Establishing and operating any business is tough and e-commerce business brings its own unique challenges. In an e-commerce business, the inventory is spread across a number of channels and there are other issues that are unique to an e-commerce business. This is why, you need to hire the services of a specialist e-commerce accounting company. Here are a few reasons why you need a specialist e-commerce accountant.
1. Gives You a Complete Picture of Your Business
Maintaining up to date books serves multiple purposes. One of the benefits is the ability to pay accurate taxes. However, your accountant should also serve as a trusted advisor. They should be able to tell you the sales made last week, last day, last month and other such things.
Online business changes extremely fast and this is why, you need real-time information. A specialist e-commerce accountant will help you keep your tab on the cash flow status of your business as well as the profitability. Regular bookkeepers don’t have the experience or the expertise needed for e-commerce businesses.
2. E-Commerce Business Is Different
When you are selling on Amazon, there are a number of steps involved in the process. Also, the money that comes into your bank account and goes from your bank account doesn’t provide a complete picture of your business. This is why, the accountant needs to dig deeper into the Amazon seller statement. They need to have experience with deciphering the Amazon seller statement to give you a bird’s eye view of the financials of your business.
In traditional businesses, the bank statement usually gives an accurate overview of the financial status of the business. On the other hand, in an e-commerce business, the bank account doesn’t tell the whole story and the focus needs to be on sales channels to get a complete picture of the financial standing of the business.
3. Inventory Management
Inventory management is one of the most complex challenges faced by Amazon sellers as inventory is usually kept in multiple locations and it needs to be reconciled across multiple channels. Inventory has a direct bearing on Cost of Goods Sold which, in turn, affects your gross margin. After all, Cost of Goods Sold is the biggest P&L item for e-commerce companies and this is why, you need someone with expertise in e-commerce accounting.
An accountant with expertise in e-commerce accounting understands the importance of properly tracking the inventory across multiple channels in order to help you make informed decisions based on accurate information.
4. Using the Right Tools
There are a lot of accounting tools designed for traditional businesses. Similarly, there are accounting tools designed for e-commerce sellers. Traditional accountants typically do not have the expertise and experience with the tools for e-commerce businesses. A specialist e-commerce accountant is not only aware of the right tools but they also have the experience to use the tools for managing your e-commerce business.
5. Cash Flow and Tax Management
Managing cash flow for an e-commerce business is a whole lot different from managing a traditional business due to its unique nature. Also, different tax rules apply to e-commerce businesses. A specialist e-commerce accountant will help you manage your cash flow and keep track of the documents required for taxes.
Final Thoughts
To conclude, e-commerce accounting is different from accounting for traditional businesses. Inventory planning and management is a whole different beast as inventory is spread across multiple channels. Similarly, cash flow management for sellers making a lot of sales is a challenging process. Also, not everybody understands the Amazon seller statement and that is necessary to keep track of chargebacks, seller fees and other such things. In short, you need someone with expertise in e-commerce accounting to get a complete picture of the financials of your business.
Infinity22 is a specialist e-commerce business advisory agency. We use the latest technologies to help our e-commerce clients thrive. Get in touch with us today to schedule a free consultation for growing your e-commerce business.