Once you become an ecommerce business owner, expect days to be longer, and responsibilities to be greater. You’ll welcome the hustle as you know it is part of the job, and it is required to make your business succeed. Yet, despite the passion and energy to take on any challenge that comes your way, know that the key to success is by optimizing your business operations early.
This article will help you optimize your online business financial management through proper bookkeeping. Check out these nine small business bookkeeping tips to ensure you do your bookkeeping correctly and efficiently.
Tip #1: Know Your Bookkeeping Basics
Before optimizing your bookkeeping processes, arm yourself with basic bookkeeping knowledge first. Begin by knowing that bookkeeping and accounting are separate tasks. Bookkeeping is all about tracking data and organizing it in a business’s books. Accounting, on the other hand, is the task of making sense of numbers through reports. Despite the two being different, they always go together.
For starters, you’ll have to choose between these two recording methods: cash-based and accrual accounting. The first tracks money as it comes in and out of your business, while the latter tracks income and expenses over a certain period.
It is also essential to familiarize yourself with bookkeeping and accounting jargon like assets, liabilities, equity, revenue, expenses, costs, and profits. Awareness of these terms will make it quicker and more efficient for you to check your books and understand reports.
Tip #2: Streamline Bookkeeping Processes
Now you know what bookkeeping is about, it is time to start tracking. To do it right, don’t go at it alone. Hold different team members accountable for keeping their income and expenses tracked and organized, and reported regularly. Doing so will save time, effort, and resources.
Tip #3: Switch to the Latest Software
Investing in good bookkeeping and accounting software can help you streamline and automate your processes. You can integrate the data you have in the ecommerce platform you are selling on with the software. Then, your data can be categorized and organized automatically.
You can combine this data with other key performance indicators you are tracking that aren’t provided by the ecommerce site. You can also use the software’s report generation capabilities to make sense of all your data.
When there are changes and updates in the books from different departments of the company, they get recorded automatically. Everybody can view the most updated data immediately.
Other benefits you will enjoy from having bookkeeping and accounting software are the following:
- Paying correct tax obligations on time because the software computes them right away.
- Automating invoice creation and sending to remind customers and receive payments on time.
- Giving access to your accounting records to only authorized team members.
- Backing up valuable financial records as the software operates in the cloud.
Do not hesitate to invest in these tools, nor think that an Excel sheet is cheaper and better. With all the benefits of the latest bookkeeping and accounting software, your investment will be worth it.
Tip #4: Have a Separate Business Bank Account
Your business should have its own bank account before you launch your ecommerce store. The business transactions in your bank should go straight to your books to be categorized accordingly. Doing so removes the additional step of separating your personal funds and personal liabilities from business income and expenses.
It also keeps you from overspending or being too thrifty because you can see your profits clearly. When tax season comes, the computation of the income and the taxes you must pay will be easier. You can also see the sales taxes you collect and need to remit.
Finally, having a separate bank account makes it easy to get a loan as you can quickly generate cash flow and profit and loss statements.
Tip #5: Keep Track of Business Finances Through Reports
Run financial reports regularly to utilize the data recorded in the bookkeeping process. Bookkeeping and accounting tools allow you to generate reports in just a few clicks because they have templates. You can quickly check the following financial statements:
- Income statements
- Balance sheets
- Cash flow statements
You can customize reports too.
As a startup ecommerce business, running reports as often as possible is best. Doing so allows you to see your business’s successes and duplicate the best practices that led to those wins. On the other hand, if there are alarming numbers reflected in the report, you can create mitigation plans quickly and improve your financial performance.
Tip #6: Stay on Top of Inventory
Another area of your ecommerce business you need to be on top of is inventory management. Customers get turned off by stores with products they want but can’t buy because of a lack of supply. When your inventory isn’t organized, you miss out on plenty of sales opportunities.
The good news is that most ecommerce sites have an inventory management feature, so you only need to integrate the data into your primary accounting system. You can add the numbers to other data stored in the tool to determine the cost of goods sold and delivery or fulfillment costs.
The collated data and reports will guide you in deciding whether your fulfillment methods are efficient. You can also use your findings to know what kind of promotions to launch and which products to focus on to boost or maintain their sales.
Tip #7: Choose Software With Human Resource Management Features
You surely envision your venture growing in the months and years to come. As your business grows, so will your team.
If you sell on ecommerce platforms as a manufacturer, you’ll have workers or partners making, checking, packing, and transporting your products. Even when you register as a reseller, you must pay for services transporting ready-made items through fulfillment centers.
Depending on the size of your company, you’ll grow into several departments. You’ll have finance and accounting, marketing, sales, human resource, customer service, and research and development teams to manage and give salaries to.
Having a bookkeeping software that has a human resource feature allows you to:
- Check your employees' schedule
- Track their time
- Monitor their performance
- Receive expense claims digitally
- Have visibility on recruitment
- Post company news and updates
- Manage your payroll
These HR details have monetary value and impact, so they should also be tracked and included in the books.
Tip #8: Have Customer Relationship Management Tools, Too
One of the most underrated accounting and bookkeeping tips is investing in a tool with a customer relationship management (CRM) feature. This practice will make your business operations even smoother.
The data you’ll get from a CRM tool might not be in monetary values, but you can get just that by combining them with other data stored in your accounting and bookkeeping software. Because customers are your business's lifeblood, you must include these details in your bookkeeping.
Give yourself and your bookkeeper the convenience of having customer insights within your main accounting tool. A CRM tool saves contacts of leads and customers that can help you conveniently send invoices and do marketing. It stores information like the sales journey of a potential customer and the issues they experience in the sales process.
Tip #9: Know the Benefits of Partnering With a Bookkeeper
We’ve already discussed the basics of bookkeeping and knowing how bookkeeping tools and their features help you optimize your ecommerce business operations. Now, we’ll answer a lingering question many business owners like you have: should you hire a bookkeeper? Our answer is yes!
Here are the benefits small business owners reap in partnering with bookkeeping professionals:
- Peace of mind knowing that a professional bookkeeper handles your books.
- Assurance that data in the books are constantly updated.
- A guarantee that you can make accurate tax payments because of organized books.
- Less work, as the bookkeeper coordinates with different teams for data collection and day-to-day book checking and updates.
- The security that the software you invest in is utilized because a trained bookkeeper is well-versed in using it.
It’s tempting to do bookkeeping yourself, but with plenty of tasks on your plate, the best move is to delegate it to experts.
Bookkeeping Tips and Assistance From Unloop
By now, you must have realized that optimizing your bookkeeping can also make your business operations run smoothly. These nine tips may be a lot for some, but implementing them in your business will be worth it.
If you need more bookkeeping tips and tricks, assistance using bookkeeping and accounting software, or if you want to delegate bookkeeping tasks to experts, Unloop is here. We have a team of bookkeepers who are well-versed in the ecommerce industry, so your books will always be in good hands. We also specialize in accounts payable services, forecasting, payroll, and taxes.
Contact us now so that we can discuss our offers further.