In the world of ecommerce, companies need the right financial infrastructure to support their growth. This includes hiring the right ecommerce Certified Public Accountant (CPA) to manage financial records, taxes, and other accounting tasks.
However, finding the right ecommerce CPA can be daunting, especially for small and medium-sized companies that need a dedicated accounting department. In this article, Unloop will explore how companies can find ecommerce CPAs and how accounting service agencies can help them get one.
CPAs can do all the regular accounting functions. Many non-CPA functions such as bookkeeping, financial statement analysis, internal business auditing, and tax preparation are part of their skill set. But there are certain things only a CPA can do, such as the following.
Licensed accountants can formally audit a company's financial statements as a representative of an institution such as the IRS. They can check if your business's recording methods comply with the rules.
If you have non-CPA ecommerce accountants doing your tax preparation, they are limited to bookkeeping, financial statement preparation, and filling out tax forms. A qualified CPA must still sign off on your tax documents before it's honored.
In some cases, only a qualified CPA can take on the responsibility of a comptroller. While even non-CPA ecommerce accountants can do consultation work, they may need to be qualified to oversee your accounting systems and make changes.
All ecommerce companies must have a CPA working for them. It is essential because there are plenty of business activities in the accounting and finance facet that need the services of a public accountant. You'll need CPAs to move things along to keep your business running well. Note the following before deciding to get a CPA.
Accountants must pass a licensure examination to become CPA. This license allows them to take private and public business clients. So before you hire a CPA, be sure to check for their license. Additionally, their license must also cover the state or jurisdiction where you're operating so they are recognized by the institutions they're going to deal with.
Accountants also have different specialties when they set out to practice accountancy. Public accountants are no different. So, as much as possible, look for the ones with several ecommerce clients under their belt. This reduces the learning curve, plus they can offer great insights from their previous experiences working with online businesses.
Hiring a CPA is an added expense to your business operations. But you want to get the best value out of their service—which means paying the correct amount given the degree of work provided. As an ecommerce seller, be aware that accountants, in general, charge in three different ways.
Each one has its benefits, depending on your company’s needs.
One of the most sought-after characteristics of a CPA is their reliability. They have to be ready to work at a reasonable time. This is how they move things along for your business. So in a practical sense, try to go for a public accountant that services only a few clients.
Now that you have the qualifications to shortlist your CPA candidates, it's time to find one that suits your ecommerce business. Here are some of the steps you can take to ensure you choose wisely.
Before you start looking for an ecommerce-specialized CPA, you must determine your ecommerce business's accounting needs. So check your business's accounting system and volume of business, then ask yourself the following questions:
Once you have a clear understanding of your accounting needs, finding a CPA who can meet your requirements will be easier.
One of the best ways to find a reliable CPA is through referrals and recommendations. Check with other ecommerce business owners in your network for a CPA recommendation. Lawyers, bankers, or other professionals you work with can also be a great source of CPA referrals because they are more likely to use accounting services.
The internet is a valuable resource for finding ecommerce CPAs. You can use search engines like Google to find local CPAs specializing in ecommerce accounting. You can also use online directories like the American Institute of CPAs to find licensed CPAs in your state.
Professional social media sites are also rich sources for accounting professionals. Sites such as LinkedIn can give you the essential information you need to know to help you find and connect with ecommerce CPAs in your area.
Attend conferences and events in the ecommerce industry to network with other professionals and learn about the latest trends and best practices. These events can be a great way to meet qualified CPAs specializing in ecommerce accounting.
Some conferences double as trade fairs where you can find several CPAs that offer their services. What's good about these conferences is you get to ask them questions and qualify them on the spot.
Once you have a list of potential ecommerce CPAs, evaluating their credentials and experience is essential. Read back to the previous section on what to look for when hiring CPAs.
Your public accountant may be a member of the American Institute of CPAs or other professional organizations for accountants. This is a plus you can consider on top of their experience. Check to see if they have certificates to present that back up their titles, too.
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If you need more time or resources to find an ecommerce CPA, accounting service agencies can help. These agencies can connect businesses with qualified CPAs who can manage their accounting needs. Here's how they can help.
Accounting service agencies have a network of qualified CPAs who specialize in ecommerce accounting. They can match you with a CPA who meets your specific needs. This is convenient because you can get your tax filed through a CPA from an agency that also handles your books.
Finding the right ecommerce CPA can be a time-consuming and costly process. You can save precious hours and energy by working with an accounting service agency. They can handle the entire process for you, from finding the right CPA to managing the billing and payment process.
In addition to connecting you with a qualified ecommerce CPA, accounting service agencies can offer additional services to help you manage your finances. These services may include the following.
Accounting agencies employ many highly skilled and experienced ecommerce bookkeepers and accountants. They can help you record transactions accurately, which will benefit your CPA when it comes to tax planning.
This team of experts is also adept at using accounting software when dealing with ecommerce accounting tasks, which makes recording and reporting faster and better.
One of the challenges a growing ecommerce business faces is reconciling its business bank account with its financial records. Accounting services can do this in hours by combining their skills and expertise with your software.
Sales Tax Compliance
Ecommerce businesses need to collect sales taxes, just like any business in the United States. The challenge is that online businesses are wide-reaching, and they do business in multiple locations, making accurate tax collection problematic. A team of experts, combined with the right tax software, can help you surmount your sales tax collection obstacles.
Calculating the correct cost of goods sold (COGS) is a crucial part of managing an ecommerce business's inventory. This cost account says a lot about how efficient you are in producing or sourcing your products relative to their price. An accounting team can help you determine the accurate COGS in a given period so you can make good inventory management decisions.
Sourcing a qualified CPA accountant for an ecommerce business can be difficult, primarily if you have yet to work with an ecommerce-specialized public accountant. The easiest way to get access to these professionals is to find an accounting agency that can bridge the gap.Let Unloop handle your accounting and bookkeeping needs. More than helping your ecommerce business become efficient with its accounting systems, we can also connect you with a CPA during the most critical period of your business—tax time. If you're curious about what Unloop can do for you and your business, book a call.
