Proper and accurate bookkeeping is vital for your e-commerce business. It involves recording all your financial transactions, which must be a part of your business accounting. Without this, you have nothing to analyse, report, and base your decisions for your business growth and success.
As the e-commerce industry is expected to hit $35.2 billion in 2021, you must do what it takes to partake in this projected success. And it all starts with your bookkeeping and accounting endeavours as a way to regulate and control your e-commerce business’s financial health.
If you're planning to start an online store or have an existing one based in Australia, here are four ways to streamline your bookkeeping system for your e-commerce business.
1. Record all transactions and track cash flow
As mentioned above, bookkeeping is the actual recording of all the financial transactions of your business. Through these data and information, you'll be able to do proper accounting, which involves summarizing, analysing, and reporting these transactions, whether for your business decisions or tax filing purposes.
For this reason, you have to ensure that every transaction—no matter what it is or its size—must be accurately recorded. Along with this is to track your cash flow, both what is coming in and what is going out of your business fund. All these will create a solid bookkeeping foundation that will kick your accounting practices up a notch!
2. Perform a break-even analysis
Break-even is when your business's total cost and total revenue are equal, meaning there is no financial gain or loss. An analysis of this involves seeing how your e-commerce’s business loses money on expenditures and generates income through profits. The ultimate goal is to earn more than you lose money, which makes a break-even analysis vital to your bookkeeping system.
When recording your business transactions, you must separate your income and expenses. After that, you must integrate them both to have a break-even analysis as part of your accounting. The goal is to ensure that you're generating more income than you are spending on your business expenditures.
3. Regulate your inventory volume and reduce unnecessary expenses
If you want to maintain your e-commerce business's financial health, there are two key things you can accomplish: controlling your inventory volume and reducing your unnecessary expenses. However, more than just recording your transactions, these two must be a part of your bookkeeping process.
For this reason, be sure to regulate the volume of your stocks regularly with an optimum inventory. Then, ensure that you have the right number of committed orders and that they don't lose out on sales. On the other hand, you must also assess all your business expenditures and try to cost-cut those that don't add value to your business, as both will help you save up on your business.
4. Take advantage of accounting software
If you want your bookkeeping system to be more streamlined, accurate, efficient, the answer is to utilise accounting software. It's time to ditch out your manual reporting system and start taking advantage of modern technologies to make your lives a lot easier, as a bookkeeper or business accountant. As there are various options available in the market, you can benefit from their plethora of features, such as real-time updates, automated recording, payroll management, and more!
At this point, you now know how to streamline the bookkeeping system of your e-commerce business. All it takes is to record the transactions and track cash flow, perform a break-even analysis, regulate your inventory volume and reduce unnecessary expenses, and take advantage of accounting software. With all these key steps, you'll be able to set your bookkeeping system in place and make the most of it to boost your accounting practice and ensure the overall financial health of your e-commerce business!
As an online accounting firm, we provide e-commerce accounting services to help online store owners and influencers reduce tax and increase profit. If you need an e-commerce accountant in Australia to streamline your bookkeeping system, get in touch with us today to book your free strategy session!