E-commerce Accounting Tips

Josh Smithurst from our cloud accounting team looks at the critical issues confronted by e-commerce businesses and shows exactly how software can help you stay ahead of the game.

Accounting may be seen as a burden by many, but its importance increases as your revenue grows, making it a part of business that's impossible to ignore. By getting your accounts and bookkeeping in order, you put your e-commerce enterprise in the best position to succeed.

Get some accounting software

With such a variety of affordable and easy-to-use accounting suites out there, there's no excuse to be managing your cashflow in Excel anymore. Accounting solutions such as Xero and QuickBooks can track sales, costs and inventory. Pick a platform that can sync directory to your e-commerce store. For example, both Xero and QuickBooks can be integrated with Shopify.

Inventory = Money

The inventory is your product, or the materials required to make the product. Inventory management can make or break an e-commerce business, as running out of stock will make you lose sales and damage your reputation. Conversely, tying too much money up in inventory can mean you have less leverage when adjusting the price of your products to cater for new demand.

Cashflow Management - Account for returns

Customers are legally allowed to return items for up to 14 days. Through accounting software such as QuickBooks and Xero, you can work out how much time you need to allocate to the returns process.

Register for VAT

If your turnover reaches £85,000 per year, you legally need to register for VAT. This is an area where proper accounting practices can help to save you a lot of money, as maintaining records of all your business expenses allows you to offset a lot of spending against your tax bill. This is where QuickBooks and Xero can organise your expenses, removing the risk of filing and potentially losing receipts and invoices.

Plan for tax

Tax is unavoidable. Whether you're selling within the UK or globally, it's essential to keep track of what you're paying, as failing to plan can lead to unwanted surprises. By using QuickBooks and Xero to organise this process, you can start setting aside the correct amount of tax each month.

Are you in need of some help as to what accounting software to use for your e-commerce business? We offer full cloud accounting solutions, and our QuickBooks and Xero certified advisers can even train you on the software to ensure you are using it to its full potential.

If you would like to discuss any of the topics mentioned in this blog further – whether it's business tips or help with accounting software or bookkeeping - please do not hesitate to contact a member of the team on 0115 955 5500 or email us at enquiries@pagekirk.co.uk.