Finances keep your business running. That's why managing it can make or break a business. But as new business owners, it can be confusing to handle money, and you might be spending them on things that could be devastating for your business.
For small businesses in particular, every penny counts, and managing finances is not always simple. In this article, we'll outline a few of the most typical errors that small business owners make that might hurt their company.
It is alright to feel excited about opening your business. But often, this excitement turns into unnecessary spending. Buying office space or furniture to make the area cozy can be tempting. There are also pieces of equipment and technology to splurge on. But before buying these things, make sure you need them.
When you have a small business, you can start with the basics. As your business grows and you earn more, you can continuously upgrade. Moreover, don't get business loans you can't pay back. The money you get will allow you to buy things, but if you don't have enough income to pay it back, your business won't generate profit or have the finances to keep operations running.
All businesses should have prepared emergency funds. There's always a possibility that an unwanted event will happen, and most of the time, it will cost you money. You can't always rely on the daily profits since you always have expenses to settle.
With emergency funds, preventing damages to your business will be easier. For example, when a piece of your equipment malfunctions or breaks, you’ll need a large sum of money to repair it. In worse scenarios, you’ll need to replace it. There will also be months when business is slow, and emergency funds can keep your operations running.
Every payment is essential for a small business. But many businesses need to pay more attention to their unpaid invoices. According to recent studies, almost 65% of businesses have unpaid invoices from their clients. That is a lot of money you lose if you're not settling with your clients.
Make it a habit to track your invoices. Send regular notifications to your clients regarding their dues. You can add penalties to overdue payments so clients are forced to pay your business more diligently.
Running a business also means you have tax obligations to fulfill. Many business owners focus on marketing strategies, sales, and other aspects that they often forget to consider taxes. Business taxes can be heavy when you pay them all at the end of the fiscal year.
You can plan them quarterly, so your business's cash flow will not be interrupted. Planning for your taxes will also help you distribute your business finances equally for your required expenses.
Many business owners fail to realize the importance of a positive cash flow. The main focus of cash flow is the money that enters and exits your company. Of course, it's good for your business's finances if cash continues to go into your business. The profit and loss statement can help you identify any cash flow problems early on.
However, there are also business-related expenses you should know of. There's inventory you need to track so you can keep selling and meeting your customers' needs. There are bills to pay, like rent, electricity, and other fees for business operations. Managing small business finances properly can help you balance your income and expenses.
Small business owners often think they have sound financial management if their expenses are paid. Always check your balance sheet to see if the money going out and in is balanced and will still make you profitable.
One of the most common mistakes of business owners is confusing cash and profit. For example, your business generates $1000 per week, and your expenses add up to $450. The cash you have on hand is $1000, and the profit you generate is $550.
In a month, you can expect to earn $4000 with $2200 to pay in expenses. If the business is stable and income is consistent, your expenses will be covered. But remember, business can be slow and unpredictable things can happen. The $4000 may not come in time, and you may not have enough to cover your expenses, leading to your business's downfall.
When business is doing good, and you are earning a lot, buying the things you want and using business profit for personal expenses can be tempting. But it is most practical to keep your personal and professional accounts separate which a lot of small business owners find it challenging to do.
While it makes sense to use your profit for your personal needs since you own the business, remember that a part of your profits should be invested for future growth. Moreover, business profits are used to assess your business's financial health.
Creating a budget is crucial for every business. When you have a clearly drawn budget for your business, you’ll have an accurate expectation of your future expenses. From business loans to buying inventory, paying your tax obligations, and employee payroll, you can ensure to fulfill all your business expenses.
It's inevitable that you can make mistakes in managing business finances. However, by having a financial plan, you may anticipate and prevent them. Furthermore, creating a budget plan allows you to see different situations that can happen to your business.
Don't underestimate small business financial management. When it comes to business, dealing with money is difficult. Fortunately, technology has caught up, and accounting software makes basic financial management for small businesses easy.
Investing in accounting software will make business financing easier, especially for owners new to the business. Here are some reasons why using accounting software for your business is beneficial.
Business finances go hand in hand with accounting, and it's not every business owner's cup of tea. Unloop offers accounting services for small businesses that need help with their financial management. We offer services for forecasting, payroll, bookkeeping, accounts payable, and taxes.
Don't let messy finances hinder your path to success. Get professional help today! Book a call with us and talk to an expert for free.
Debit or credit? The question can confuse most beginner business owners since, to the average person, it can mean the same thing in certain situations. However, debit and credit are far more different than they are similar. This article will help you settle the debits vs. credits question once and for all.
To understand debit and credit, we have to go back to the basics of business finances: money coming in, and money coming out. It is the inevitable truth of business—you can't earn without spending, and you shouldn’t spend money without expecting returns.
This brings us to our main point: the credit and debit difference. It's an ongoing cycle, give and take. Debit and credit just give us a sharper idea of which goes where.
At first glance, the difference between debit and credit seems pretty straightforward. Debit, since it brings in money for the business, is the one that gives, while credit, which connotes loans and payments, takes.
But if you keep track of your financial transactions and look closely enough, you'll realize that debit and credit are not just fancy accounting jargon, and accounting for each can get pretty complicated. So what's the main difference between the two accounts?
Let's go back to give and take. Businesses live off customers' payments in exchange for goods and services and make investments to maintain or even improve their operations. Customers give you money, and you take money from your budget to pay for necessary expenses.
When a customer pays for services, their money becomes the company's money to do with as they see fit. Such payments can be considered “assets”—resources under a company's control. Assets can be anything from hard cash to vehicles or properties.
But when it's the company's turn to make payments to other entities—whether in the form of investments, expenses, or refunds—they relinquish control of the money in their possession, turning them into a “liability”: a resource or amount a business owes to another individual or business.
The main difference between debit and credit lies in assets and liabilities. A debit increases the value of assets while credit accounting increases the value of liabilities. So while the two both give in some areas, they also take in others, depending on the account.
