Firstly, these reports aid in performance monitoring of an ecommerce business by allowing business owners to assess trends, patterns, and areas that may require attention over time. Ecommerce businesses often operate in a high-volume, real-time sales environment. Streamlining bookkeeping tasks allows for the immediate recording and updating of financial transactions. This provides business owners with real-time insights into their cash flow, sales, and expenses. Ecommerce businesses, like other businesses, employ different accounting methods to record and report financial transactions. The three primary ecommerce accounting methods are cash accounting, accrual accounting, and modified cash accounting.
Accrual basis accounting is the method required by generally accepted accounting principles (GAAP). Under this method, you might receive a purchase order for an $800 handmade coffee table, make the table, and then ship the table to your client. Under a cash accounting method, you only record income from the table when the purchaser’s payment lands in your account. Determining when an ecommerce seller must charge sales tax can be complicated—and is made more so by the fact that different states are governed by different rules.
Bookkeep Recap: Simplifying Accounting Complexity for Multi-Channel Sellers
On the other hand, accounting is the process of analyzing, interpreting, and reporting financial transactions. This is what allows you to make informed decisions about your e-commerce business’s finances. Without having to sift through your bank and credit card statements, it makes finding ecommerce bookkeeping transactions simple. You can further break it down into sub-ledgers for assets, liabilities, equity, revenue, and expense transactions. To ensure that you and your accountant don’t get lost in the future, identify all of your sub-ledgers names and purposes in a chart of accounts.
We provide quick tutorials and detailed instructions to guide you through using MyCountSolutions if you need them. Software applications like MyCountSolutions and Bench offer e-commerce bookkeepers a subscription-based service that bundles their systems and the services of their specialists. E-commerce bookkeepers will categorize your transactions, reconcile all of your records for you, and provide real-time financial information. Fraud cannot be stopped, but it can be detected thanks to bookkeeping.