ecommerce bookkeeping tips

We’ve discussed sales tax as an issue for many ecommerce businesses. It’s impossible to overstate how crucial it is to collect and pay this tax for ecommerce companies. This money is not revenue but a sum a company owes to the government. The cash flow statement is probably the most important document for any type of bookkeeping.

ecommerce bookkeeping tips

The cash flow statement only needs to be prepared for companies that do accrual accounting (we’ll go over that in the accounting section). Your e-commerce business must keep track of your daily, monthly, and quarterly cash flow. To keep track of your cash flow, avoid early ecommerce bookkeeping payments unless you have enough to cover an upcoming payment. To record all transactions in a suitable category, you should start setting up a customized chart of accounts in your accounting software. Most accounting software providers you a default chart of accounts.

Periodic Inventory Tracking

When my store was days old, I was able to get a couple of sales using this method. Keep track of all your business expenses, including shipping, packaging, and transaction fees. Record them correctly in your accounting software to avoid missed deductions and overpaying taxes. You can also consider hiring a bookkeeper or accountant to manage your finances. Using periodic inventory tracking, you must perform physical counts of your inventory at regularly scheduled intervals. A physical count involves counting every individual unit you have in stock and making a record of the cost and sale value of each item.

An income statement only gives you a short-term picture of your company’s financial health. If you want a long-term picture, you’ll also need to prepare your company’s balance sheet. First, you need to record transactions so you can accurately file taxes.

How to Track Inventory Across Platforms

The task of categorizing transactions is the baseline practice in e-commerce accounting. All transactions should get marked on the cash flow statement as either an income or an expense. Regularly review your financial statements, including your income statement, balance sheet, and cash flow statement.

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