Most people aren’t aware of the challenges that come with e-commerce accounting. It’s a fairly new concept, and not many accountants are familiar with it. This post will go over 5 reasons why e-commerce accounting can be challenging, as well as how you can reduce or eliminate each one so you don’t have to worry about them in your business!
What does an e-commerce accountant do?
The following are the 5 main reasons why E-commerce accountants are typically responsible for the day-to-day e-commerce activities, which include maintaining product listings, processing orders as well as collecting and remitting sales taxes. In addition to these tasks e-commerce accountants will also need to complete monthly accounting reports to track inventory levels, revenue generated from e-commerce transactions, and expenses such as the cost of e-commerce merchandise.
How do e-commerce accountants deal with e-commerce businesses?
E-commerce accountants need to be prepared for e-commerce businesses with higher transaction volumes, which can make e-commerce accounting more difficult. The e-commerce accountant will also need some knowledge of e-businesses to accurately predict trends and properly plan their workflow.
5 Main Reasons Why E-Commerce Accounting is Difficult
E-commerce accounting is difficult to do. The e-commerce industry has grown rapidly over the past decade and with this growth comes a lot of challenges when it comes to e-commerce accounting. For instance, e-commerce businesses often have many more transactions than traditional brick-and-mortar stores, which increases in complexity for e-commerce accountants. This blog post will discuss 5 main reasons why e-commerce accounting can be challenging and how you can overcome these difficulties!
It’s Easy to Get Confused About Sales Tax Liability.
One of the 5 main reasons why e-commerce accounting is difficult is because of the confusing Sales Tax Liability. E-commerce businesses may have a lot of different types of customers from many different regions. The e-commerce accountants need to make sure that they are paying the proper amount of sales tax for each transaction and not underpaying or overpaying taxes because it can lead to hefty fines!
To Pay, Or Not To Pay? Another challenge e-commerce accountants face is deciding when to allow e-commerce businesses to pay their taxes. The e-commerce accountant may want the e-commerce business to have a lower tax burden and keep more money in their pocket, but if they do this then it will increase the risk that e-commerce doesn’t stay compliant with state sales tax laws
Taxes, Taxes Everywhere – e-commerce accountants are also responsible for making sure that e-commerce businesses maintain compliance with all state and federal taxes. If they don’t pay these on time or underpay the amount owed, then it can lead to tax liens and other big problems!
Excess Expenses Can Lead to Financial Problems. e-commerce accountants must be on top of e-commerce expenses as well. This includes things like the e-commerce store’s physical location, office supplies, and other operating costs. If e-commerce accountants don’t pay attention to these types of expenditures, it can lead to serious financial problems for e-commerce businesses.
Inventory Control Is Difficult.
e-commerce accountants are also responsible for inventory control. Inventory is often a significant part of e-commerce businesses and e-commerce accountants have to make sure that accounting for the e-commerce business’s stock is accurate, or else they can be stuck with not enough product on hand! E-commerce accountants also never want it to happen that e-commerce businesses have too many products on hand because this can lead to a loss of income and money.
That’s why e-commerce accountants need to make sure e-commerce businesses maintain an accurate inventory at all times!
Amazon Fees Account For A Significant Amount Of Your Profit & Loss.
E-commerce accountants are responsible for keeping e-commerce businesses compliant with Amazon fees. eCommerce business owners may not realize how significant these fees can be and the effect they have on their profit & loss statement! The e-commerce accountant must make sure that e-commerce businesses stay in compliance or else there is a chance that they will lose their e-commerce account with Amazon.
Many e-commerce businesses don’t realize how important it is to stay compliant and an e-commerce accountant has the responsibility for ensuring that the e-commerce business stays on its track!
Your accounting system may be blown up by the volume of transactions.
E-commerce accountants often deal with a lot more transactions than traditional e-Commerce businesses. This is because e-commerce business owners may sell many different types of products on their e-commerce website, whereas brick and mortar stores only sell one type of product at any given time!
The complexity can increase exponentially when you have multiple e-commerce businesses and e-commerce accountants will have to figure out how to manage their accounting system as it becomes more difficult!
Many issues arise as a result of returns.
E-commerce accountants often have to deal with e-commerce businesses dealing with a lot of eCommerce returns. This can lead to more work for e-commerce accountants because they will have to track the returned products and restock the e-commerce businesses ‘ inventory to make sure that they are ready for the next sale.
This can also lead e-commerce accountants to have an increased risk of error, which is something e-commerce accountants never want to happen!
Difficult right?
Blogging e-commerce business owners is a difficult job, but if e-commerce accountants don’t take on this role then e-commerce businesses will be in trouble. E-commerce accounts are responsible for five main things: tax compliance, inventory management, Amazon fees, and deals with eCommerce returns. eCommerce accountants must also make e-commerce businesses aware of eCommerce accounting compliance responsibilities. eCommerce accountants never want to let e-commerce businesses down, and that’s why it is so important for them to stay in compliance!
A lot of e-commerce business owners may not realize how much eCommerce accountants do and the impact they have on a successful e-commerce business. eCommerce accountants often deal with a lot more transactions than traditional e-commerce businesses, and have to figure out how to manage their accounting systems as it becomes increasingly difficult!
Securing an accountant for your business could be the best decision you ever make. If you don’t have one, e-commerce accountants are waiting to help you!