Here are some examples of assets:
Here are some examples of expense accounts or liability accounts:
To better understand debit and credit, here are some examples of how they function in different accounts.
The balances in a bank and cash account are the simplest way to explain debit and credit. When someone deposits an amount into your bank account, you consider that a debit transaction because cash is an asset, and a deposit increases the amount or value of that asset. Essentially, bank debits are transactions wherein the asset account increases.
But when you pay for something, like bills or expenses, then those are considered credit transactions because you owe certain amounts to other individuals or businesses, taking away your control of the asset. Monthly payments on your prepaid debit cards or credit card bill increase your amount owed, making it a credit.
Revenue includes expenses in the equation, making it a liability. So when a client pays a business a certain amount, that amount is entered into the books as a credit, even if it adds to your business's total income after expenses.
Debits in revenue are made when a customer returns an item or asks for a refund, increasing what your business owes to other entities.
Equity is what remains from the revenue after expenses. It is your profit to be divided among shareholders as their portion. Because it takes money from a business, equity accounts are considered liability accounts on the balance sheet. So if someone invests in your business, even if it helps your company financially, that will still be considered credit because the equity accounts increase.
If you're having trouble determining your profit, remember the accounting equation: liabilities minus expenses equals assets. Usually, the profit's dividends will depend on shareholders' equity.
Accounts receivable are simply your business's earned but unpaid sales. Accounts receivable is considered an asset account because when customers pay for the services, the payments turn into cash for your company. Naturally, logging sales into the accounts receivable is considered a debit entry.
Accounts payable keeps track of how much the business owes, making it a liability. So money sent into this account guarantees it will be spent elsewhere, like suppliers or the company's bills, which is considered a credit transaction. This is usually how a credit card company does business.
You probably think that debits and credits complicate the whole accounting process, which is true to some extent. It is complicated, but not without reason. Debits and credits give context to your business's financial health.
For example, in the two account systems, single-entry and double-entry accounting, borrowing money or a bank loan can be interpreted in different ways. In single-entry accounting, the loan is logged as income since it increases your company's funds. But in double-entry accounting, where transactions are labeled as a debit or credit entry, a loan is considered an expense, or a credit that the business will have to pay in the future.
See, if you only logged the loan as additional cash (which it is, but only temporarily), you risk forgetting it in the future and hurting your company's financial health. But if you log it as an expense now, you can better prepare for it in the future.
One of the best decisions you can make in favor of your business's financial health is deciding on an accounting method to use to track your finances.
If you run your business account on a single-entry system, you won’t have much of an issue since it's simpler: separate income and expense accounts; nothing more, nothing less. You can even manage your books with a single journal entry. You log incoming and outgoing money and mark the difference, which will be your profit.
However simple as it may be, single-entry bookkeeping or accounting poses problems for a businessman accounting for their finances using this process. First, single-entry accounting lacks context. Since you only account for income and expenses, you have only a vague idea of your business finances. Second, because of the lack of context, single-entry accounting cannot produce balance sheets, which leads to problems regarding taxes.
So what's a better choice?
Double-entry bookkeeping or accounting fixes the common problems with single-entry bookkeeping. A better financial context in a double-entry system allows you to make more accurate financial predictions. Consequently, you'll have fewer problems with the tax authorities since you'll be able to provide much needed details with a balance sheet.
Double-entry accounting takes assets, liabilities, and equity into consideration when assessing a company's financial situation. It takes asset and expense accounts and marks the debits and credits properly to make an accurate financial assessment.
With double-entry bookkeeping, you won't have to worry about making it to the end of your financial period since your accounting method keeps you up-to-date. Also, accounting software is usually optimized to record debits and credits properly, so it becomes less of a headache to do.
Learning the difference between debit and credit is essential to the survival of your business finances. The average person will have trouble seeing which—they may even label the same transaction as both debit or credit without noticing.If doing your own accounting isn’t optimal, try a bookkeeping service. A good bookkeeping service can keep your books flawless and your business in great financial shape. Unloop can do this for you. Give us a call to find out how.
Revenue and expenses are a core part of running a business. You can operate your day-to-day business activities smoothly if you keep them in balance. You can employ several strategies to control your expenses and help grow your revenue.
The path to business success is a long and tedious one, but it's not impossible. Business finances are messy, and here we have some tips to help manage them effectively. Revenue and expenses go hand in hand. Take note of these tips to help you handle them better.
Expenses will play a huge role in your financial health. Expenses are costs that a business incurs to pay and run business operations. This covers everything from paying your rent and buying equipment to costs for packing and shipping.
Here are some suggestions for managing your company's expenses.
One of the most effective ways to have control over your budget is to start with a plan and stick to it. Creating a budget should be practical and applicable to your industry. You need to research your spending patterns and behaviors in order to develop a successful plan.
Annual budgeting is most common, but unforeseen circumstances could make you go off budget. You can control your expenses by drawing up monthly budget plans. This way, you can review and see if you are on track with your overall budget.
But more significantly, you must adhere to your spending plan. Making a budget is useless if you're not committed to sticking to it.
Make it a habit to keep all your receipts. You can record them manually or invest in software to help keep track of your expenses. Software features allow you to capture photos of receipts and store them as data so you can guarantee you don't lose your records.
Furthermore, documentation of expenses is also helpful for taxes. Certain operating expenses can be eligible for tax deductions to lessen your tax liabilities. Keeping a detailed track of your expenses helps you see the areas when you could be overspending to help you strategize your spending patterns.
Many business owners don't pay mind to fixed costs since they are recurring payments. Fixed costs often come from partnerships between merchants and suppliers. After a while, you will think you have a good deal with your suppliers if they don't change their prices. But it would help if you check market offers periodically.
You can start reducing expenses by finding better deals regarding your fixed costs. Get regular quotes to ensure that you are spending your finances correctly.
It's understandable that most business owners believe manual processes are cheaper. Imagine if you have a small business with a dedicated team for packing and shipping orders.
