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Accounting for online retail business
As e-commerce business owners know, it’s a fiercely competitive market out there. Initially, hobbyists latched on to e-commerce platforms like Shopify to sell their designs and creations. However, digital transformation has unlocked the doors to turn these hobbyists into budding entrepreneurs, and the e-commerce industry has, in a word, boomed.
The industry is arguably paving the way for the future of retail. According to Statista, the United Kingdom has the most advanced e-commerce market in Europe. Moreover, it’s opened a new gateway for e-commerce businesses to expand their customer reach. This would traditionally be done by brick and mortar brands opening new stores, except now entrepreneurs only need one e-commerce store or seller page.
So e-commerce can be a lucrative venture and your unique product or service could be a real winner for you.
However, being an e-commerce owner requires basic accountancy and bookkeeping skills to ensure your cash flow and business remain healthy.
Now, we’re going to assume that you’re a very proactive individual, which is why you’re looking at investing in accounting software. You are? Great, because in this article we’re going to look at why you should use QuickBooks if you have an online retail business.
Choosing your e-commerce accounting software – what should you consider?
Undoubtedly, taking advantage of accounting software for e-commerce can be the key to success. However, like all things in life, not everything is created equal. It’s therefore always recommended that you choose a system that’s been specifically designed for e-commerce.
Although you might seek the assistance of an e-commerce accountant to help manage your finances, it’s still advisable that you understand the basics. Now, if maths and finances aren’t necessarily your forte, this is where accounting software can really help you.
There’s a whole range of e-commerce accountancy solutions. Cloud-based options, in particular, can really help you get a handle on your finances, even on the go, and allows you to digitise your bookkeeping. But before you sign up to any software, you need to ensure that it’ll work for you and your business.
Do you need an e-commerce accountant?
Before we look at why you should use QuickBooks for e-commerce businesses, there’s one more consideration. Which is, do you already have an accountant, do you plan on hiring an e-commerce accountant, or will you manage your accounts yourself? It’s generally recommended that business owners, including those in e-commerce, understand the basics of bookkeeping - as well as the difference between bookkeeping and accounting.
Whether you have an accountant or you’re thinking about hiring one, make sure they’re software savvy. Typically, a specialist online e-commerce accountant will already be proficient in platforms like QuickBooks.
Choosing an accountant who understands your preferred platform as well as the e-commerce industry in general, means you can spend more time thinking about growing the business. And with QuickBooks, you can have multiple users - you and your accountant - giving you all access to those all-important figures.
Why is QuickBooks the best online accounting software for e-commerce?
Perhaps you’ve been looking into e-commerce accountancy software for a while. If so, then we’re sure you’ll have noticed the well-used term integration. While most platforms do offer integration, setting it up or using it incorrectly can cause issues further down the line.
Most e-commerce accounting software provides the integration and multi-user capability that gives both you and your accountant an accurate picture of your finances. Not only that, engaging with a bookkeeper or accountant who fully understands e-commerce ensures you get reliable advice on how to manage your finances and as well as on where you can cut costs.
Integrating your accounting software with other systems can offer huge benefits, particularly with your stock management system.
We’re sure you already know that inventory management is crucial - you may already be using third-party software, or an Excel spreadsheet, to track it. Now, to make this process more effective, as well as to provide you with a clearer picture of your sales, select a software which you can use directly on your platform, or integrate with your existing system.
By integrating stock management and accounting systems, you’ll be able to more accurately track data like how much money each product is bringing in and how often each piece is being bought. This means you’ll be better equipped to put together cash flow forecasts, and make more informed decisions about your business.
For example, some items of your stock may not be selling very well. Why not offer your shoppers special reduced rates in order to drive sales? Or reward those customers that keep coming back to your online store?
So, why is cloud-based, flexible and effective e-commerce bookkeeping software a necessity. Well, it allows you to thoroughly manage your business finances. Arguably the initial investment into the right online solution like QuickBooks is a worthwhile investment.
Automatic and regular updates?
Understandably, being an e-commerce owner often means a busy schedule. The last thing you want to do is manually update your software.
But we know that having the most up-to-date version of any software is crucial. Just think about how slowly your phone runs when you don’t update the operating system.
Fortunately, QuickBooks is an online cloud-based solution, which means you don’t have to worry about whether you have the most current version. All the updates run in the background, without you even knowing.
This also means that processes are constantly being streamlined, meaning you’ll always be saving time.
E-commerce accounting advice
Which leads us on to taxes, and accountants. For any business, whether you’re a limited company or a sole trader, you’ll have certain tax requirements. Even if you’re happy to do your weekly, monthly and yearly bookkeeping, it’s always advisable to seek help from an e-commerce accountant for your end-of-year tax report.
Why? Well, it can still be complex, even with QuickBooks. So, having an accountant’s input ensures that you submit accurate figures to HMRC, avoiding a headache later on. However, if you’re looking for a specialist e-commerce accountant, then please speak to the dedicated team at Pearl Accountants. We’ll be able to advise you on all aspects of bookkeeping, as well as collaborating with you via QuickBooks.
How do you choose the right e-commerce software?
As with most things in business, there are things you need to consider before making your choice.
For us at Pearl Accountants, we’ve seen how QuickBooks really does deliver on its promises. It’s easy to use, accurate and offers seamless integration. Moreover, it helps e-commerce business owners at all stages in developing their bookkeeping skills. Besides being able to set up automatic financial reports and invoices, you can also generate your tax report really simply.
It’s a popular, trusted choice. QuickBooks has over 2 million global users, and it’s introducing constant improvements. Not only that, this online cloud-based accountancy solution is advocated by thousands of other e-commerce accountants.
There are other factors too which should influence your decision, including:
Industry challenges – are there any new regulations, competition or taxes (especially if you sell overseas)?
Business model – does the software help you achieve the goals set out in your business model? You want to choose a software that allows you to fully understand the financial health of your business so you can make informed decisions.
Seamless integration – if you’re going to use an online accountancy solution, you need to ensure that it works seamlessly. Now, what we mean here is that it should help you juggle all the different aspects of your business effortlessly.
As we mentioned at the start, the e-commerce industry is continuously growing:
So we understand why you’re probably looking for an accountancy solution like e-commerce for QuickBooks. If you want to remain on a par with (or preferably ahead of) your competition, proper bookkeeping and management of your finances are key to the growth and success of your business.
Having a thorough understanding and managing your books well makes running your business much easier. And you’ll be glad of this when you reach the point where you’re ready to expand, for example if you’re switching from sole trader to limited company due to increasing demand for your products or services.
One of the many reasons why QuickBooks is our favourite platform is because it accommodates business growth. Overall, it’s the ideal platform for small and medium e-commerce businesses.
The Bottom Line
As we’ve said, there are things you should consider when making your choice, but you don’t have to make this decision alone. There are plenty of specialist e-commerce accountants you can ask for as little or as much advice as you like.
We hope we’ve been able to convince you why you should use QuickBooks for your e-commerce business. The bottom line is, when it comes to selecting the right accountancy software, it all comes down to what’s best for you and your business.
However, if you’re unsure about how to sign up, integrate or set up QuickBooks, Pearl Accountants have a specialist team who can guide you through the process. Or you can choose from one of the many QuickBooks accounting experts in your area.
We hope you’ve found this article on e-commerce accounting useful. When you’re starting out in e-commerce, QuickBooks ensures you’re always on top of your accounts, which leaves you more time to develop your business.