Why is bookkeeping for an eCommerce business important? Just like with any other type, your finances are the foundation of a healthy business.
If you do not have accurate inventory numbers, or do not know what your sales are, you cannot make impactful business decisions.
How to do accounting for an eCommerce business:
- Hire a Bookkeeper or Accountant that is an expert in these this of business
- Choose the right accounting software; QuickBooks and Xero are excellent options and have the ability to integrate with many eCommerce platforms including Shopify
- If you’re unable to hire someone, follow eCommerce accounting best practices
Follow eCommerce accounting best practices:
- Keep your books up to date
You can work with your bookkeeper/accountant to update your books on a weekly, bi-weekly or monthly basis
- Stick with Accrual Accounting
Cash based accounting just does not work for this type of business
- Maintaining proper inventory reporting
Using third party apps such as OneSaas, will import all sales and inventory into your cloud accounting software. QuickBooks online is a good inventory management system, however if you need a more robust system, third party inventory apps like SOS are a great choice.
- Setup fraud prevention measures
Keeping a close eye on bank accounts, payroll, etc. will help you detect if something is out of place.
Review your financial statements such as the Profit and Loss statement, Balance Sheet and Cash Flow statement often. Analyzing these documents on a monthly basis will help detect if there is misclassification of expenses, if all sales were imported correctly, if you are making money, etc..
If all else fails speak with an expert in this industry or book a time to chat with us. We are happy to chat with you and help secure the future of your growing business.
~ Jennifer, CPB