E-Commerce Bookkeeping: All You Need to Know
Nothing highlights the current global business landscape shift more than the rapid rise of E-Commerce success. As online shopping experiences improve and consumer trust levels continue to rise, E-Commerce businesses are well-positioned to capitalize in the years ahead. Alongside this growth comes a need for better financial management and planning. The future of your business will depend almost exclusively on your ability to keep it financially healthy. E-Commerce bookkeeping is the framework with which you’ll organize and assess every element of your operation. It’s essential that you get it right from the jump.
If you’re a Canadian E-Commerce business looking to better understand bookkeeping and its impact on your future, you’ve come to the right place.
What is Bookkeeping?
Bookkeeping is the process of recording, tracking, and organizing all financial transactions for your business. Financial transactions will include purchases, sales, payments, payroll, and any other operating inflows or outflows. It’s critical to have accurate, updated information for all items to understand the current health of the business. It’s with this detailed understanding that you’ll be able to avoid common financial concerns in the E-Commerce space, such as cash flow crunches, inventory shortages, and payroll strain.
What Are The Benefits of Bookkeeping?
Regardless of the product you sell or E-Commerce platform you use, proper bookkeeping will ensure that you always have a detailed understanding of your business’s health. To keep things clear, here is what we believe to be the best benefits of a proper E-Commerce bookkeeping setup:
- Clarity on your business’s finances and health
- Proper foundation for growth, investment, and business development
- Clear goals and objectives, ability to benchmark past performance
- Solid foundation and understanding for times of uncertainty and economic downturns
- Accurate estimate, forecast, and plan for future operations
- Minimize unexpected tax issues and penalties
- Identify trends and business opportunities, basing your decisions on accurate data as opposed to intuition
- Leverage your data to create business efficiencies and foster long-term success.
Above all, the most significant benefit will be understanding your business from the inside out, thus ensuring it will survive the months and years ahead.
What Does an E-Commerce Bookkeeper Do?
A good E-Commerce bookkeeper will ensure that your financial records are updated, organized, reported, and error-free. They are responsible for taking the mountain of data that your business produces and consolidating it into an easily consumable report for your team to review and assess.
When it comes to selecting a bookkeeper for your business, you have a few different approaches available. You can hire a full-time in-house bookkeeper, which will provide you anytime access to focused service and support but cost the most of any option. Alternatively, you can go the route of independent freelance bookkeepers or third-party bookkeeping services, like ParallelCFO, which will be more affordable and efficient solutions. Regardless of the route you select, it’s crucial to find an individual or team that is honest, experienced, and capable of supporting your business as it continues to grow.
How To Manage Your E-Commerce Bookkeeping
Once you’ve decided on the bookkeeping support that is right for your team, setting up the systems to successfully manage your books are easy. The rise of cloud accounting software has created incredible efficiencies to the process. All that’s required nowadays is a proper tech stack and ensuring your team stays on top of weekly, monthly, and quarterly responsibilities.
Tech Stack
There is a sizable variety of cloud accounting tools available to help manage your E-Commerce business books. From receipt management to transaction logging and beyond, you’ll be able to find online software that streamlines the collection process and makes management easy.
At ParallelCFO, we use the likes of QuickBooks Online, Plooto, Dext (formerly ReceiptBank), and Stripe, as we’ve found them to be the most versatile and practical tools. To learn more about the many tools available, check out this article.
Weekly Bookkeeping Responsibilities
Your weekly bookkeeping responsibilities are all about keeping your transaction processing, recording, and reviewing up to date. The foundation of your bookkeeping success will be regular weekly data reports and analysis, and you’ll be able to assess financials and inform impactful business decisions accurately.
Monthly Bookkeeping Responsibilities
Since your monthly bookkeeping responsibilities are going to focus primarily on cash flow and inventory management, you’ll want to set up forecasts to monitor how the business is performing relative to benchmarks over time. Monthly bookkeeping will be higher level than weekly and act as a guide for larger business initiatives.
Quarterly Bookkeeping Responsibilities
Your quarterly bookkeeping responsibilities will focus primarily on large-scale data consolidation, including collecting, reviewing, and assessing performance over several months. This assessment will allow you to measure performance and set forward-looking growth objectives. Additionally, you’ll be able to review tax-related items better and ensure that you’re remaining compliant.
With a cloud accounting stack in place and weekly, monthly, and quarterly assessments established, you’re all set to build a better financial foundation for your E-Commerce business.
How We Can Help
ParallelCFO is focused on helping E-Commerce businesses across Canada manage their finances better. From data collection and analysis to future planning and more, our team exists solely to help yours grow. If you could use a hand with your E-Commerce bookkeeping, get in touch with us!