Advanced equipment may look like massive investments at first, but machines can do repetitive tasks equivalent to several people. This means you'll need fewer people to hire, which saves money in the long run.
Business revenue is the total income a business generates from its product sales or by providing services. Revenue is also known as gross income and referred to as the top line because it is typically seen on top of an income statement.
On the other hand, profit or net income is a company's total earnings after business expenses have been deducted. The balance between gains and losses will keep a business running. Here are some helpful tips to generate revenue.
Most companies spend time and assets to gain new customers but often neglect customers to repeat business. Building trust with your consumers will drive them to use your services again.
One effective way to persuade your customers to repeat their purchases from your business is through email. Once your clients join your email list, it allows you to communicate with them. You can solicit their opinion and keep them informed about special offers and new products. They are more inclined to repurchase your goods or services once you have earned their confidence.
Who can resist coupons and discounts? You can use this strategy to funnel sales to your business. Of course, you have to be smart about it. You won't be making sales if all of your customers are granted discounts.
Your most devoted and active clients may receive discounts. These can be used as a thank you gift for buying your products. You can also give discounts to people who purchase a certain amount. For example, you can have promos for people who purchase more than $300.
Coupons, on the other hand, are great for new customers. For example, first-time buyers can have a 5% discount on their first purchase. Coupons such as this will entice new customers to try and purchase your products.
In the United States, over 70% of people prefer to shop online, if you don’t have a well-built website, your competitors will surely outshine your business. Easy navigation and positive user experience can encourage customers to purchase from your business.
Make sure all elements in your website are working and reflect the branding of your business. It should contain all the information your customer needs and make the purchasing process easy for them—from choosing the product or service to processing their payment.
Juggling and managing your time with running a business is a difficult task. You may not want to admit it, but there are other aspects of your business that you fail to give attention to. Marketing your business allows you to gain customers. More customers mean more income.
However, marketing is challenging with so many things on your plate. Instead of forcing yourself, outsource your marketing needs to a professional. These services can guarantee that your investment is worth the price and will help scale your businesses.
You reach more customers as you venture further. Consider opening new branches in different cities if you have a physical store to attract more clients. For your ecommerce counterpart, you can widen your shipping options.
Small businesses usually start deliveries locally, but you can extend your reach nationwide or internationally. Look for shipping partners that will give the best deals to help you reach more customers.
Even big companies use this strategy to increase their total revenue. Offering a higher-priced product can help simple transactions turn into valuable ones. The process of upselling is offering your customer a better version of their original choice. A great example is mobile phones. Companies usually offer products with bigger memory or better performance for a higher price.
Just remember, when you upsell your products, it should be something related to the original choice to find success in your upsell strategy. If they are buying a mobile phone, upsell a better version—not a laptop or other types of gadgets.
Managing your expenses and revenue also includes accounting. Accounting helps owners see their company's financial performance and prepares their business for tax season. When it comes to accounting, Unloop offers different services for small ecommerce businesses.
If you need help managing your revenue and expenses, our bookkeeping services will help you keep up with your business finances. Our services include:
Keeping track of how much your company earns and spends in a specific period keeps your business operations steady and running. Managing expenses and revenue is a challenge, and we hope these tips help you understand and handle your finances better.
For more accounting services, Unloop also offers payroll, taxes, forecasting and accounts payables. Book a call with us now and talk to an expert for free!
Monitoring your business's accounts payable is crucial to determine the state of its financial health. Accurate forecasting allows you to gain control of your cash flow. In addition, knowing when your payments are due builds a good relationship with your suppliers and opens up strategies for money-saving plans for your payables.
Forecasting accounts payable may not be your priority when handling business accounting, but it can benefit your business. In this blog post, we'll talk more about forecasting accounts payable so you know how to do it for your business.
Accounts payable refers to short-term liabilities a business needs to pay off within a year or a shorter time frame. Understanding and seeing your business expenses fully allows you to do the groundwork for building a suitable budget for your business.
Forecasting will help you prepare to meet your payments by considering different scenarios. For example, if the price of raw materials increase or third-party fees change their rates, you can ensure your business can still fulfill its obligations and make wise decisions regarding your business finances.
You can monitor the money going out of your business in several ways. Here are some things you can do to help you build an accurate accounts payable forecast.
The payment patterns for your business are an important piece of information in creating an accurate forecast. Your expenses on payroll and inventory are relatively consistent month to month and easier to track. But always look at past spending data to see accurate patterns.
For example, look at the months you spend more on inventory. Some of your items may be in demand in certain months, so be mindful of that so you can plan your budget accordingly. You can also accumulate your past invoices to have a picture of where your money is going.
Noticing the patterns will also help you see where you can save, which can be good for your cash flow.
Understanding trends in the marketplace, like technological advances and consumer behaviour, will help determine if these changes can affect your business payables. Changes in the industry are quick, and if you're not keen enough to see them, you may fall behind, which can make your forecast less accurate.
You can track some marketing trends by:
Using historical data is advantageous for forecasting because many methods maximize historical data. The most common way of using past data is through extrapolation. However, there's room for error with this method because it doesn't consider the changes that happened in your business.
Statistical modelling is a more accurate method for creating accounts payable forecasts. This method helps business owners identify behavior in ways businesses do their payments and create a forecast based on its current conditions. This forecasting method is the most accurate but requires a huge investment in time and resources.
If you're new to forecasting, it is best to use both methods for the best results. Then, play with the strength of each method to make better business decisions.
You need all the data to create an accurate forecast. That's why it is crucial that you keep track of your invoices and dues. Here are some ways to do it effectively:
Accounting software is a valuable tool for businesses. Think of it as a virtual assistant that handles certain tasks that you can't because your hands are full. For example, you can start with a Microsoft Excel spreadsheet to organize your cash flow in a certain accounting period. Although this may keep things organized, you still have to input data and create financial statements manually when needed.
If you want something more convenient, there are several accounting software you can choose from. These software options can perform basic accounting tasks and even more complex ones. Furthermore, they can produce financial statements like income statements, balance sheets, and other reports in just a few clicks.
