Drop-shipping Accounting Solutions for E-commerce Entrepreneurs

Vlada Karpovich
drop-shipping accounting solutions entrepreneur

Drop-shipping can be a quick and cost-effective way to start your e-commerce business. Drop-shipping accounting solutions, such as those mentioned in this article, will ensure your accounting is quick and cost-effective too.

Drop-shipping can be a valuable tool; it is perfect to get your e-commerce store up and running or to test new products for your existing store. Above all, it is timesaving, so you don’t want your accounting to eat back into that.

Potential Hurdles – Integrating your drop-shipping platform

If you are drop-shipping through AliExpress or similar, you are probably doing so through Shopify or a similar platform. By using accounting software designed for e-commerce, such as Xero, your e-commerce platform transactions will automatically be fed through to your accounts. This includes drop-shipping transactions.

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Potential Hurdles – Accounting for VAT

VAT on your drop-shipping supplies can be a tricky business, especially if you are selling internationally. We recommend all e-commerce entrepreneurs seek advice from a professional in each market they intend to sell in to ensure you don’t get any nasty surprises down the line. Be forward-thinking and investigate your obligations before you start selling in a country; it will save headaches retroactively editing the accounts. If you have already started selling and haven’t sought out VAT guidance, please get in touch with our team to check your outstanding obligations.

Potential Hurdles – Transaction History

If you didn’t do so when you started your e-commerce business, we highly recommend you open a dedicated bank account. Keep your transactions easy to see and easy to match to your accounts. If you are already in over your head, seek a specialist e-commerce accountant, like us, to help get your transactions correctly accounted for, and bring your accounts back to a manageable place.


Potential Hurdle – Accounting for Inventory

Possibly the easiest drop-shipping accounting solution relates to your inventory – simply don’t account for it! At no point in the cycle does your e-commerce business own the inventory, so it has no place in your accounts.

Make Drop-shipping work for you

Outside of our drop-shipping accounting solutions, there are many things you can do to make drop-shipping work for you.

– Always order a sample from your suppliers to avoid the risk of selling poor quality items
– Invest in your website’s SEO or your product listing’s SEO if you sell through Amazon or a similar platform
– Make your delivery times crystal clear and broadcast any expected delays
– Follow up with your customers with discounts for future purposes to increase loyalty and turn one-offs into repeat customers

Next Steps

Whether you exclusively use drop-shipping, use a blend of e-commerce styles, or make your own products from scratch, we would love to help your e-commerce business grow to its full potential. Reach out to our team for advice on how to help your business flourish, despite the challenges of 2020.

The best time to act is now.


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Breakout E-commerce accountants and Xero specialists to supercharge your UK online business growth.