A CREATIVES' GUIDE TO BOOKKEEPING FOR ETSY SELLERS

Pearl Scott

A CREATIVES' GUIDE TO BOOKKEEPING FOR ETSY SELLERS

When you made the decision to start your Etsy business, crunching figures for hours on end was probably not what you had in mind for the future.

Fortunately, you don't need to be an expert in arithmetic to keep your bookkeeping up to date. We'll go through the fundamentals of bookkeeping that every Etsy seller needs to understand in this post, along with several tools that might be useful.

Accounting for Etsy

Due to the fact that Etsy is an eCommerce platform, your bookkeeping will be different from that of a traditional business.

Although the basic principles of bookkeeping remain the same, there are additional considerations unique to online commerce. These considerations include:

Tax on purchases

inventory management

Tax-deductible expenses

Compliance

How many transactions there are

Fees imposed by businesses

Returns

There are DIY accounting software programs that can automate many of these processes because manually keeping all of your transactions is time-consuming and exhausting, including a number with connections to Etsy.

Among the most popular are Xero, Wave, QuickBooks Self-Employed, and QuickBooks Online. It is also possible to utilize QuickBooks for Etsy, however many users have complained about its restrictions. The bench can manage your Etsy bookkeeping and even file your taxes for you if DIY isn't your thing.

What advantages may bookkeeping provide your Etsy store?

How accurate and current your books are will have a big impact on how healthy your business is.
Maintaining your records, for instance, gives you a better understanding of your financial flow, which is a key factor in 82% of small businesses that fail.
Making sure your books are up to date also enables you to make data-driven business decisions rather than relying just on intuition.
Determine tax deductions.
Find solutions to manage cash flow during challenging times.
Steer clear of tax notifications, penalties, or fines.
Make it simpler to spot financial issues like fraud.
Give the comprehensive financial details needed to submit a loan application.
Recognize trends and establish specific growth objectives.
forecast your inventory.
Create financial reports to help you make wise financial decisions.

Not just that. By analyzing financial data, Etsy business owners like you may discover additional crucial details, such as:

What was the price of each of your finished products?
Which item from your Etsy store generated the most revenue this year?
What live sale event generated the greatest revenue?
How much money did you make last month from your Etsy store?
Do you have too many supplies?
How long will it take if revenues stay steady before you can purchase that new pottery wheel?

Comparing Etsy bookkeeping with accounting

Although they are sometimes used interchangeably, the phrases "accounting" and "bookkeeping" refer to two different tasks. In contrast to bookkeeping, which only records financial transactions, accounting analyses and evaluates them.

One of the most typical bookkeeping tasks is:

Classifying transactions
Invoicing
Management of inventory
A balance sheet and an income statement are produced.
Reconciling the accounts
Management of payments and collections
Responsible for managing the financial flow

The approach used in accounting, on the other hand, is comprehensive. It's important for Etsy sellers who want to do further analysis to support business growth to bear in mind that the quality of your accounting analysis closely correlates to the accuracy of your bookkeeping records. If your bookkeeping is outdated, any accounting outcomes will be incorrect.

These activities are frequently done by accountants:

Examining the financial accounts that a bookkeeper has produced
Models, statements, and reports must be created.
Auditing books
Tax refunding
Forecasting financial data
Finished the risk assessment

Pearl Scott

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