Bookkeeping and keeping track of cash flow is essential for maintaining a successful business.
Think of bookkeeping as an airtight index meant to reflect each business transaction. It is an essential account system that lets you know whether your business is profitable or not.
Whether you’re a seasoned seller or just getting started as an ecommerce entrepreneur, it’s important to know the best practices for keeping track of your books. The following are all some of the most critical areas to understand about maintaining bookkeeping quality in the current era of ecommerce.
What is ecommerce bookkeeping?
By the simplest definition, ecommerce bookkeeping can be described as the process of virtual asset management. This is the management of all things that refer to financial data that must be reported and organised. In running any ecommerce business, massive stores of data are generated that have to be collected and analysed regularly.
Keeping on top of this priority is the process of bookkeeping. The result of bookkeeping is your balance sheet. A balance sheet is a financial statement, indicating a business’ health. This source of truth summarises your liabilities (debts) and assets.
Through consistent bookkeeping, you have the most accurate window of insight into the data that’s flowing both to and from all of the most fundamental moving parts of your business as it fulfils orders. The more business you do, the more fundamental it is to have the proper perspective on the critical data that’s involved in reflecting its performance.
The need to prioritise proper bookkeeping increases with every milestone that your business makes in total volume profit. Because its value over time is concurrent with rising profit from greater transactions, bookkeeping is essential for any ecommerce business owner with a growth-oriented vision. Not only will it allow you to track growth, but having objectively qualified data about business profits equips business owners to make informed decisions about the future of their company.
How do you do ecommerce accounting?
Bookkeeping can be considered the first of the three components encompassing a universal trifecta of accounting practices for your business’s transactions: recording, reporting, and tax return file submission.
Bookkeeping lays the foundation for the accuracy of the subsequent two steps, providing the cornerstone for accurate reporting and tax returns.
To ensure a seamless ecommerce accounting process, you’ll need to work in tandem with a reputable business banking account and payment processor. It is vital to have a designated business banking account made specifically for your ecommerce transactions to isolate it from personal expenses.
What bookkeeping tools should I use for my ecommerce business?
Ensuring proper bookkeeping for your ecommerce business could mean employing reliable bookkeeping software. In addition to your chosen bookkeeping platform, there are a variety of contextual tools you can employ during bookkeeping to make the process more streamlined.
Some of the most relevant tools that you can use in your accounting platform include:
- Inventory management: to keep track of specific products in stock, organise shipping logistics, and attach purchases to the transactions that stem from them
- Currency conversion: to account for international transactions
- Scalability projection graphs: to get a visual of how the current trend of your transactions may develop in the future
- Longitudinal campaign tracking: to monitor the progress of chosen projects in real-time
- Customer support platform integration: to help you use the accounting data in tandem with any customer correspondence to issue refunds or resolve potential payment issues due to technical errors
- Sales tax rate calculation: to maintain constant compliance with every sale you make online
- Business fee calculation: to apply the necessary amount to be paid for integration with major ecommerce platforms such as Shopify and others similar to it
The repertoire of specialised bookkeeping tools will vary depending on what platform you use for the job. If necessary, you could theoretically use a combination of multiple third-party platform options to make the most of the specific tools that you deem the most relevant for your intended accounting direction, whether it’s inventory tracking or budgeting.
Regardless, the most effective bookkeeping system will generally give you the option to seamlessly integrate your accounting into whatever tools that you have in place to keep track of the paper trail.
Grow your business with Mollie
Though you may have the know-how to conduct bookkeeping on your own, integrating it with the right service is necessary to get the best ROI.
At Mollie, we pride ourselves on providing the most supportive payment services available as a resource for your business needs. Learn more about our payment processing solutions today.