Some even have a feature to create financial models for your business based on the data you input into the system. The right accounting software will help create your business's accurate accounts payable forecast.
Knowing how much you need to pay at the end of each period will help you plan your budget. Fortunately, there is a simple calculation method that allows you to get an overview of your expected accounts payables.
Here is how to do it:
Once you have this data, you can simply follow the formula:
(Current liabilities)/(Total operating cash/Number of days) = Expected accounts payable
So, for example, if your business has an outstanding liability of $10,000 and your total
operating cost is $25,000, and you have 25 days to complete your payments. You can calculate your expected payables by:
(10,000)/(25,000/25) = $10,000
You can expect your business needs to pay $10,000 by the end of 25 days.
Forecasting is an optional part of accounting, and some business owners find it unnecessary. However, forecasting is a good move for your business if you want a clearer view of your financial ratios. Here are some benefits of doing it.
The results of the accounts payable forecast are valuable for improving your cash flow forecasting. This will help get key insights into how much of your working capital is available for business growth and investment. In addition, a clear picture of your forecast will help you maximize your working capital more confidently and risk-free.
Nothing makes your suppliers happier than you paying them on time. Forecasting accounts payable will help you see your deliverables ahead of time so you won't incur late payments. In addition, timely payments build trust and good relationships with your suppliers.
Moreover, forecasting helps you identify if you will run into problems with your payments. This way, you can give your suppliers a warning if there's no choice but to delay your payments.
Knowing your expected liabilities will help prevent disruptions in your payments. Understanding how much working capital comes in and out of your business in a specific period will help you eliminate risks and other potential disruptions.
Now that you have an overview of how forecasting accounts payable can benefit your business, you should start planning how you can forecast. Forecasting is not an easy task, so it is better to have a professional handle this for you.
Unloop offers AP forecasting for small ecommerce businesses. Our team of experts will ensure:
Unloop can handle all your accounts payable needs and even other accounting needs. Our team is ready to work with you on your bookkeeping, income tax, payroll, financial forecasts, and accounting. Book a call and work with us today!
Cash flow forecasting can be tricky—it requires skills, attention to detail, and dedication. But when done right, cash flow forecasting can offer tremendous value and invaluable insight into the future of your startup business or project.
Many organizations face significant challenges while attempting this exercise, but some workarounds can help you achieve success in predicting your financial future with confidence.
In this blog post, we'll explore some common cash flow forecasting challenges and solutions for improving your forecasts' accuracy. With these tips, you'll have valuable information to make better decisions about where to allocate resources and set appropriate expectations for revenue and expenses.
As an owner of a startup business, at the beginning, your cash flow may be slow and manageable using manual bookkeeping and accounting. A common mistake would be sticking to this day-to-day cash flow monitoring system and not forecasting. Seeing only daily cash flow and having no visibility about your company's future income and expenses is like operating a business in the dark.
Understand that cash flow management is essential for all businesses, even startups. Know that with it, you can see how much income and expenses you’ll have daily, weekly, monthly, quarterly, or annually. As a result, you can use the data as the basis of your financial game plans. You can use it to decide the following:
Having limited historical data is common to startups either because owners have failed to store financial data in the past or because the business hasn’t been running for a significant period of time yet. Historical data is the most basic information needed when creating a cash flow forecast, and the absence of these numbers makes the forecast result less reliable.
Despite the absence of historical data, there are still ways to get a reliable cash flow forecast. To begin, whether you lack past numbers because of a personal choice or not, it is time to invest in software and applications to help you track your business finances.
These apps and software can also help you conveniently create simulations, or before and after trials. Use the following data for your forecasts:
The biggest enemy of a cash flow forecast is inaccurate data, which can happen when tracking income and expenses manually. Although Excel sheets are readily available (and free), they may lose your business money in the long run as human errors bring costly damages to your finances.
Inaccurate data leads to making bigger loans, being overconfident in forecasting income, making fewer investments, and saving less—all detrimental to your business growth.
The most efficient workaround to the data inaccuracy problem is bidding goodbye to your company's manual systems. Accept that part of growth is optimizing your bookkeeping and accounting technology so that you can track your finances better.
Accounting software is highly automated, and you can also integrate various apps. As a result, you can minimize or even eradicate manual inputs, which can cause inaccurate data.
If there are a couple of teams in your company, you’ll need input for their income and expenses. This task becomes a roadblock when there is no collaboration between different departments. When different teams do not practise open communication, you might get incomplete or erroneous financial data from them. Another challenge is not having an established system for workflow and data submission processes in the company.
Excellent accountants and bookkeepers need to be well-versed in their tasks or have certifications and training to perform them correctly. On top of that, they should have communication skills and be team players. This is to make sure that they can connect to the various departments in your company to get the needed data. They also need to be forward thinkers to suggest and enact the best systems to make this data acquisition as smooth as possible for everyone.
Expect that a cash flow forecast doesn’t mean you’ll get 100% accuracy, as the following variables are prone to changes:
As a result, the final accounts receivable and payable won’t be exactly as what you forecasted.
The best workaround to ensure that you get the forecast closest to the truth is keeping numbers and data updated. Be in the know with the latest interest and foreign exchange rates. Know if there are changes in sales taxes and other tax dues you need to pay. If there are updates on commodity and raw material prices, they should also be reflected in your forecast. And do not forget about your customers too. Check sales trends to know when your peak sales occur.
Successfully launching a cash flow forecast is not the end of the cash forecasting process, but it becomes a problem if you make it so. As we’ve learned, some variables are subject to change, so if one variable adjusts, the income and expenses will as well. If you keep on using the old data without any adjustments, your business finances will suffer these consequences:
The best way to do a cash flow projection and actual cash flow analysis is through the help of software. An accounting software already has the forecast and the latest data of your business stored. They also have templates to show a comparison of current cash flow and forecast data. With software, generating reports is easier, and you can regularly analyze data to see if you need to optimize your cash flow plans and strategies.
