Starting an ecommerce business is a great way to expand your business and reach customers. With an online account, your products are available 24/7 and can even reach customers worldwide. However, as your business grows, managing its different aspects will prove difficult. That's why seeking help from a professional accountant or paying for accounting software will be a huge help in managing your online store.
Nowadays, Quickbooks’ bookkeeping services are becoming more popular with ecommerce merchants. But if you are a small business, is it worth committing part of your earnings to these services? In this blog post, you’ll see a new perspective on bookkeeping and decide if these services are essential for your ecommerce business.
What is Bookkeeping?
Whether you have a physical store or an online selling business, bookkeeping is a great way to keep track of all your financial records. This way, you can clearly see the money that comes in and the money that goes out of your business. In addition, keeping a book of all your transactions can help you manage your inventory and your cash flow.
Moreover, bookkeeping software automatically records every financial transaction, so you're sure you won't miss anything. It can also deliver on-the-dot reports, which will be helpful for your tax filing and even when conceptualizing marketing strategies to increase your sales.
What to Expect in Quickbooks’ Online Bookkeeping Services?
Before your bookkeeping software can automate every financial transaction for your business, you have to set up the workflow of your software according to your needs. Here are some essential settings you should note to maximize your bookkeeping software.
- Set up how you prefer or need to track your inventory. You won't see many changes in daily tracking if you're a small business. Instead, you can start with a weekly tracing of your inventory and, from there, study the trends and your costing to see the goods that profit most.
- Create your templates for sale receipts, invoices, and orders. This way, it will be easier to track and categories where your money comes from and where it goes. In addition, these templates will come in handy when balancing your finances at the end of each month.
Once you set up some of the essential workflows and the automatic tracking starts, it will be easier to manage your business and focus on other aspects of your business to cater to its continued growth. With this, it is also important to understand the financial statements the accounting software will produce for you.
These financial statements will carry crucial information you can use to manage your taxes and strategies to increase your earnings. But, first, let's look at the different financial statements automated bookkeeping services can provide.
Balance Sheets
In a normal balance sheet, you will see two columns for your business's assets and liabilities. As the name tells you, if your business is doing well, both sides of the sheet should be balanced. It means that you earn enough to give you profit and compensate for your business's needs like inventory costs and payroll if you have an employee.
For an ecommerce business, since you don't occupy a physical space, you won't see the cost of rent and other physical materials on your liabilities. What to look out for are your shipping, costs of packaging, the costs of replenishing your inventory, and even investments. The balance sheet can say a lot about the current financial health of your status. When you see negative earnings, it may be a sign to devise a strategy to save your business.
Income Statements
Income statement is a straightforward document and easy to understand. These documents contain all the money your ecommerce business receives over a period of time. Quickbooks can provide you with income statements monthly, quarterly, and yearly. These income statements will be useful when you file for your income tax returns, and these are valid documents you can use when someone from the internal revenue agency comes to audit your business.
Income statements show two types of income, operating and non-operating. Operating income is every sale you make selling your goods. Non-operating income is money made that doesn’t come from your inventory.
For example, you sell your warehouse space and use a cheaper one. The profit from selling your warehouse space is categorized as non-operating income. Selling your equipment and gains from your investments are non-operating income as well.
Cash Flow Statements
As an ecommerce business owner, the cash flow statement is probably the most important document you should have. If the income statement only shows all the money you earned, the cash flow statement shows all that, including the money you spend for your business. For example, it can be spent on rent, paying bills, replenishing inventory, hiring people, and other business-related expenses.
Cash flow statements can tell if you are spending your resources properly for the growth of your business or if you are overspending on unnecessary things. Quickbooks online can readily provide you with cash flow statements whether you want an overview of your monthly, quarterly, or annually spending.
Final Thoughts
On the surface, bookkeeping may look like it's keeping a record of everything that transpires within your business. But you can utilize these financial documents to cater to the growth of your business. Furthermore, these documents can help you manage your taxes for proper filing and remittance.
If you are new to ecommerce, seeking help from professional accounts will surely help you manage and boost your business. Regarding reliable professionals, Unloop can help with all your ecommerce queries. In addition, our professionals can handle taxes and can give consultations to help you grow. We also offer software like Quickbooks’ bookkeeping services and other accounting services you can integrate with your ecommerce platform.
Start your success story with us. Book a call with our professionals, and let's discuss what we can do for your ecommerce business.