What is Ecommerce Bookkeeping: Guide for UK Businesses?
Today, it is hard to imagine how our lifestyles would be without Ecommerce. Not only that, even businesses have recognised the power of Ecommerce that helps them in increasing the reach of their products and services among potential buyers. With the increased reliance of your business clients on ecommerce the daily transactions have also increased phenomenally. To manage these transactions, you and your clients will need to know a thing or two about Ecommerce bookkeeping.
Because the rate of transactions via Ecommerce has increased, managing it has become essential. To explain it simply, Ecommerce bookkeeping will help you keep track of all the financial transactions of your client’s Ecommerce business. To run this bookkeeping process flawlessly, you will need to understand the standards of Ecommerce and accounting principles.
The Ecommerce environment is quite dynamic and often involves international sales, digital transactions, and fulfilling complex tax requirements. Therefore, there is a requirement for specialisation here. Hence, we have produced a guide to Ecommerce bookkeeping that will deepen your understanding and help you and your clients make informed decisions.
Fundamentals of Ecommerce Bookkeeping
To run an Ecommerce business smoothly, you will need to have a deep understanding of Ecommerce bookkeeping. Firstly, you will need to record financial transactions, conduct bank reconciliations, and categorise transactions accordingly. This helps maintain accuracy.
However, in this guide to Ecommerce bookkeeping, we will focus more on the unique aspects of Ecommerce bookkeeping, i.e., processing fees, tracking sales, shipping costs, and returns coming from different channels.
The main objective of Ecommerce bookkeeping is not just recording numbers but creating a clear financial picture of your client’s business, thus allowing better decision-making and planning.
Setting Up Your Ecommerce Bookkeeping System
To handle Ecommerce bookkeeping, you will need to set up an Ecommerce bookkeeping system to ensure the smooth function of your client’s business. Under it comes the setup of process to record daily transactions. Through this system, you can record all the sales, returns, discounts, and shipping costs made by the business. It is also to be noted that while doing Ecommerce business, your clients mainly have to deal with international orders; in that case, the system must handle multiple currencies.
Apart from keeping all the financial records, an efficient Ecommerce bookkeeping system also offers important data to your clients, which can be used to review business performance and take steps for further improvement.
Furthermore, you must select the right accounting software for the smooth functioning of your Ecommerce business and provide valuable support to the bookkeeping system. Choose a software that perfectly integrates with your client’s systems and Ecommerce platforms. Although it does the usual job of tracking orders and handling payments, its important task will be handling complex tax calculations.
Using the right accounting software will help you save time and money, reduce errors, and provide valuable insights to your clients, enabling them to make informed decisions. However, we understand that installing and running it requires specialisation and experience. Therefore, if you are finding it difficult to get or operate it, then you can outsource the task to an accounting outsourcing service provider that offers bookkeeping services and is experienced in running multiple accounting software.
Sales and Revenue Tracking
Sales and revenue are a business’s two lifelines. That’s why tracking sales is important. It allows you to identify customer preference patterns and income sources. The bookkeeping system must be capable of tracking and recording sales from various websites, social media platforms, and online marketplaces.
Here are some key aspects of sales and revenue tracking in Ecommerce bookkeeping:
Sales Channels: You can track and record sales from different online platforms, analysing which channel performs better.
Payment Options: It tracks keeps track on multiple payment options used by customers such as credit cards, digital wallets, and so on.
Currency Conversion: If your client’s business depends on international orders, then the bookkeeping system must handle multiple currencies. You must also factor in whether the online marketplace will pay out in local currency or the currency that the customer has paid in.
Discounts: Discounts and coupons used in any sales transaction should be recorded. This will help understand their impact on revenue.
Refunds: Track refunds and returns to create an accurate picture of net revenue.
Through effective revenue and sales tracking, you can gain proper insight into your client’s Ecommerce business performance. This will enable you to identify trends, assess performance, and make informed decisions accordingly.
Outsourcing Ecommerce Bookkeeping in the UK
Ecommerce booking is a time-consuming and complex process, and it requires specialisation to tackle unique challenges in the online space.
As an accounting practice, your clients have entrusted you with the responsibility of taking care of their accounts. However, handling Ecommerce bookkeeping will certainly overburden you, especially when the transaction volume grows.
It would be wise to outsource the responsibility of Ecommerce bookkeeping to an accounting outsourcing service provider that specialises in offering bookkeeping services, such as Corient.
Here are some reasons why you must think about outsourcing E-commerce bookkeeping in the UK:
Expertise: Accountants who are experienced and experts in tackling the complexities of online business are employed by service providers. These challenges can range from tax implications to reporting requirements.
Saves Time: Outsourcing allows you to focus on other important accounting tasks rather than getting bogged down in bookkeeping tasks. Thanks to outsourcing, you can save time and increase efficiency.
Accuracy: Ecommerce accountants working for service providers are well-versed in HMRC regulations and accounting standards developed by the Financial Reporting Council. They will ensure compliance with tax laws and regulations, thus reducing the risk of penalties and legal hassle.
Cost-effectiveness: Rather than spending time and money on recruiting a specialist, it is wise to outsource. Once you outsource, you will spend only on the services you use.
Scalability: If your client’s Ecommerce business takes off, you must expect an increase in transaction volume. However, if you have already outsourced to a professional bookkeeping outsourcing service provider, there is nothing to worry about. The outsourcing service provider will easily handle the increased volume, thus providing flexibility to your client.
Technology Access: You may think twice before investing in new technology or software to improve the accounting process, but not the service providers. A professional accounting service provider will always provide its accountants with access to the latest accounting software and technology. With the help of accounting software, you can now streamline the accounting and bookkeeping process.
Reduced Stress: Outsourcing bookkeeping to experts will relieve you of much burden, giving you peace of mind
Time to Focus on Strategising: With bookkeeping off your plate, you can concentrate on strategic decision-making, marketing, and customer engagement, driving your e-commerce business’s success.
Conclusion
We hope you found this ecommerce bookkeeping guide beneficial. By following it will help your clients propel their business to the next level. This guide helps you set up an E-commerce bookkeeping system. It will also help provide business insights that aid clients in making valuable and timely decisions. This allows you to provide valuable services that increase client profits, streamline E-commerce operations, and build trust.
However, you cannot achieve all this. You will require the help of e-commerce accounting experts such as the ones working for Corient Business Solutions. We design our ecommerce bookkeeping services to be future-ready and customizable to meet your specific requirements. Furthermore, we also provide payroll, management accounts, year-end, and VAT services. We can quickly set up an online meeting at your convenience. Through a meeting, we will be able to understand your requirements and explain our services in detail.