Plus, outsourcing this task allows you to focus on other aspects of your business that you likely find more enjoyable, such as product development and marketing. What are the best practices for eCommerce inventory management? Download our ecommerce accounting tool kit and learn how to build a financial system to scale your business beyond 7 figures.
For example, if you only give them basic information, they are going to provide you with more general advice and best practices. Every eCommerce entrepreneur has their own risk tolerance. However, when it comes to taxes, it is generally better to be safe than sorry.
If you can’t afford a full-time, in-house accountant or simply don’t want to deal with the management time, using a turnkey, specialist ecommerce accountant or accounting firm like Bean Ninjas can be a great alternative. When you outsource, it is a monthly expense (instead of fixed overhead) and you get the benefit of working with a company that has dialed-in processes and expertise in the cloud accounting software you use. You will also have the business intelligence to review what products are selling profitably, which benefit from paid acquisition, and clearly know how much money is on hand to pay yourself at the end of each month.
Product categories
- You’ll also want to have your financial records on hand in the event that you are audited by the IRS.
- When you outsource, it is a monthly expense (instead of fixed overhead) and you get the benefit of working with a company that has dialed-in processes and expertise in the cloud accounting software you use.
- If you find this to be true, read for more details on accurately recording COGS and why COGS matters.
- Here, you can access numerous reports based on the performance of your product and much more.
Not only will it affect your decision-making, but others will have a false sense of how your business is performing. This makes it incredibly difficult to get loans, investors, and to sell your business. If you have employees or virtual assistants that help run your business, you can add them as a user to your seller account. We believe everyone should be able to make financial decisions with confidence. In month one, on the cash side, there is a big inventory purchase which causes the whole month to look like a loss. In month two, on the cash side, there is no inventory bought so the business looks crazy profitable.
Regularly reconcile your accounts, review your financial statements, and ensure everything is in shipshape. It’s like having a personal assistant that keeps your financial records in tip-top shape. The inaccurate recording of COGS and inventory is more detrimental as your business grows. You will get lost on how your business is truly performing, and the value of your assets will be inaccurate. As already mentioned, these problems become serious when trying to get investors, loans, or when selling your business. Poor accounting will give you inaccurate financial data that leads to poor decision-making.
When to hire an Amazon CPA
It helps you track your real profits by considering all those hidden costs and fees that can eat into your revenue. When you know where every penny goes, you can truly celebrate your hard-earned profits. After entering what your product is, you’ll see a recommended product type.
What Makes Amazon Bookkeeping Different From Most Other Businesses?
If you notice that your sales tax liabilities are significant in multiple states, you will probably want the help of a sales tax professional and/or make use of sales tax automation software. You get insights into your sales trends, cash flow, and overall business performance. Armed with this knowledge, you can steer your ship towards success with confidence. A common way to provide discounts on your products is by using a clippable coupon. You can set the discount you want to provide and a coupon will be displayed on your listing as well within the search results to help your listing stand out.
You will also have the data available to back up requests to suppliers for preferential pricing or terms on future purchases. We recommend that most businesses create cash flow forecasts at least once a quarter. You may want to do this more often if your business is prone to volatility or you are in uncertain times – like a global recession and pandemic. Having proper accounting and bookkeeping systems and processes in place can give you confidence in your numbers and help you make more strategic business decisions.
If you can figure out what caused the spike in sales, you can then double down on what’s working. Your P&L is a report that allows you to quickly see all of your revenue and expenses in a given time period. It can get a little complicated when diving into these steps. If you find this to be true, read for more details on accurately recording COGS and how to efficiently manage capex capital project management software why COGS matters.