Staying on top of your enterprise’s accounting is a crucial part of running an eCommerce business. It’s best to hand off the bulk of the responsibility to a professional small business accountant, as they have the expertise and tools to continuously crunch the numbers. However, as the owner, you still have to be cognizant of the basic figures your business generates.
Why ECommerce Accounting is Important
You don’t need an accounting certification or degree to learn the very basics of small business accounting. The concepts are very simple, but they are all crucial to how you run your business. Even if you have a professional accountant, your understanding of business finances and accounting is still necessary to help you make data-driven choices in the future.
Business accounting helps maximise profits, minimise tax obligations, and boost your enterprise’ overall efficiency and productivity. Accounting is the language of business transactions, and a deep understanding of this language will be the key to the long-term success of your enterprise.
Here are five accounting details eCommerce business owners should know:
1. Separate Your Accounts
All your business accounts should be kept entirely separate from your personal ones. At the very beginning of your eCommerce journey, you could have gotten away with just getting money out of your savings account. As your business grows and progresses, you need to open new accounts as early as possible. Pay yourself out of your business checking account and charge expenses to your business credit card. This clear delineation will make all financial transactions go much more smoothly.
2. Calculate Labour Costs
When it’s time to scale your business and take on employees, remember that you’re not just responsible for their base salary. You also have to cover their benefits and payroll taxes. When setting your budget for labour, calculate salaries along with these added costs to ensure that you can pay all of your employees fairly and on time.
3. Ask for Receipts
Many business expenses can be filed as tax deductions through the Australian Taxation Office (ATO). All you have to do is prove that it is a reasonable business expense and have documentation to back it up. Every time you run errands for your business, whether to buy office supplies, meet with a client, or sign up for a subscription, keep the receipt for tracking and verification.
4. Navigate the Software
eCommerce accounting software will save you a lot of time, effort, and resources in keeping track of your financial data. As a business owner, knowing how to navigate this software can be helpful to your accountant and your employees. You don’t have to know everything about the ins and outs of accounting—that’s your accountant’s job. But the more you know about the financial tools you use, the easier it will be to navigate financial conversations with your accountant, investors, shareholders, and even your employees.
5. Understand Financial Statements
It’s your accountant’s responsibility to generate financial statements for you and your business regularly. These statements are crucial in making data-driven business decisions for your future. As a business owner, you need to understand every line item and accounting term found on these reports. The good news is that a business accountant can easily explain all of it for you. Together, you should be able to make all your business dreams a reality.
Small business owners have a lot on their plate every day, but that’s just the nature of the job. You need to know as many business details as possible so you can keep an eye on your growth and fulfil your potential. Although you don’t have to be an accounting expert, you do need to know some of these basics. With an experienced professional at your side, there’s nothing you can’t achieve!
The ECommerce Accountant offers eCommerce accounting services for online entrepreneurs and business owners. We can help you increase profit, minimise tax, and give you specific advice to grow your business and reach your goals. Book a free strategy session with our experts today!