Creating and maintaining a cash flow forecast is a major task for every company. Not having a dedicated team to handle it makes report generation impossible. And if even one is created, there wouldn’t be anyone to update it and let you know the latest data analysis results. Like a snowball, a series of the above mentioned challenges will surely accumulate.
There are plenty of choices a company can go for to hire a bookkeeper and accountant to handle forecasts. An in-house accountant is the traditional choice, but you can also choose to work with remote team members and freelancers. With these choices, building a dedicated team to handle forecasting becomes easier.
Your finance team will ensure your business has a defined forecasting process, an efficient way to acquire and manage data, and the best software to make forecasting cash flow easier and more accurate.
With cash forecasting being so important to any business’s success, startups must understand common challenges and how to avoid them. We hope that these common challenges startups face when forecasting cash flow and some workarounds have helped you. At Unloop, we have seen firsthand how important cash flow forecasts are to businesses. Proper forecasts can help businesses stretch their budgets and stay ahead of payments. With that in mind, take advantage of our forecasting services to experience the power of having a reliable and secure forecasting platform at your fingertips. Call us today!
Financial forecasting is the backbone of good financial planning. It directly affects your budget planning, investments, and strategic decisions for your business. If you're not doing budgeting and forecasting for your business yet, this year is the time to start.
There's more to forecasting than spreadsheets. Many things can affect a financial forecast other than numbers and some formulas. Fortunately for business owners, technology makes forecasting easier.
Businesses can use several budgeting and forecasting software to help predict their finances. To help you choose which one is best for your business, we've listed some of the best forecasting software options in 2023.
Even a structured business model needs financial forecasting to prepare for the future. It's a big problem when businesses run out of cash or are not prepared for the surge of expenses to keep their business running and retain their clients.
Accurate financial forecasts are valuable to every business, may it be big or small. Most businesses start with an Excel spreadsheet to develop their financial forecasting. However, doing forecasting in spreadsheets can be complicated because of the following reasons:
Forecasting in Excel is doable, but it is time-consuming and tedious. Developers are continually making software solutions for more progressive, innovative, and convenient forecasting. With that, here are the top budgeting and forecasting software products you should check out.
Cube is one of the top-rated forecasting software for businesses. Here is a quick overview of the great features of Cube.
Cube is the best financial software for startups that want to quickly transfer their data from manual spreadsheets to forecasting software without having to study complicated interfaces. Cube is best for faster workflows and is optimized for easier collaboration. Some of the functions of Cube include:
AnaPlan forecasting software is designed to plan for complex scenarios and do intelligent forecasting for faster and more accurate decision-making. Some of the key benefits of using AnaPlan are:
AnaPlan is best for bigger businesses with a dedicated IT team that can handle the complex controls of the software. But for smaller businesses, Vena is a suitable choice and almost similar to AnaPlan.
Planful is an affordable cloud-based solution for structured and dynamic planning, consolidation, and reporting. Planful offers:
Planful has AI-enhanced operations and functions that allow businesses to lessen the number of people they need to hire in the financial department. This overall lessens expenses in hiring staff.
SAS Forecast Server is popular for businesses because of its ability to generate accurate forecasts in a short period. More than quick forecasts, SAS has many great features to let you be in full control of your finances.
The forecasting software has easy-to-use GUI that can:
Its scalability and modeling offers:
The SAS forecasting software has many great and advanced features which makes this forecasting software good for small businesses and large enterprises. It can take some time for business owners to familiarize themselves with the software, but the product has official demo videos to help new users out.
Bizview is another cloud-based solution that can streamline your planning, forecasting, and budgeting processes in one software. You can access this software anytime and on any device as long as you have a stable internet connection.
Here are some of the features of Insight Software's Bizview:
Bizview has an interactive Excel-like interface which is also why many business owners prefer to use this software. It is also the most affordable software you can use for small businesses.
Streamline is the leading forecasting software of the first quarter of 2023. Its revenue forecasting processes are realistic, innovative, and quick to ensure that your business is on the right track when it comes to planning budgets and making strategic decisions.
Here are some of the key features of this forecasting tool:
There are hundreds of financial budgeting software available for businesses to use. It is just a matter of choosing the right software for your needs. The aforementioned forecasting tools are some of the best examples you can get for your business, but don't be afraid to explore and find software to suit your liking and needs.
If you need a professional for your budgeting and forecasting needs, Unloop can do the job! Our services include revenue forecasting so we can help small businesses like yours in their growth trajectory.
We use your business's historical data to determine any pain points and fix them before they happen. We will also set your business up with reporting software for accurate forecasting. Monitor your financial performance today and book a call with our experts!
Taxes are every business owner's legal obligation. In ecommerce, sales tax is one of the most prominent. However, not all ecommerce businesses, particularly those with a platform on Amazon, pay taxes on sales the same way.
Here's a quick guide on Canadian sales tax policies so you can manage your taxes better as an Amazon seller in Canada ahead of tax season.
A sales tax is a value-added consumption tax that tax authorities include in the sales price of goods and services. The sales tax is paid at the buyer's expense, which the seller must file to the appropriate tax authorities.
The sales tax, while consistent among countries as an attachment to purchasing goods and services, comes in different computations depending on a nation's tax policy.
The Canadian government imposes three different taxes for the computation of a sales tax:
The federal goods and services tax, or GST, is a value-added tax imposed by the government on goods and services.
Provincial sales tax, or PST, on the other hand, is a different value-added tax levied locally on the same goods and services that business owners have sold.
The standard rate for the GST is 5%, while the standard rate for the PST is 7%.
The Quebec Sales Tax is similar to the Canadian provincial sales taxes (PST) in function, with only the rate being different. If the provincial sales tax is at 7%, then the Quebec sales tax is at 9.95%
The Harmonized Sales Tax (HST) is a uniform rate for five of the thirteen provinces and territories of the Canadian government. In provinces following the HST, the GST or the provincial sales tax PST do not apply. Instead, there is a single rate for all five provinces, which is 15% (except for Ontario, which charges a 13% sales tax but is still under the harmonized sales tax).
