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Dropshipping Business: How to Manage Your Bookkeeping

As a dropshipping business owner, you could be wondering if you need a bookkeeper or accountant. In most cases, doing your bookkeeping if you are only starting out is fine because the numbers are still manageable. However, when your business starts to grow, that’s when you’ll find that working with an accountant will be worthwhile. We will share tips below on how you can manage your books for dropshipping.

Set Up a Cloud-Based Accounting Ecosystem

If you are dropshipping, then you should be doing your bookkeeping online. There are a lot of online accounting software such as QuickBooks Online and Xero.

These powerful cloud-based accounting tools will allow you to do your accounting on the go.

For example, you can set up reminders to pay your suppliers and employees.

In addition, you can track the performance of your dropshipping business and its progress through metrics.

Set Up Your Charts of Accounts for Accounting

If you want to keep track of your dropshipping business’s daily sales, you should set up a chart of accounts.

This will allow you to keep track of your business’s daily performance as well as any seasonal fluctuations.

You should have a chart of accounts with the following income statement accounts:

  • Revenue

  • Cost of Goods Sold

  • Operating Expenses

You should also have the following expense statement accounts:

  • Office Expenses

  • Selling Expenses

  • General and Administrative Expenses

In addition, if you also set up a chart of accounts for your dropshipping business’s balance sheet, you’ll have the following asset accounts:

  • Cash

  • Other Current Assets

  • Accounts Receivable

  • Inventory

  • Other Current Liabilities

  • Long-Term Liabilities

  • Plant, Property, and Equipment

  • Other Assets

Manage High Volumes of Invoices

You might be thinking, “Well, if I’m doing my dropshipping business through multiple platforms, how am I supposed to keep track of all the invoices?”

It’s quite simple.

If you are using a cloud-based accounting ecosystem such as QuickBooks, Xero, or Freshbooks, you can easily set up recurring invoices.

This allows you to send out the same invoice to your different suppliers, and they’ll all be automatically entered into your accounting software, saving you the time and stress of entering a bunch of invoices.

Go ahead and give it a try and see how simple it is to manage.

Generate Financial Statements

If you are dropshipping and only have a small business, you might want to stop here.

Generating financial statements such as income statements, balance sheets, and cash flow statements can be time-consuming and isn’t necessary.

However, if you are dropshipping a large volume of products, you should definitely set up your accounting to generate these financial statements.

This will keep you up-to-date with your business’s performance.

If you happen to do your business’s taxes from January to December, you’ll end up having to do all of your bookkeeping again.

That’s why generating financial statements will save you a lot of time and energy.

In addition, you can use your accounting software to generate a depreciation report for your business.

This will give you an accurate reading of how much your assets are worth.

Final Thoughts

A successful dropshipping business is one that manages its costs, inventory, and financials efficiently. As your business grows, you will want to take the time to set up your accounts so that you don’t lose control of your business.

Doing your accounting on the fly will take up a lot of your time, so it’s better to account for this in your business plan from the get go.

Leave everything to an excellent Gold Coast accountant today. The ECommerce Accountant will help ensure your dropshipping business will stay afloat financially. Get started now!

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