Running an online e-commerce store can be a rewarding experience, but it comes with its own set of challenges. One of the most important aspects of running an online store is keeping accurate financial records. This is where bookkeeping comes in.
In this article, we’ll discuss some of the best practices for bookkeeping for online e-commerce stores.
1. Separate Business and Personal Finances
One of the most important steps in bookkeeping for an online e-commerce store or a small business in general, is to keep your business and personal finances separate. This means opening a separate bank account and credit card for your business. Mixing your personal and business finances can lead to confusion and make it difficult to accurately track your income and expenses.
2. Use Accounting Software
Using accounting software can save you time and help you keep accurate records of your financial transactions. There are many accounting software options available for e-commerce stores, such as Xero, QuickBooks, and MYOB. These software options offer features such as automated invoicing, expense tracking, and bank reconciliation. They can also integrate with your e-commerce platform, making it easy to import your sales and expenses data. If you end up using Shopify and Xero as your e-commerce and accounting platform, Post to Xero can help with the integration between both systems.
3. Track All Expenses
It’s important to keep track of all your business expenses, including inventory, shipping, advertising, and any other costs associated with running your e-commerce store. By tracking your expenses, you’ll have a better understanding of your profitability and can make informed decisions about pricing and sales strategies. You can also deduct business expenses on your taxes, which can lower your tax bill.
4. Keep Accurate Sales Records
Keeping accurate records of your sales is crucial for e-commerce bookkeeping. You should track the date of the sale, the customer’s name and contact information, the product sold, the sale price, and any discounts or fees associated with the sale. This information will help you calculate your revenue and profit, and it can also be used for customer relationship management and marketing purposes.
5. Reconcile Bank and Credit Card Statements
Reconciling your bank and credit card statements regularly is an important step in e-commerce bookkeeping. This involves comparing your recorded transactions to your bank and credit card statements to ensure that everything matches up. This can help you catch errors or discrepancies early on, and it can also help you identify any fraudulent transactions.
6. Keep Track of Sales Tax
E-commerce stores are often required to collect and remit sales tax to the appropriate federal, state and local authorities. It’s important to keep track of the sales tax you collect and pay, as well as any exemptions or discounts that may apply. You should also be aware of any changes to sales tax laws that may affect your business.
7. Schedule Regular Bookkeeping Tasks
To stay on top of your bookkeeping, it’s important to schedule regular tasks, such as reconciling bank statements, tracking expenses, and reviewing financial reports. This can help you stay organised and ensure that you’re not falling behind on important tasks. You may also want to consider hiring a bookkeeper or accountant to help you manage your finances.
In conclusion, bookkeeping is a critical aspect of running an e-commerce store. By keeping accurate records of your income and expenses, you’ll have a better understanding of your profitability and can make informed decisions about your business. By following these best practices, you can ensure that your e-commerce bookkeeping is accurate and up-to-date.