With the harmonized sales tax (HST), you only need to file one (1) tax return for all five provinces, removing a bit of the hassle of doing your taxes.
File name: amazon sales tax canada 2.jpg
Alt name: The Canadian Revenue Agency in a heading.
Now, here's where it can get confusing. You can compute Canada's sales tax in three ways.
First, there is the standard federal sales tax plus provincial taxes. In these provinces, you must add the federal goods and services tax to the local taxes.
For example, the sales tax in British Columbia and Manitoba is 12%, coming from a federal sales tax of 5% and provincial taxes of 7%.
However, some provinces do not impose provincial sales taxes and instead collect only the federal sales tax of 5%. Such provinces include Alberta, Nunavut, Yukon, and the Northwest Territories.
Second, there is the HST. Since the federal taxes and local taxes no longer apply, you can mark your sales tax in provinces under the HST at 15% (except Ontario, with an HST rate of 13%).
In case the numbers confuse you, we've provided a list of the different Canadian sales tax rates below:
Recent changes in Canadian tax policy have allowed marketplace facilitators (MPF) to handle tax work for third-party sellers. MPF legislation defines a marketplace facilitator as a marketplace that allows third-party sellers to sell physical and digital property, goods and services online. Amazon, being an MPF, can now collect, calculate, and remit taxes for their third-party sellers on taxable sales covered by MPF legislation.
However, some third party sellers are required to collect, calculate, and remit their own taxes. Regardless of how you go about collecting taxes, as an Amazon seller in Canada, you are expected to fulfill your tax obligations.
Fulfilling your tax obligations as a Canadian seller can be tedious, but it must be done. Failure to file and remit sales taxes could lead to criminal charges and could foresee the end of your time as a business owner.
As the business owner of a Canadian company, you're obligated to pay your taxes. But for your sales to be taxable, you'll have to open a sales tax account with the Canada Revenue Agency, also known as a GST/HST account.
Even foreign Amazon sellers with an online store who have a gross income of over $30,000 in Canadian sales are required to open a sales tax account to pay HST/GST.
If you're a Canadian seller with worldwide sales less than or equal to $30,000 for a period of 12 months, you're considered a small supplier and are prohibited from filing for and charging sales taxes. You can collect and remit sales taxes on the product or service that surpasses $30,000.
So, regardless if you're a Canadian seller or an international seller, you're going to have to pay GST/HST.
Sales tax filings in Canada usually run from January 1 until April 30, with income tax returns collected around February.
On the other hand, payment for Canadian taxes is usually collected monthly or annually. If your business income is less than $1.5 million in sales, then you can pay annually. In some provinces, however, the cap is lower.
Manitoba has a ceiling of $75,000 dollars before being required to pay annually; for Saskatchewan, it is $60,000. In British Columbia, you pay your sales taxes monthly during the first year of your business. Then if your taxes are paid on time during the first year, you'll be paying the next few years annually.
You can pay your GST/HST in three ways:
You can pay your GST/HST using a financial institution's transaction methods or online banking services. The Canadian Revenue Agency (CRA) has also established a new online payment method called MyPayment. You can try different payment options using MyPayment. Check their website for different payment options for businesses and individuals.
On the other hand, if you want to pay your GST/HST through a financial institution, use Form RC158, Remittance Voucher - Payment on Filing to pay the amount you owe. These forms aren't available online since they come in pre-printed format.
The following tax-related forms are also available in financial institutions:
You can also send your payment by mail. However, payment sent by mail should be under $50,000, regardless of currency. Any mail equal to or above $50,000 should be remitted electronically or through a financial institution.
If you're not paying in Canadian dollars, simply pay the equivalent amount in the available currency.
There are so many things to think about when it comes to taxes. Worse, getting something wrong can mean hefty penalties for your business. We understand that filing taxes can be complicated, especially for new ecommerce sellers like you. If filing your taxes is making you dizzy, then you might need the help of a tax professional.
Unloop can help you file your taxes and more! Our team of professionals can handle any accounting problem you can give us—just give us a call and see what we can do for you.
Business owners like you can deny it all you want, but you depend greatly on your customers for the money you receive each month. In some cases, unplanned expenses can disrupt your cash flow. That's why an accurate cash flow forecast is a must for every business. However, a precise cash flow forecast is easier said than done.
The forecast process should allow your business to plan and strategize any issues that may occur within the month. You'll surely thank yourself for avoiding huge cash flow catastrophes when the forecast is done properly. In this blog post, we'll share some tips to help improve your cash flow projections.
Cash flow forecasting is similar to budget planning, but in this process, you focus more on the money coming in and out of your business. It is rare for businesses to have cash shortages, especially when business is booming and you directly exchange cash for your goods and services.
However, there are some businesses that receive payments on schedule, and they must carefully plan their operation costs until the payment comes through. For example, you rent out a unit space for $1,000 a month. If you have ten units, you'll expect to receive $10,000 at the end of each month. But within the month, you should also have enough resources to pay for electricity and other bills.
Cash flow forecasting will help you see what to expect within a time frame. Will you get $10,000 at the end of each month? If not, how much cash will you receive, and how will your money move to cover the cost? All these forecasting results will be based on the past data of your business.
The more accurate the cash forecast, the better you can plan for your time-specific cash flow. Here are some practices you should note to improve your financial forecasting.
Most of the forecasting process is built around historical data. So it's important that you document all your business plans to build your cash flow forecast around it. For example, last year showed that your revenue increased by 40%. So it's possible that you will go on the same trajectory.
From there, you can make changes to your business plans. If your business continues to increase revenue, you may need to stock up your inventory to keep up with the sales. You can also create budget proposals to expand your business, get a new physical space, and hire more employees.
Once you know the changes that will happen around your business, don't let the plans stay as plans on paper. Instead, draw up a budget to transform a plan into action. Considering the previous example, if you plan to expand your business by getting a bigger space and hiring new employees, it's best to lay out the budget for the costs so you can picture what happens to your cash flow.
