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In today’s competitive world of ecommerce, small businesses face the challenge of managing their finances effectively while trying to grow their brand. With so many things to oversee while operating a business, it’s easy to see why entrepreneurs become overwhelmed. That’s where professional accounting for ecommerce services comes in, providing many benefits crucial for the growth and success of small ecommerce businesses.
As a small ecommerce business owner, you might wear multiple hats and juggle various responsibilities. However, one area that requires consistent attention and expertise is accounting. Proper financial management can make or break a business, and enlisting the help of an accounting pro can ensure you stay on the right track.
In this blog post, we’ll explore seven reasons why investing in professional accounting for ecommerce services is a must for small online businesses. Read on to discover how these services can help you streamline operations, optimize growth and make informed decisions that will set your ecommerce business up for success.
1. Bookkeeping off your hands.
As a business owner, having neat and tidy books is a big part of keeping all your ducks in a row. Keeping track of revenue and expenses and maintaining financial records ensures accurate, reliable information is available for decision-making. However, the downside to bookkeeping is that it can get complex, particularly if your financial knowledge could use some honing. Doing it properly also takes time, taking you away from other areas of the business that may feel more exciting or pressing.
Some business owners mistakenly think an ecommerce accountant only helps with taxes and financial planning, but many practices also offer bookkeeping services. This one-stop financial shop can work well for your business. Engaging an accountant to help with your bookkeeping will free up hours every month, so you can spend time on other tasks to grow your business. Then, when it comes time to file your tax returns, those professionally-kept books will make it a breeze.
2. Assurance you’ll be totally tax compliant.
One of the most complex parts of being an ecommerce business is staying tax compliant. Sales tax is particularly tricky for those who sell in the US. With so many moving parts, it’s hard to be 100 per cent confident when handling taxes yourself.
An accountant specializing in ecommerce business can help owners stay up-to-date on tax laws and ensure tax season flows seamlessly. What’s more, if you’re an international seller, a professional who knows accounting for ecommerce can keep you compliant with international tax responsibilities you have, for example, US sales tax, GST, or VAT. Some accounting firms will have international partnerships, meaning you can retain a local accountant familiar with Canadian taxes but benefit from the expertise of their international partners. (As a bonus, accountants can often help with payroll tax, too!)
3. In-depth financial analysis.
One of the most significant benefits of using a qualified accountant is the in-depth analysis they can provide you. When doing your books and financials yourself, it’s easy to slide into a pattern of checking your key metrics and thinking that’s enough. Once you use a knowledgeable professional’s services, you’ll unlock how much more your financials can tell you about your business.
An accountant can analyze an ecommerce store’s financial statements and provide insights into areas where the business could improve its profitability and cash flow. They can also help identify key performance indicators (KPIs) to monitor and improve the business’s financial health. Using these insights will help you build a sustainable, long-term business.
4. Cost Savings.
Many small and medium businesses operate on a lean budget, and paying for services from a bookkeeper or accountant might seem unnecessary when you could spend that money on advertising, marketing or buying stock. But although hiring an accountant does have a short-term cost, in the long-term, they can save you so much more across the board.
Firstly, an accountant can get you on a budget, monitor your expenses and pay the bills on time. Properly managing your finances means avoiding fees, penalties and interest charges. You also have a guideline for your spending to keep you profitable (or on the road to profitability). An accountant will also ensure you take advantage of tax deductions and credits while staying compliant and on-side with the Canada Revenue Agency (CRA).
For small businesses with a view to the future, someone who knows the ins and outs of accounting for ecommerce makes a world of difference. They can provide analysis and advice on areas to cut costs and increase revenue, building a sustainable business in the perfect position to grow and profit.
Finally, there’s the most obvious cost saving — you can spend your time and energy on core areas of the business. Your expertise may be in manufacturing or marketing rather than accounting and bookkeeping, and by leaving finances to the experts, you can spend more time on those tasks.
5. Support in an audit.
No business owner ever wants to be the subject of a tax audit, but only one thing will make the audit process even worse: Doing it yourself. Trying to handle an audit yourself is a surefire way to turn an annoying but solvable challenge into a mess, thanks to the many hidden traps a business owner could fall into.
However, if the CRA audits your online store, a chartered professional accountant (CPA) for ecommerce can provide support and guidance during the audit process. They’ll be able to explain and prepare you for the process and assist you in reviewing statements to ensure they’re complete and accurate. If they spot any potential areas of non-compliance, they can proactively address them with the CRA to reduce your risk of fines or penalties. During the audit process, they can act as a liaison between you and the CRA to address your concerns or relay requests, which should significantly reduce any stress and disruption.
6. Help with planning a profitable business.
Given the nature of ecommerce, it’s crucial to have an eye across your books to ensure your business is as profitable as it looks according to your units sold. It’s very easy to get caught up in looking at sales and mistakenly think your business must be wildly profitable. Meanwhile, advertising and shipping costs, enticing discounts and fees have all eaten a much more sizable chunk than you imagined.
An ecommerce accountant can work with you to develop financial projections and create a budget that will help you work toward profit and growth. In addition, they can provide advice on business structure, financing options and other strategic decisions. Ideally, your ecommerce accountant almost takes on the role of a proxy business partner, as invested in your business’s success as you are.
7. Peace of mind.
Running a business is exhilarating, fulfilling, stressful, and rewarding, but something that’s harder to come by is peace of mind. While you may have initial reservations about using a professional, when it comes to accounting for ecommerce, qualified ecommerce accountants, like the ones found on the A2X Directory, will give you complete confidence in your books, your tax-compliant status and work with you on an actionable path forward to continue building the most profitable business possible.