One of the most challenging things about running an ecommerce business is accounting. Since ecommerce is so complex, and the sheer volume of transactions can be intimidating, your accounting may need help to keep up with your business. You'll need a better accounting process to satisfy your business's demand. Specifically, you'll need the best accounting software for ecommerce.
How Is Ecommerce Accounting Unique?
Since ecommerce is a worldwide business, its accounting is trickier than traditional businesses that serve only within physical locations. This 2023 the ecommerce industry is projected to jump to $6.51 trillion in value. Just think of the transactions that make up that figure—massive.
Ecommerce accounting differs because there is a lot more to account for. Here are some transactions that ecommerce accountants manage daily.
Processing Multiple Sales Tax
As mentioned, ecommerce is a global industry. Through an ecommerce platform and an exemplary shipping service, an online business can sell anywhere in the world. However, to be able to sell legally, there must always be a sales tax attached to each sale.
Ecommerce accounting requires sales tax calculation for different tax policies. For example, while Amazon allows you to let them help you handle your taxes through the Amazon Tax Exemption Program (ATEP) for sales in the US, you'll still have to collect and remit your own sales taxes in Canada. On top of that, the US and Canadian sales tax rates are completely different, with their tax returns filed each year.
Large Inventory Management
If you want your ecommerce business to thrive in an industry with thousands of competitors for every niche, you'll have to have many products on-hand and ready to meet demand at a moment's notice. Another thing that separates ecommerce from regular businesses is that sellers have a vast inventory.
Inventory tracking is no easy task for anybody, especially for small businesses. However, if you're a business that ships to customers in different timezones, there will be an inevitable addition to your accounting load. Add to that the sheer volume of items you'll have to check on-—where they are stored, how many are ready for shipping, how many are damaged or lost—and reconcile your records regularly.
High Volume of Transactions
If you're selling products or services to the world, expect to be met with thousands of transactions daily. That means various modes of payments, currencies, bank accounts, taxes, and so on. Tracking each transaction will take copious amounts of time and energy, and still, you might miss out on some financial data, which, for a global business, you cannot allow to happen.
Why Is an Accounting Software for Ecommerce Essential?
While it's possible to do your accounting manually, tracing every transaction in an ecommerce business can make even the best accountants dizzy. In such cases, giving your accounting specialist some much-needed assistance, like accounting software, is good.
Using accounting software produces financial reports quicker and with fewer people, saving your company time and your accountant's energy. However, not all accounting software on the market can suit your ecommerce needs; for your online business, you'll need the right accounting software.
What Features Make the Best Ecommerce Accounting Software?
Accounting software comprises different accounting tasks that your accounting staff can do electronically. However, if you want the best accounting software for ecommerce, here are some key features it must have.
Bookkeeping is an integral part of your business finances. Without proper bookkeeping, you can risk losing track of your income and expenses and have an inaccurate view of your company's financials.
Having a bookkeeping feature in your accounting software allows you to keep a record of each sale or expense and automatically add it to your company's financial data for the accounting software to note.
Small business owners have a hard time managing inventory, and how well you take care of inventory can directly affect your business. Since ecommerce sellers usually store items in remote warehouses, like Amazon FBA fulfillment centers, losing track of units or missing out on damaged ones is becoming too common. The right inventory tracking tool lets you know how much you still have for sale and who will compensate you for lost or damaged items.
Since payments to your online businesses are often made remotely with various payment schemes, it's important to have an accounts receivable feature in your accounting software to keep track of your revenue. An accounts receivable feature lets you know how much money to expect and how much you can use to repurchase stock.
As a business, you also have investments that help grow your company. Having an accounts payable feature lets you know how much your business is shelling out on a weekly or monthly basis and could help predict your future expenses.
For example, if you're in the retail business, you may have scheduled shipments to replenish your inventory. Accounts payable notes this in advance for you to continue or change, depending on your decision.
Ecommerce integration is perhaps the most important feature you should have in accounting software. An ecommerce integration feature streamlines transferring your financial data from your online business to your books, so there's no need for manual data entry if you don't need it.
Direct integration also organizes your accounting in such a way that it suits the ecommerce platforms you have decided to sell on, giving you an easier time tracking your financial data.
Cloud Accounting Features
If you want a bigger accounting team, you'll also need cloud accounting as a feature. Cloud accounting uploads all your data to the cloud, securing it and allowing multiple users to log on and do your accounting.
Cloud accounting is great for an expanding business since it allows you to assign multiple people to do different accounting tasks simultaneously using your software.
Mobile app functionality is a great feature to add to your accounting software. With everyone on the go nowadays, having a mobile app handy allows you and your staff to update your accounting whenever and wherever.
The Best Accounting Software for Businesses
Out of the top ecommerce accounting software options, we recommend QuickBooks online. With well over 200,000 companies using QuickBooks, it's undoubtedly one of the best accounting software in the market. With QuickBooks, you can expect the following features:
- Income and Expense Tracking
- Payment Processing
- Cash Flow Management
- Inventory Management
The best part is that's not even all of them. QuickBooks is designed for many accounting tasks—too many to list down. That shows how versatile QuickBooks is and why it's one of the best in the market.
Unloop As Your Bookkeeping Service
Doing the books for your ecommerce company can be a huge hassle. Fortunately, Unloop will be happy to do your books for you.
As one of the premier accounting services in North America, Unloop offers bookkeeping services to go along with precise and detailed accounting. Book a call with us and see how we can help your business today!