Bookkeeping for ecommerce businesses can leave you wondering where to start, keep your head spinning and maybe even make you question if you should have gotten into ecommerce in the first place.
Luckily we are going to tackle how to get started with bookkeeping for an ecommerce business, what software is out there and how to get help if you need it.
Getting Started With eCommerce Bookkeeping
Bookkeeping is a critical function for any ecommerce business, as it helps track and organize financial transactions. It doesn’t matter if you are selling on Amazon, Shopify or your own website, you’ll need bookkeeping.
As an ecommerce business owner, it is essential to understand the basics of bookkeeping and how it can support the growth and success of your business.
One of the key elements of bookkeeping for ecommerce businesses is maintaining accurate and organized financial records. This involves recording all income and expenses, and ensuring that transactions are properly classified and accounted for.
It will only get more complex as your business grows. That is why picking a bookkeeping software is critical for your growth.
Another important aspect of bookkeeping for ecommerce businesses is monitoring cash flow. This involves tracking the inflow and outflow of cash, and ensuring that there are sufficient funds to meet the business’s financial obligations.
This can be tricky for new ecommerce business owners and if you struggle in this area then we certainly encourage you to get help such as a mentor.
One of the challenges with bookkeeping for an ecommerce business is the high volume of transactions. We are going to solve this problem using a bookkeeping program.
In addition to maintaining accurate financial records and monitoring cash flow, bookkeeping for ecommerce businesses also involves preparing financial reports.
These reports, such as the income statement and balance sheet, provide important insights into the financial performance and position of your ecommerce business. Again, luckily if you are using software, it can spit these reports out for you once you learn some basic bookkeeping.
So now that we know you are going to need bookkeeping skills and software, let’s approach the software first.
Read More:
Bookkeeper vs Accountant vs CPA: What’s the Difference?
Finding an eCommerce Bookkeeping Software (3 Options)
There are many different software options available for ecommerce bookkeeping, and choosing the right one for your business can be intimidating. Some of the top options for ecommerce bookkeeping software include:
QuickBooks: If you are a small ecommerce business then you can opt for QuickBooks self-employed. If you are larger than QuickBooks small business may be the better option.
Fortunately, since QuickBooks is such a well-known program, it can work for a bunch of ecommerce solutions. There are apps that integrate Amazon into QuickBooks to track inventory and automate transactions.
QuickBooks can also connect to Shopify. Wherever your ecommerce business is online, QuickBooks can provide a bookkeeping solution.
FreshBooks: Made for the non-accountants out there, FreshBooks does just about everything Quickbooks can. Just like QuickBooks, it’s suite can integrate with Shopify or Amazon to capture all your accounting.
You’ll be able to track expenses, income, inventory and more, all from the palm of your hand in FreshBooks mobile app. For a ecommerce business owner who hasn’t done any bookkeeping, it doesn’t get easier than FreshBooks.
Xero: Xero is an online accounting software that is for larger ecommerce businesses. With easy integration and high-end features, Xero can take on almost any small business ecommerce business.
Xero is an intuitive platform when it comes to managing bookkeeping for a ecommerce business. Amazon, Shopify or a website can all use Xero for their bookkeeping function. Xero is best if you have a bit of accounting background and are really trying to dive deep into reporting.
When to Hire an eCommerce Bookkeeper
If the software looks foreign and you have no idea where to start with bookkeeping for ecommerce then you should at least get a mentor. Decide if you are going to wear another hat in your business and take on your own bookkeeping or hire it out.
There are resources to learn all the accounting skills online but is it worth your time?
Deciding when to hire an ecommerce bookkeeper can be a challenging decision for business owners, as it involves the costs to outsource the function.
If you don’t understand bookkeeping though and can afford it, outsourced bookkeeping should be one of the first decisions you make.
As a general rule, it is a good idea to hire an ecommerce bookkeeper when the complexity and volume of financial transactions in your business become too much to handle on your own.
While you don’t need to know complex tax laws or advanced technical accounting to do ecommerce bookkeeping, it helps to have an understanding of the following:
- Income
- Expenses
- Debits & credits
- The balance sheet
- The income statement
- Cash flows
- Accounting for inventory
If you can’t commit to learning these ecommerce bookkeeping basics then think about hiring a bookkeeper.
Final Thoughts on Bookkeeping for Ecommerce Business
Bookkeeping for ecommerce businesses isn’t hard but it will take some time if you have no prior experience in accounting or bookkeeping. We’ve looked at the challenges, a few good software choices and the basics you’ll need to learn to get started.
It’s really up to you to do a little self-study or just hire out your bookkeeping. We encourage you to do a bit of learning but the choice is yours!