Proposing a budget ensures that big and unplanned expenses will not strain your cash flow. Furthermore, seeing your budget helps you make better business decisions.
It's best for businesses to make long and short-term forecasts. Long-term cash flow forecasts can involve projecting your cash flow for the entire year, while short-term cash flow forecasts project your cash on a monthly basis.
Long-term forecasts are less accurate since they are mostly based on assumptions and greatly depend on your monthly cash flow outcome. There are different factors that can affect the annual cash flow forecast, but you can be optimistic when making your predictions.
On the other hand, short-term forecasts are more accurate, and it is crucial that you make these as realistic as possible. You can make a short-term forecast based on the business's past performance, making predictions more precise.
Every business wants a positive cash flow. Of course, there will be good days for your business, but it is also important to prepare for the worst. When preparing cash flow predictions, consider every possible scenario that can occur in your business.
If you predict that your monthly production and sales volume will increase, you can expect more revenue, but you also need to plan to cover the cost of increased production. However, when you don't hit your monthly quota, what will you do to cover the other expenses of your business?
There may also be times when a piece of equipment needs replacing or you need to renovate your space. You should also cover the big expenses in your forecast to ensure you are ready for every scenario possible and make intelligent decisions based on your planning.
Optimizing working capital is important to cash flow forecasting. As business owners, you should prioritize understanding your accounts receivables, payables, current assets at hand, cash flowing in and out of your company, and when it happens.
Optimizing your working capital gives you a clear picture of your business's cash position. As a result, you will have better and more accurate cash flow forecasts for a specific period.
You may think that cash flow forecasting is only for big companies. You’re wrong! Every business should know how money will move around their business. Here are some reasons why you should do cash flow forecasting.
Improving cash flow forecasts entails a lot of work. Of course, you want it to be as accurate as possible. But forecasts are greatly affected by human error. Accounting services can provide the best forecasts for your business if you want accurate forecasting.
Unloop is the all-in-one solution for your accounting needs, and yes, we do forecasting! We forecast revenue and cost of goods for every dollar. We identify potential strains on your business and make tailored plans for you. So book a call with us and work with our experts today!
Every seller wants tax exemption; there's no exception. If we can channel every dime we pay to our company instead of the government, we'd all be happy businesspeople.
That said, we need to know what tax exemptions apply to our businesses. It will help us get a financial advantage that we can leverage to grow our ecommerce enterprise.
If you're a business owner selling on Amazon, let Unloop shed some light on how to use tax exemption on Amazon and ensure you're set up to get this privilege.
Before you set up a tax exemption on Amazon, it's important to know that when you opt in for this privilege, you'll be under the Amazon Tax Exemption Program (ATEP).
This program lets you purchase your supplies or raw materials within the Amazon network without added taxes. In effect, you'll get a discounted price on your purchase because the tax on top of it is removed.
To know how to enroll for tax exemption as an Amazon marketplace merchant, we'll have Amazon explain the step-by-step procedure on how to do it. You may find out more about the ATEP and how to set it up on your account here.
To enjoy the ATEP, you'll have to fulfill certain things first, which will be discussed in the following section.
No, they can't. Amazon Seller Central is a merchant's selling platform. Consequently, it's also a channel where you collect sales tax from customers and remit them to the appropriate tax authorities.
The Amazon Tax Exemption Program applies to sellers who purchase their merchandise or raw materials from Amazon, their affiliates, and other Amazon sellers.
To get tax exemptions for their purchases, they must sign up for an Amazon Business account.
Yes, you do. In most cases, you'll have to apply for sales tax exemption if you're purchasing from another Amazon business or seller. But if you're a merchant that resells products, you will be enrolled automatically.
As a result, an Amazon seller who buys one product from another Amazon merchant and sells it for a profit will have their sales tax automatically waived due to ATEP.
On the other hand, remember that this may still depend on the taxing authority where the order is going. If a destination nexus state needs a requirement to be fulfilled, the merchant must submit it before any exemption takes place.
Documentation requirements vary by state or taxing authority. But the primary requirement for Amazon is called the tax exemption certificate.
You will have to enroll for this certification, depending on your industry. But if you're a reseller in the Amazon marketplace, the entity will automatically enroll you in the ATEP program and issue the seller a tax exemption certificate on your behalf.
This document proves that you are a person or entity exempted from paying taxes during purchase. It lets you opt out of the sales taxation system. The main objective of this is to help businesses boost their income and encourage more business.
Another benefit of a tax-exempt certificate is to give the marketplace seller convenience. If a buyer has an Amazon tax exempt account the seller is relieved of the obligation to collect and remit sales tax.
Yes, it does. A tax exemption certificate can be good for at least five years in most states. Though some are only good for a year.
If you have an Amazon account for business-to-business (B2B) transactions, you'll have to watch out for when your tax-exempt certificate will expire. You don't want to be surprised with a high sales tax amount to pay because of a huge volume of purchases.
On the flip side, if you're an Amazon marketplace seller, you also may have to watch out for Amazon sales tax exemption certificates. If a customer claims they should be exempt and presents no certification, it may cause some trouble.
Yes, you do! Picking up from the last segment, you may have gotten exposure for an Amazon sales tax because there's a claim of exemption, but no tax exempt certificates are given.
The good news is that Amazon has a robust system for sales tax collection, especially if you're a marketplace seller. But ultimately, setting up and remitting the correct sales tax is the merchant's responsibility.
Tax exemptions go both ways. If you want to know how to add tax exemption to Amazon purchases as a merchant, you need to enroll for it, except if you're a reseller. On the other hand, your customer (business or individual) can also get tax exemption when they purchase a product you sell.On both occasions, you will need to consult with your accountant about handling tax exemption on Amazon. But if you want assistance setting up your Amazon sales tax collection, Unloop can help you out. Call us at 877-421-7270 for a consultation, or check out our ecommerce services now.
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.