Various industries have slightly different accounting practices and nuances, and it is no different for e-commerce. These differences are what an accountant has to get right to help business owners make the right decisions. If the accountant cannot produce accurate information, the business will slow down and even fail.

If you have an in-house accountant or a third-party accountant, it is essential to know the nuances of e-commerce accounting. Many regular bookkeepers will have trouble working with this type of accounting, as there are different aspects to consider. In general, five areas require accuracy in e-commerce accounting.

1 - Finding Transactional Data

If you're running a business that isn't related to e-commerce, finding transactional data is quite simple. A look at a bank account or credit card will show any transaction takes place. Adding any bills or outstanding invoices will almost complete all their data. As for e-commerce, it is quite different.

In e-commerce, if your bookkeepers are traditional, they may record e-commerce transactions similar to any other industry. For example, a bookkeeper finds a deposit from Amazon into the bank account. They may record this as income on the day it was deposited. However, two issues occur from doing this. The deposited number isn't accurate, and the timing of the transaction isn't exact. The amount deposited isn't precise because the number means the net deposit. Net deposit means a total of what affected the final number. This can include tax, chargebacks, sales, return, shipping costs, and several other activities.

To find the actual transaction, your bookkeeper will have to check the backend of every single sales channel. Only this way can you find the precise numbers for every activity that affected the net deposit.

2 - Transaction Time isn't Accurate

Merely recording the net deposit means you miss on all the timing of every other activity. For example, you received the deposit from Amazon on the 10th of December. However, what you don't know is that the transactions occurred in November or even October. When your business continues to operate and grow, not being able to record the right time on each sale will have detrimental effects.

3 - Understanding the Cost of Goods Sold and Inventory

If you're an e-commerce business, it is highly likely that you are inventory-based. Because of this, your understanding of inventory and COGS numbers is vital. Here are the things you and your bookkeeper must know: the inventory management process, bookkeeping principles for stock, and COGS. Knowing how to calculate the cost of goods sold for each stock-keeping unit is also essential.

The most common area of mistake for any bookkeeper is the principles themselves, in recording a purchase from the vendor as an expense.

4 - Online Sales Tax

Sales tax laws are hard enough, let alone online sales tax laws, this task can be a little nerve-wracking for you and your bookkeeper. You and your bookkeeper must try hard to keep up with the online tax laws as they are always changing and evolving. The easiest way to deal with this task is to hire a sales tax consultant to assist you.

5 - Reducing Costs on Foreign Transactions

Due to the nature of your business, foreign transactions are much more common than typical industries. To push your profitability up the charts, reducing foreign transaction costs is an important task to accomplish. With the help of professional e-commerce accountants, you will be on the way to achieving this goal.

If you’re looking for an ecommerce accountant in Australia, get in touch with us today for a free consultation!