As an ecommerce business owner, you’re undoubtedly keen to keep your operations streamlined and your focus on growth. Dealing with financial complexities can feel like a burden. The question often arises – Do I need an accountant for my ecommerce business?
At Walker Hill, we believe the answer is simpler than it may seem. Getting an accountant on board can be a game-changer – it’s like unlocking extra hours in your day, supercharging your business growth, and sidestepping those pesky financial pitfalls.
DIY Accounting vs Professional Accounting
It’s a dilemma that every ecommerce business owner faces – should you manage your own finances or bring in a professional ecommerce accountant? So, we’re going to dig into the upsides and downsides of managing your books yourself versus getting a seasoned accountant on board.
DIY Accounting
Most ecommerce business owners might be tempted to handle their own accounting to save costs. However, this approach has its own set of challenges.
Benefits of being a DIY Accountant
- It can help cut costs as you won’t have to pay for professional accounting services.
- It gives you a comprehensive understanding of your own financial data.
Drawbacks of being a DIY Accountant
- It can be time-consuming, diverting attention from other critical business operations.
- It may not provide the level of expertise needed for complex financial transactions and tax law.
Hiring a Professional Accountant
Engaging a professional ecommerce accountant, on the other hand, can offer significant advantages, even though it might be more expensive.
Benefits of using a Professional Accountant
- It can save you time, allowing you to focus more on your business.
- It offers accurate financial management and cash flow management, reducing the likelihood of costly errors.
- An ecommerce accountant can provide expert advice on tax law, deductions, and financial planning.
Drawbacks of using a Professional Accountant
- The cost can be a deciding factor for small ecommerce businesses, but consider that the time and stress saved might make it a worthy investment for your business accounting needs.
Addressing the 5 Key Accounting Challenges for E-Commerce Businesses
Like any other business, e-commerce companies, too, face a number of specific accounting issues. Here, we highlight five of them:
1. Decoding Sales Tax
Sales tax? It’s a head-scratcher, especially for e-commerce businesses because each place you sell in might have its own rules and rates. Whether it’s across countries, states, or cities, each has its unique tax laws. Keeping up with these, particularly if your sales channel caters to a global audience, can be quite taxing without professional help.
2. Mastering Inventory Management
Managing your inventory in an online business is essential. The ability to accurately track your stock levels and cost of goods sold (COGS) is key to maintaining healthy profit margins. Neglecting this could lead to costly errors in business transactions. Collaborating with accounting firms can help keep these figures in check.
3. Handling Currency Conversion
Businesses operating on a global scale have to deal with currency conversions. Currency conversions, with their constant ups and downs, can really mess with your bottom line. To keep transactions running smoothly, businesses must stay on top of frequent foreign exchange rate and fee changes.
4. Comprehensive Financial Reporting
Developing precise financial reports is a significant challenge in e-commerce accounting. These financial reports, they’re like the pulse of your business – giving you a solid read on its health and guiding those big decisions. A savvy accounting firm that’s all over e-commerce stuff can make sure your financial reports, like those tricky cash flow statements, are accurate and comprehensive.
5. Calculating Profitability Accurately
Determining accurate profitability in e-commerce is often complex, considering various additional costs like shipping, payment gateway fees, and marketplace fees. But, if you’re feeling overwhelmed with all the number crunching, getting help from a professional accounting firm is the one you need – they’ll nail your tax preparation and profit figures, making sure your business’s finances are solid.
5 Signs You Need an Accountant
If you’re still unsure whether hiring an accountant for your e-commerce business is the right decision, here are five signs that may indicate it’s time to get professional help.
Sign 1: Your Business is Growing Fast
If your e-commerce business is growing at a rapid pace, it will undoubtedly bring more complex financial transactions. You may find yourself struggling to keep up with the increasing volume of sales, inventory changes, and tax responsibilities. A professional accountant can help manage this growth, ensuring your financial operations are running smoothly and efficiently.
Sign 2: You’re Spending Too Much Time on Accounting
As an e-commerce entrepreneur, your time is best spent on activities that grow your business, such as product development and customer engagement. If you find yourself dedicating more and more time to accounting, it’s high time to consider hiring a professional.
Sign 3: You’re Not Confident in Your Financial Reports
Financial reports give a clear picture of your business’s financial health. If you’re uncertain about the accuracy of these reports or unsure how to interpret them, it’s a clear sign you could benefit from a professional accountant.
Sign 4: You’re Unsure About Tax Laws
Tax laws are inherently complex and can vary significantly from one jurisdiction to another. If you’re unsure about your tax obligations or how to maximise your tax deductions, an accountant can be invaluable.
Sign 5: You’re Making Large Investments
If you’re planning to make significant business investments, such as buying a warehouse or investing in expensive technology, an accountant can help. They can give you a clear picture of how these big investments could shake up your financial situation and help you figure out your budget and manage costs.
How to find the right accountant for your ecommerce business?
In Australia, accounting is a regulated profession, which means accountants must have specific qualifications and hold a license to provide professional services. Here are some tips to help you find the right accountant for your e-commerce business:
Tip 1: Consider Their E-commerce Experience
When hiring an accountant, it’s essential to consider their experience in the e-commerce sector. An accountant with e-commerce experience will be more acquainted with the unique challenges your business faces, such as sales tax across different jurisdictions, inventory management, and currency conversion. They can provide you with tailor-made solutions that fit your business needs.
Tip 2: Check Their Qualifications
Ensure that the accountant you choose is suitably qualified. They should be a member of a recognised accounting body such as the Association of Chartered Certified Accountants (ACCA) or Chartered Accountants (CA). This ensures that they adhere to strict professional and ethical guidelines and keep up-to-date with the latest accounting standards and practices.
Tip 3: Evaluate Their Communication Skills
Accounting can often involve complex terminology and concepts. Therefore, it’s vital that your accountant can explain these things to you in a way you can easily understand. Good communication will lead to better transparency, making it easier for you to make informed decisions about your e-commerce business.
Tip 4: Ask About Their Fees
Accounting fees can vary greatly depending on the services provided. Be sure to ask about the cost upfront to avoid any unwelcome surprises. Remember, while an accountant might seem costly, the time and stress they can save you, as well as the potential financial gains from their expertise, often outweigh the cost.
Tip 5: Assess Their Technology Proficiency
In the world of e-commerce, technology plays a critical role. Ensure that your potential accountant is proficient with the latest accounting software and technologies. This will not only streamline your financial operations but also provide you with real-time insights into your financial status. An accountant well-versed in technology can also suggest intelligent tools to automate various accounting processes, saving you both time and resources.
Book a Free Strategy Session with One of our E-Commerce Accounting Experts
Don’t let financial complexities hinder the growth of your e-commerce business. At Walker Hill, we’re the go-to pros, fine-tuning our skills and know-how to perfectly match your e-commerce business needs. Our expert accountants understand the Australian landscape and can make managing your e-commerce finances a breeze in a cost-effective manner.
Book a free strategy session today with one of our E-Commerce accounting experts – it’s time to put your financial worries to rest and focus on what you do best – growing your business!
