Bookkeeping is an important part of the e-commerce process because it tracks which orders have been paid and which ones haven’t. Without proper bookkeeping, these stores can end up having a large number of unpaid or high-risk orders.
Errors in-store accounting often results in costly refunds for the company. When a company handles its books poorly, it can cause them to pay money unnecessarily and miss sales opportunities.
This blog will show you how your business will be better off if you use bookkeeping software to track your profits and expenses so that you can calculate better tax rates for your CPA firm you know how much profit is attributable to each type of expense on an annual basis (profit vs expense).
7 Reasons Why is Bookkeeping Important for E-Commerce
Tracking Sales
Bookkeeping for e-commerce companies is all about tracking and forecasting sales revenue. One of the reasons on why is bookkeeping important for e-commerce is because your business will make more money if you can sell more products when you properly track your sales. This allows you to know when to make additional inventory purchases, which, in turn, creates a larger profit margin for your business.
Tracking Expenses
Your e-commerce company needs to be able to track its expenses so that it can stay within its budgeted expenses each month. Without proper tracking, many companies end up spending too much on things like office supplies or shipping costs. You can avoid this problem by using bookkeeping software such as Xero and QuickBooks Online (QBO).
Determine Profit or Loss
Bookkeeping is all about determining profit or loss for your business. One of the reasons on why is bookkeeping important for e-commerce is, without bookkeeping, you won’t know how much money you’re making from your e-commerce business accurately. That means you’ll be sending out false invoices and receiving incorrect payments for your products. You need to track this information in order to calculate exact figures for taxes, sales and other important items.
Reduce Risk
You need to know exactly how much profit you’re making from your e-commerce business in order to know whether it’s worth the risk to keep expanding in the future (or start using affiliate marketing).
Set Profit Goals
You need to be able to set profit goals for your business as a whole so that you can determine whether you’re reaching them and earn a profit (or make a loss). This allows you to know whether it’s worth continuing with your current e-commerce business model or making some changes if necessary.
Help with Staffing Decisions
Your e-commerce company needs to know how much money it is making in order to make decisions about hiring more staff or finding new employees. One of the reasons on why is bookkeeping important for e-commerce is, it will ensure that you can get the right amount of people onto the payroll without going over budget and without having too many expenses (which will affect profits).
Establish Business Goals
You need to know where your business is starting out each month. Without this information, you’ll have a much harder time reaching your goals because you won’t know how much you’re making each month or how many orders you’re getting as well.
By keeping track of your sales and expenses, it allows you to have better control over your cash flow of your CPA firm so that you can plan ahead for the future and manage your profits more effectively. Connect with us at Orange IQ today to get a hold on your bookkeeping!
