, keeping up with accounts and establishing effective accounting processes can also help track stock levels, reduce inventory holding costs, and accurately forecast product demand by analysing hhistorical financial data and identifying trends.

Additionally, accurate accounting ensures compliance with tax laws and regulations to reduce the risk of late and incorrect submissions and minimise fines and penalties.

What is the best way to maintain accounting and tax compliance?

The best way to maintain accounting and tax compliance for e-commerce stores is by outsourcing to a specialist e-commerce accountant.

E-commerce accountants have the knowledge, experience, and expertise to advise you about cross border payments, multi-currencies, VAT requirements, and international shipping to ensure you operate efficiently and in compliance with international laws.

Making mistakes and operating in defiance of regulations, rules, and industry standards can have serious consequences for an e-commerce business- even if it wasn’t intentional.

To minimise the risk, contact an e-commerce accountant today.

Why choose Unicorn Accounting?

Ensure you keep on top of your finances and tax obligations by outsourcing to an accountant. This means that you don’t need to worry about your end of year accounts, payroll, or bookkeeping requirements.

At Unicorn Accounting we are e-commerce accountants who help make your online business a growing success. We offer e-commerce accounting advice, financial management, bookkeeping, cash flow statement, and tax filing services to support and scale your business.

Our team of accountants and Xero-certified advisors have experience working with both small start-ups and family-run online stores to large-scale, international retail and e-commerce brands.

If you’ve got an online store, we have the best solution for you. Providing you with a financial arm to your business through our sector experience, and skills with innovative technologies. To see how we can help you maximise the scalability of your e-commerce brand all year round, get in touch with Unicorn Accounting today. Or click here to get a free quote.

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