How do you manage ecommerce in accounting

In today’s digital age, e-commerce has revolutionised how we do business. While the allure of a global customer base and low overhead is strong, managing the financial side of an online store can be complex. From navigating a sea of transactions to tracking inventory across multiple platforms, e-commerce accountingpresents unique challenges that traditional accounting methods simply can’t handle.

Here at Unicorn Accounting, we specialise in helping e-commerce businesses not just survive, but thrive. We understand the unique intricacies of online retail and have developed a comprehensive approach to manage the financial landscape.

Our methods are designed to provide clear, actionable insights, helping you make smarter decisions and focus on what you do best – growing your business!

The e-commerce accounting puzzle

Traditional accounting often deals with a smaller number of large transactions. E-commerce, however, is the opposite – a high volume of small transactions, often from multiple sales channels, creating a financial ecosystem with many moving parts.

Sales channels: You might be selling on your own Shopify store, a marketplace such as Amazon or Etsy, and social media platforms. Each channel has its own fee structure, payment schedule, and reporting format.

Payment processors: Platforms such as Stripe, PayPal, and Shopify Payments deduct fees, hold funds, and process refunds. The money that hits your bank account isn’t your gross sales, but a net amount after all these deductions.

Inventory management: Tracking stock, calculating the cost of goods sold (COGS), and managing returns is a continuous process. Your inventory is a key asset, and its value needs to be accurately reflected.

Sales tax and VAT: E-commerce businesses must handle sales tax or VAT in multiple jurisdictions, both domestically and internationally. This can be a labyrinth of different rates, rules, and reporting requirements.

Refunds and returns: The e-commerce world has a higher rate of returns. Managing the financial impact of these returns, including the cost of shipping and processing fees, is crucial.

Our approach to E-commerce accounting

At Unicorn Accounting, we don’t just record transactions, we build an E-commerce accounting system that gives you a complete, real-time picture of your financial health. Our process is built on a foundation of best practises, technology, automation, and expertise.

 Integration and automation

The first step in our process is to connect all your sales channels and payment gateways to your accounting software. We use powerful tools such as Shopify Apps, A2X, and other integrations to automatically pull your sales data, fees, and payouts directly into your accounting system.

This eliminates manual data entry, which is not only time-consuming but also prone to error. By automating this process, we ensure that your financial data is accurate and always up-to-date.

 Reconciling with precision

One of the biggest headaches for e-commerce businesses is reconciling bank statements with sales data. The lump sum deposit from a payment processor often includes sales from various days and accounts for fees, refunds, and chargebacks.

We use specialised software to break down these payouts. For example, instead of manually matching hundreds or thousands of individual sales, the software creates a summary journal entry that accurately reflects your gross sales, fees, and other deductions. This ensures your books are clean and reconciled, with every penny accounted for.

Strategic financial reporting

Once the data is flowing cleanly, we transform it into meaningful insights. We provide you with custom financial reports that go beyond basic profit and loss statements.

Our reports can help you answer critical questions such as:

What are my most profitable products?

• Which sales channel is delivering the best return on investment?
• What’s my real-time cash flow position?
• Are my marketing campaigns generating a positive return?

We also provide in-depth analysis of your Cost of Goods Sold (COGS), which is essential for accurate profitability calculations.

Managing sales Tax and VAT

Navigating the complexities of sales tax and VAT is a full-time job. We use integrated solutions to track your sales by location, apply the correct tax rates, and ensure you’re compliant with local and international regulations. We can also prepare and file your sales tax returns, giving you peace of mind that you’re meeting your legal obligations.

Proactive financial guidance

Our relationship with our clients goes beyond simple bookkeeping. We act as your financial partners, providing proactive advice and strategic guidance.

We help you with:

Budgeting and forecasting: We use your historical data to create realistic financial models for future growth.

Inventory planning: By analysing your sales data, we can help you optimise inventory levels and avoid stockouts or overstocking.

Profitability analysis: We help you identify areas where you can improve your margins, whether through pricing strategies or cost reduction.

Scalability planning: As your business grows, we ensure your financial systems can scale with you.

Why choose Unicorn Accountancy?

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

To maximise the scalability of your eCommerce brand, get in touch with Unicorn Accounting today.

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