The pandemic has been devastating for many people and for many industries as well. But there are other areas of the economy that have managed to not only survive but thrive. eCommerce was one of them.
In 2020 eCommerce sales increased by 43%. More and more eCommerce stores began to open across the country.
If you’re one of the many enterprising Americans who has started an eCommerce business in recent years you’re probably still finding your feet and learning new things all the time. eCommerce accounting, for example, can be a tricky skill to master.
That’s why today we’re going to be talking about some eCommerce accounting tips to make your life easier and your business more successful. Read on for everything you need to know.
Prepare the Necessary Provisions
There are a few different ways you can go about doing your accounting. But no matter how you choose to get it done there are some details and provisions you’ll need to have ready.
First and foremost, you’ll need to obtain an Employer Identification Number. This is a number that identifies your business on all tax documents.
You can apply for your EIN online. If you’re a sole trader then you can use your Social Security Number instead of an EIN.
As well as an EIN you’ll also need to open a business bank account. It’s important to keep your business finances separate from your personal account.
Choose Your Means of Accounting
One of the most important bookkeeping tips for eCommerce is there are two different ways you can go about recording your business income and expenses. These are cash basis accounting and accrual accounting.
In cash basis accounting you record when money arrives in your business bank account or when leaves it as an expense. With accrual accounting, you need to record each sale or expense when it takes place, not when you actually receive or send money for it.
You’ll need to decide which method you want to use and then be consistent with the reporting required. Cash basis accounting works best for smaller eCommerce sellers. Accrual accounting would be better if you’ve got high stock levels and multiple suppliers.
To Outsource or Not to Outsource?
Another thing you’ve got to remember about accounting is that you don’t need to go it alone. There are many different accounting software platforms that make this task a whole lot easier.
It’s also possible to outsource your accounting function entirely to professional eCommerce accountants. To learn more about this option click for amazon accounting services.
There are advantages to outsourcing but there are costs and considerations you’ll need to take into account as well. So weigh your options carefully.
eCommerce Accounting Made Simple
eCommerce accounting is an essential part of running a successful eCommerce store. Whether you want to tackle it yourself or make use of software or professional help it’s not something you can avoid dealing with. That’s why it’s good to be as informed as possible on best practices.
Follow these tips and conduct your own independent research so you can make smarter choices when it comes to accounting for your eCommerce store. We’ve got plenty more informative articles on the rest of our site.