Business 101: Why Accounting is Vital in Today’s Economy?

We are still reeling from the devastation brought by COVID-19. The destruction is beyond the realms of medicine. It encompasses economic turmoil too.


At the pandemic’s beginning, the World Economic Forum reported that roughly 30 million Americans filed for unemployment. The Australian government stated that almost 1 million Aussies lost their jobs. The devastation extended to small businesses too. The woes kept going on and on.


Thankfully, the introduction of the vaccine provided much relief. Although we are coming round the bend in terms of our health, small business owners still have a lot to do. They have to pick up the pieces of their battered company metaphorically.


If you are a small business owner, bookkeeping would be the last thing on your mind, but you should take this business function for granted. It is the best time for you to engage in e-commerce accounting services. Here are some reasons why:


Lost Opportunities


The primary function of E-commerce accounting or any bookkeeping service is to provide financial data to the stakeholders. We specifically mentioned stakeholders and not just business owners because the information gathered from accounting includes numbers that can help improve operating efficiency. Without this data, you stand to lose more.


You might be thinking that you can determine if you are operating efficiently. Yes, you can identify if your team is working at total capacity. But is your staff utilizing your assets well? You can only answer this question with the help of an accountant.


That is not the only lost opportunity. Ignoring basic bookkeeping means that you do not have an accurate overview of your company’s financial health. It would mean that you will not be able to take advantage of the numerous government help available for small businesses.


Payroll Errors


Other than dealing with the financial setback brought about by the pandemic, you may also need to handle the problem of not having enough employees. Although e-commerce accounting does not necessarily fix this dilemma, it will prevent other crises caused by payroll errors.


This scenario is not the only problem that you might need to deal with because of payroll errors. You might likely end up paying your employees more than you owe them in your haste to resolve this trouble. It is a mistake that most employers can afford these days.


It will also likely lead to the erroneous collection of taxes. In your haste, you may not have deducted the right amount for your employees’ withholding tax. Thus, this leads to more financial headaches on your end.


Less Financing Capabilities


Due to the current economic setback, you may need additional finances. In this case, you need to submit financial statements to banks and other financial institutions. If you engaged in e-commerce accounting, you would be able to meet their requirements in no time. On the other hand, if you dropped the ball and have not kept your books up to date, it may take you a more extended period to acquire the much-needed loan.


Conclusion


Most entrepreneurs have this archaic thinking that bookkeeping is only applicable during tax season. But the economic downfall brought about by COVID-19 showed us the importance of real-time accurate financial reporting. It does not only open up financing opportunities. But it also allows us to continuously monitor our operations in terms of the utilisation of our assets.


For your e-commerce accounting needs, count on The Ecommerce Accountant. We are your partners during this time of crisis. Contact us to book a meeting with one of our e-commerce bookkeeping specialist.

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