When you manage a business, you need to fully understand your revenue, your expenses, and your profits at the end of the day. And this is even more important in eCommerce, where you need to manage different kinds of expenses, from your supplier to your marketing budget. You will need to know how to effectively manage stock and sell to customers in different countries via different channels as well.
In order to keep track of your important finances, it’s crucial to keep your accounting in order. This article, written with our accounting partner Sleek, gathers all the important accounting practices for eCommerce you need to know.
Important Accounting Practices
There are three essential practices that you need to familiarize yourself with in order to keep track of a successful eCommerce business:
Bookkeeping lists every transaction that happens in your store. For instance, when you sell items in your shop, stock up on products, or have to deal with clients returning products, you’ve completed a transaction that needs to be recorded. Bookkeeping takes note of each asset or money movement with appropriate documentation.
Management reports gather all data regarding sales for analytic purposes. For example, this keeps track of how many products you sold, how many sales channels you are operating on, and where specifically your money is coming from.
Tax filing & statutory reports
These tax and statutory reports depend on where you sell, as each government has a different tax system.
Tax reports keep a very detailed recount of every transaction and the tax categories they fall under. Depending on the categories, different types of taxes are attributed. An experienced accountant can also help make sure you get the benefits and exemptions available to your business under each specific tax code.
Why you should consider cloud accounting
There are a few options you can take to get started. You can either spend months researching and doing it all yourself, you can engage a traditional brick-and-mortar accountant, or you can try cloud accounting.
Cloud accounting is simply accounting completed online with software hosted on a remote server. This is why it’s referred to as being on the ‘cloud’.
If your company implements cloud accounting software, then anyone authorized, such as staff or business partners, can access the cloud through their own devices. This makes it easy to stay connected, no matter where they are, and is much different from traditional accounting firms, which require onsite computers at the company’s physical office.
Also unlike traditional accounting software, online accounting software allows for automatic updates of financial details, and you can see the financial reporting in real-time. In essence, account balances will always be accurate.
Not to mention, these programs are also more efficient at handling multi-currency and multi-company transactions.
Another aspect to consider with traditional accounting is this: each time a company grows, there will inevitably be new license and maintenance costs along with new fees for database maintenance, system management, and other software. Cloud accounting does not stick you with permanent, expensive equipment and licenses, therefore requiring less maintenance than traditional options.
How to do it ? Meet our partner, Sleek 🙂
We know that handling your own financial statements might be overwhelming, as we all have different skill sets, and reading financial statements may not be as automatic for you as you want it to be. If that’s the case and you’re looking for cloud accounting software in Hong Kong and Singapore, you can check out Sleek, a platform that runs your books so you can run your business.