E-commerce, the new and innovative business model, is here to stay. At the same time, though, it encounters and tackles unique financial and legal issues that traditional businesses do not. Read on as we discuss the common e-commerce issues and the practical solutions you might just need for them.
Problem: The Passing of Risk
Passing risk has historically been relatively straightforward in traditional brick and mortar businesses. While online shopping is an excellent way to save money, it is also an excellent way to discover new products and services. However, situations get complicated when products arrive late or in poor condition, modes of payment are unreliable, and when customers ask for refunds, among others.
Solution: Clarify Terms and Conditions
Businesses must develop standard terms and conditions of trade that will be applied to their selling platforms in order to protect their businesses. When a disagreement or problem arises, the business owner has the best chance of resolving it. As such, the terms and conditions of the business should be adapted and reviewed by legal experts to identify risks and develop systems to mitigate those risks.
Problem: The Incorrect Organizational Structures and Systems
E-commerce startups frequently prioritize customer-facing platforms such as Shopify or Neto as their primary business system. However, as the business grows, it will require a more robust back-end business eco-system. Rapid growth frequently overwhelms accounts payable and receivable, bank reconciliation, monthly management reports, payroll management, inventory management, and project management.
As a result, businesses frequently overlook opportunities for advanced reporting and analytics, such as customer trends, purchasing patterns, and recurring costs.
Solution: Seek The Appropriate Advice
Consult accountants who specialise in e-commerce. These accountants can assist you in determining the optimal structure and systems for balancing initial cost-effectiveness and scalability. They can also assist you in identifying the appropriate advisors to document and implement it, as well as solutions for adoption and integration.
Problem: The Management of the Payroll
Payroll and employment taxes increase in tandem with the development of emerging market economies. And in recent years, technology has become critical to the administration of e-commerce payroll. Simultaneously, employees expect and demand increased access to information, as well as greater flexibility in how and when that information is accessed.
Australian e-commerce payroll is complicated by the variety of industrial instruments that cover various types of employees. Enterprise Agreements (EAs) are agreements reached between an employer, its employees, and a labour union. They include the contract's minimum wage and working conditions.
Employers may be bound by multiple EAs, each with its own set of wage rates, loadings, allowances, and overtime provisions. All of these variations must be configured in the payroll system and monitored.
Apart from that, the majority of jurisdictions (including Australia) require periodic reporting/lodging of payroll data in accordance with the frequency with which payments are made. Without software automation, this task can be error-prone and time-consuming. Payroll software should be integrated with multiple jurisdictions with the assistance of IT specialists and accountants.
Solution: Control Each Detail
Here are simplified steps for payroll administration:
Ascertain that your employment contracts cover all possible scenarios;
Verify employee compensation, including overtime, shift compensation, and other benefits.
Ascertain that superannuation is accrued correctly on employees' aggregate ordinary times earnings (which may differ from their wage entitlement);
Pay your superannuation quarterly, one week prior to the due date, to ensure that it clears any intermediary platforms.
Periodically review your awards and critical employment assumptions.
Ensure that an employee's entitlements are reduced prior to going on leave.
Consistently adhere to SuperStream and Single Touch Payroll regulations.
Recognize your ATO reporting requirements (which are typically monthly) and make timely disclosures;
If your wages exceed the payroll tax threshold in your state, you must register and pay payroll tax within seven days of the end of the month.
Notify the appropriate state agency of mandatory policies.
Conclusion
Each e-commerce business is unique, and each has its own set of requirements. Each day, an e-commerce company and its employees face the challenge of developing and implementing new procedures. This is why it’s crucial to find solutions to their common problems.
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