Managing finances for e-commerce businesses poses some difficulties because sales are conducted online, relate to different currencies and platforms, and are affected by changing tax laws. But don’t worry! This guide categorizes general relational issues and provides easy ways of addressing them with the help of a CPA in Brooklyn, NY.
Table of Contents
Common E-commerce Accounting Issues and How to Solve Them
Picking the Right Accounting Software
- The Problem: Most of the available accounting software does not include features that address the concerns of e-commerce, making it challenging to identify the program to use.
- The Fix: Some popular software includes Zoho Books, Xero, and FreshBooks. These are designed for online business requirements that include sales tracking, taxation, and integration with other systems.
Dealing with Platform Fees
- The Problem: Various e-commerce platforms charge fees and pocket the cash, and the rates differ, making it hard to measure.
- The Fix: It is recommended that all the fees paid to different platforms be tracked using software, which will save more time and reveal the true cost of sales.
Managing Inventory Across Multiple Platforms
- The Problem: When selling on different channels, customers face a challenge when restocking.
- The Fix: Use inventory management tools that synchronize with all your sales channels.
Balancing Accounts from Different Platforms
- The Problem: It is tiresome and should be avoided because mistakes are likely made when entering the data manually.
- The Fix: Develop a procedure for recording the sale in one location, leading to consistent input.
Handling GST (Goods and Services Tax)
- The Problem: Different GST rates may apply to a product depending on its type or the buyer’s location.
- The Fix: Promoting using accounting tools that help you calculate GST for each product sale. If your warehouses are in different states, you must register for GST in each state and track it separately.
Staying Tax Compliant
- The Problem: The process of filing taxes is very complex, and one can easily incur some penalties.
- The Fix: You should use tax software or consult an accountant to calculate GST and income tax and then file them correctly. This saves you from incurring unnecessary fines.
Reducing Manual Work
- The Problem: Such data entry uses a keyboard and is slow, inconvenient, and easily prone to errors, resulting in delays.
- The Fix: Substitute accounting jobs with software or outsource them to an expert. Automation saves time and ensures accuracy.
Extra Tips
Inventory Management
- Implement an application that will show you the current position of the stocks.
- It is recommended that physical stock is frequently checked to rectify any error that may have occurred.
Payment Handling
- Choose payment solutions that assure integration with other accounting programs.
- The general instructions include tracking refunds and chargebacks.
Managing Subscriptions
- Pay via subscriptions: This involves automating bookkeeping for subscription purposes.
- Customers should be informed clearly about each channel’s cancellation rules.
Fraud Prevention
- Select the right fraud detection measures that should be adopted to reduce the rates of fictitious transactions.
- Resolve conflict quickly with proper paperwork.
International Sales
- Ensure you are on platforms that deal with more than one currency type.
- Seek advice from other entities that deal with international taxation.
Data Protection
- Use secure payment systems.
- Educate staff on maintaining customer data privacy, which is customer information
Custom Reports
- Some of the helpful reports can be created using the available accounting tools.
- Accountants help analyze business knowledge data and expand businesses.
Here’s the truth: e-commerce accounting is not as complicated as most people think when you have the best tools. Report all processes, automate all work, and always monitor all changes. Your business will only grow and be successful if you’ve got accurate accounts.
