We know how vital proper accounting is in the e-commerce industry. Not only does it record all financial transactions coming in and out of the e-commerce business, but it also allows managers and CEOs to monitor the financial health of the company. Through proper bookkeeping and accounting, leaders can make sound business decisions.
No matter how well-structured your accounting is or how streamlined the processes are, it's still inevitable that you’ll make mistakes as an e-commerce accountant. When these mistakes occur, you have to make little adjustments and ensure that figures are properly accounted for. The problem, however, is when you commit grave accounting mistakes that can compromise the e-commerce business.
As an e-commerce accountant in Australia, you must perform proper accounting for your e-commerce business. For your guide and reference, here are common accounting mistakes you should avoid at all costs:
1. You tend to forget recording small transactions.
When it comes to accounting, the rule of thumb is to track and record each and every transaction. Even small business transactions should be properly accounted for. When neglected, they can add up, causing a huge dent in your company's finances. You'll be caught off guard as to why the numbers do not match at all. As much as possible, strive to leave no room for miscalculations. The bottom line is: record everything, whether big or small.
2. You don't sort income and expenses properly.
As far as accounting is concerned, organizing and categorizing are very important. You should sort out your finances into incoming and outgoing cash flow. From there, you have to classify where the money is coming from and how the money is allocated. This means that you have to separate the company's assets and liabilities. Transactions should be sorted into rent, utilities, wages, office supplies, and many more. Doing so helps show financial transparency and maximizes profitability.
3. You don't reconcile your books with bank statements.
As mentioned above, no one's perfect, and everyone has room for mistakes. As an e-commerce accountant, chances are that you forgot to record small transactions that your company will need during emergencies. That's where bank reconciliation comes into the picture. That is why you should reconcile your books with your bank accounts, as the goal is to see the figures listed are correct. All you have to do is check the account balance and see if everything matches. Ultimately, this process allows you and your boss to have a clear overview of your company's financial health.
Conclusion
We all understand that running an e-commerce business can be a bit complicated. And as far as accounting is concerned, every accountant is prone to make some mistakes. However, you can avoid such mistakes by becoming aware of the common pitfalls outlined above.
That said, make sure to record small transactions, sort your income and expenses, and reconcile your books with your bank accounts. Not only will these tips help you save your business money, but they’ll also help boost the financial health of your e-commerce business.
We provide e-commerce accounting services to help online entrepreneurs reduce tax and increase profit. If you're looking for professional e-commerce accountants in Australia, get in touch with us today to see how we can help!