Bookkeeping is very important in any business. It is best for business even if you are running a small eCommerce business. Financial management is not only just important to the business but it is important to all aspect of life. Mismanagement or negligence will cost thousands of dollars to the business. Let’s look at the methods to keep records neat, advantages and disadvantages.
The good accounting will lead to less tax
All business person knows that making money doesn’t matter much, however, at the end of the day how much one can save matters most. Proper accounting will help in determining exact taxes and one can identify how to reduce tax. All businesses subjected to high taxes and keeping records help in identifying where one can reduce taxes. Invoice is an important aspect of business which is the only proof of transaction that matches your bank account. Makes sure you keep all your e-invoices in the cloud. If you are still using paper records, just click a photo and save it in the cloud. There are many firms recently transit from paper records to e-invoices to deal with data easily.
For Amazon sellers that things are pretty easy and it is taken care of by Amazon itself. The invoice will be delivered to customers and data will be safe in the cloud. There is no need for hard copies nowadays, almost all countries take softcopies as proof. However, it is important to keep all the records.
Softwares are the best tool one can get to store all credits and debits. This will save a lot of time for an accountant and money for you. Keep the book under review every week. Match balance sheet every month and analyse cash flow routinely. Keep all the log of your inventory which includes packing materials also.
Keep the Invoices from suppliers
The Invoices from suppliers can be used as proof for amazon for having an Inventory. So this is very important for keeping books and as proof to amazon as well. Never ever try to fake the invoices, Amazon will see this as an attempt to sell counterfeit products. The seller account might get suspended, business close and possibly gets into further trouble like a police investigation. Private Label Products has many advantages when it comes to tax and accounting. One can perfect the documentation based on requirements given by Amazon. Private Label sellers can have control over many factors.
Make sure all the information matches in all the records. Invoice name given for Amazon or Suppliers should match with tax records or where ever you submit. A slight mismatch causes a lot of problems especially when you are dealing with multiple suppliers. There are several Invoice Management tools available in the market which is very helpful in dealing with multiple suppliers and marketplaces.
Invoice factoring is another leverage one can use to keep the cash flow in the business. Today many financial institutions help you by covering financial needs based on the invoices. For example, when you made a sale in Amazon, to receive payment sellers must wait up to 4 weeks. This gap can be covered with the help financial lenders who give advances based on sales made in amazon. This will help you buy more inventory, goods and other expenses. Maintaining a clean balance sheet will give access to these leverages. A balance sheet will show the overall net worth of the business. Another important report is the income statement, and cash flow statements, where one can see the profit & loss, and detailed view of all the transactions.
Choosing the software for eCommerce business
There are hundreds of software available in the market, particularly for eCommerce business. The software must have the capability to send invoices, pay bills, accept payments and keep all the transaction in proper auditable format. Let’s look at some factors that influence choosing accounting software,
- Cost is the main factor and business must see the affordability.
- Payments and transactions must be handled.
- Calendar and schedule payment options
- Importing and integration capabilities like transactions, connecting with other Softwares
- Ease of use
- Generate financial statements
Apart from financial management and accounting, one must be aware of tax. Profit doesn’t matter, but, earning after-tax matters a lot. It is another big topic and will discuss in a different blog.
