Basics Of E-Commerce Bookkeeping and Accounting

Are you an e-commerce business and struggling with managing your bookkeeping and accounting? Is every financial transaction recorded in a structured, organized manner? Do you use automation tools to keep track of inventory, orders, and customer addresses in an automated fashion? If not, this is a sign that you should look for ways to streamline your bookkeeping and accounting process. The retail industry has undergone a digital transformation, bringing new challenges for businesses selling their goods and services online.

The e-commerce business has increased its reach to far-off locations, making it possible to trade globally. It has enhanced the complications and importance of e-commerce bookkeeping and accounting. However, knowing about the basics of e-commerce bookkeeping and accounting is important before looking for ways to make the process easier. Keep reading to learn more about e-commerce bookkeeping. 

What is e-commerce bookkeeping?

E-commerce bookkeeping involves keeping track of all financial activities associated with an e-commerce business. It is a time-consuming and complicated process. Thus, you can switch to automated accounting to save time while tracking your business’s transactions to get a clearer picture of your sales and profits. An automated system, besides providing you with a ton of business data, will assist you in identifying where to apply your time and energy more effectively. Using this information, you can determine where your sales are weaker and plan for growth. As an international business, you must keep track of exchange rates and calculate profit margins for each sale. You will benefit from having up-to-date knowledge of these particulars to help you make wise decisions about your company.

Why is e-commerce bookkeeping important?

E-commerce bookkeeping is a process that helps companies to track and report their financial performance. It can be used to monitor their sales and expenses and analyze trends and changes in their business. E-commerce bookkeeping can also improve customer service, as it allows companies to track their customers’ payment. 

While it may seem like a simple task, it is not as straightforward as it sounds. For starters, you need to know how much your business is earning and how much it costs to run. You also need to keep track of your inventory levels and expenses, as well as your customer base and conversion rate. E-commerce bookkeeping can be a complex task, especially if you are just starting out. However, with a little bit of planning and preparation, you can make sure that your business is running smoothly and that you are able to report accurately on your finances.

You can also take help from automated accounting solutions, including accounting software like Xero bookkeeping, FreshBooks, etc. If you want to completely relieve yourself from the stress of managing bookkeeping, you can opt for a good outsourcing bookkeeping and accounting services provider. 

Steps to start an e-commerce bookkeeping 

• You may handle your bookkeeping and accounting duties for your own business if you prefer. You can also simplify the process by getting good accounting software like Xero bookkeeping, Zoho Books, etc., or simply outsourcing the entire process to a third party. 
• Ensure the in-house or outsourcing accounting services provider you choose has expertise and experience in the field and is familiar with the latest accounting tools and technologies.
• Ask your bookkeeper or accountant to set up alerts and automated notifications to keep track of your finances and to stay updated with your financial data.

Conclusion

E-commerce businesses are growing day by day and enhancing their reach. However, with increased reach comes an increased number of transactions from different locations. Keeping track of transactions becomes difficult, but it is a critical business function. Thus, maintaining proper bookkeeping and accounting is a must. E-commerce bookkeeping allows businesses to track their financials and determine profits and growth scenarios.