eCommerce Accounting: 3 Accounting Concepts You Need to Know

eCommerce accounting should be a top priority for all kinds of online businesses. This is because you need to be able to track and properly budget your money. After all, you want to avoid common financial pitfalls such as crippling debt or government fines.


This article is here to help you step into the world of online business accountants. This will not only help you to get systematic about the money you earn but also help you problem-solve when it comes to financial issues like budgeting and getting out of loss.


The goal here is also to help you as an eCommerce business owner understand why accountants for online businesses are necessary and why you need to find one as soon as possible.


1. Cash Inflow


Cash inflow is defined as the money that comes into the business. It refers to the actual payments or money that you acquire from making a sale. This is the foundation for understanding both accounting and how money comes in for online businesses, especially given that income can come from different sources online.


It is important to note here that cash inflow is separate from money that has not reached your businesses’ bank account yet. This is a common occurrence in online transactions, as it takes some days or even weeks before the payment reaches the business.


Thankfully, technology keeps advancing, and eCommerce businesses are getting payments faster. However, the fact remains that there are still some transactions that are not yet received right away.


From a financial standpoint, cash inflow helps the business keep track of payments made and also realistically reins in how much they currently have—perhaps even what they can spend.


2. Taxes


Aside from cash inflow, eCommerce businesses also have to pay their dues. You have to remember that just because your business is online, it doesn’t mean that you are excluded from paying your taxes. After all, you don’t want to be seen as a tax evader or an illegitimate business.


By complying with tax laws and policies, you better ensure that your business is secured for the future. It will also allow you to enjoy certain benefits in the form of tax deductions and special services. Your employees also stand to benefit at the same time.


Be a responsible business owner and look into the relevant taxes that you need to pay and what services you can enjoy as a law-abiding online business.


3. Customer Retention Rate


Aside from earning money and paying dues, understanding accounting can help you as an eCommerce business understand the purchasing behaviour of your customers. Customer Retention Rate basically means the rate in which your customer will likely buy from your online business. In particular, you have to enumerate the number of customers you have, how often they make a purchase, and how much they buy.


With this accounting concept, you can effectively improve and grow your business. It helps you understand your online business model and what you can enhance to serve your customers better.


Let’s say, for instance, that you want to improve your online presence, so you hire an eCommerce website developer to install a Content Management System. To get a better idea of its Return On Investment or ROI, you can compare the Customer Retention Rate from before you chose to improve your online presence and after.


Conclusion


eCommerce accounting and accounting, in general, are important tools for understanding the way money works, where it goes, and how it affects your business. You need to understand these concepts because online business is also a game of finances. By familiarizing yourself with the rules, you can win this game and sustain your business throughout the years.


Are you looking for an accountant for your eCommerce business? We can provide you with all your online accounting needs and solutions. Track your online business money effectively with us!

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