Guidelines for Accounting in E-commerce Business

 

If you own an e-commerce business, you’re familiar with how complex accounting for online transactions and cross-border sales can be. Beyond being time-consuming, e-commerce accounting also involves navigating different tax regulations and digital payment systems that are distinct from what traditional brick-and-mortar businesses use. You need to ensure that everything is accurate to avoid HMRC penalties and enquiries.

 

Need assistance? E-commerce accountants can help you manage your financial records. With their bookkeeping and accounting services, you can easily track your finances, manage your cash flow, fulfil tax obligations on time, and make informed choices.

 

Whether your e-commerce business is new or has been around for some time, a chartered e-commerce accountant can eliminate the guesswork in setting up your accounts, calculating taxes, and managing your inventory.

Setting up accounts

The first and arguably the most critical step in e-commerce accounting is setting up accounts properly. This means opening a separate bank account for your e-commerce business to separate your personal and business expenses. This makes it so much easier to track your expenses and income. Plus, it keeps you organised for tax filings.

 Pick an appropriate accounting method.

E-commerce accountants can help you pick between cash or accrual accounting methods based on your needs and how you run your business.

 

Cash-basis accounting means you acknowledge transactions only when you receive or spend funds. It’s often recommended for large transaction volumes and in cases when the business deals directly with customers.

 

In contrast, accrual accounting records expenses when they occur and income when it is earned. This approach offers clearer insights and a more accurate picture of a business's financial health. It's particularly beneficial for e-commerce businesses that have to deal with extended payment periods while transacting with large organisations.

Income and expenses tracking

As an e-commerce business, you also need to accurately track all financial transactions—including expenses, sales, chargebacks, and refunds. If you use online selling platforms, e-commerce accountants can provide an automated solution for recording the fees and sales of all selling channels you use to save you time and ensure updated records.

Other tasks

Like a traditional business, e-commerce businesses also have to deal with routine activities like inventory management, accounts reconciliation, financial statement preparation, bookkeeping, and tax filings.

 

Don’t worry. Allenby Accountants can help you navigate and fulfil these tasks with confidence. Get a quote or arrange a free consultation with our e-commerce accountants by calling 0208 914 8887.

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