The unprecedented year of 2020 made us highly dependent on technology for the smallest of needs. Many door businesses shifted to the e-platform to keep up with the consumer demands. However, it is not only the pandemic, but it is also the convenience-driven lifestyle we live that has favored the growth of e-commerce. As of 2021, experts estimate that there will be 2.14 billion e-commerce customers, and they expect these numbers to rise.
Many people in the past year have shifted to e-business as a necessity without proper accounting knowledge. Ecommerce accounting seems similar to that of traditional retails. However, there are a few crucial accounting elements that require consideration –
On-web businesses offer services beyond geographical limits. Therefore, in Ecommerce Accounting, one has to regulate the applied tax based on the location of the consumer. Though automated systems handle these functions, one must have a thorough knowledge of eCommerce accounting. The revenue received as sales tax is a liability that one must carefully record.
Shipping is a significant element in e-commerce that must be accounted for properly. Companies use different shipping charges methods – flat prices or prices variable to the cart amount. Those that show free shipping cover the expense under the product price. One must, however, know that shipping charges are recorded under CoGS (Cost of Goods Sold).
Refunds (chargebacks) are a situation that online businesses try to avoid. Generally, chargebacks occur due to technical malfunctions or fraudulent requests. Thus, it becomes tricky for one to record them appropriately. Usually, they are registered under returns and allowances, and inconsistencies in marking them may cause problems in the longer run.
These factors and many other minute details must be paid attention to while adding numbers to the sheets. Therefore, many companies have started onboarding accounting firms to manage their finances.
Trends in Ecommerce accounting
E-commerce is a consumer-centric universe, and hence every trend changes as per the consumer preferences. Consumers constantly look for easy checkouts and quick payment options. Therefore, for an e-business to grow, it is essential to apply innovative methods and make the buying process extremely simple using artificial intelligence.
The horizons of accounting have also expanded. Analyzing risks, making strategic decisions, and keeping up with changing technology and consumer behavior also fall under accounting. All the factors mentioned so far have led to the emergence of the following Ecommerce accounting trends –
1. Ecommerce Accounting Outsourcing
A report states that organizations saw a 15% cost reduction, as a result of outsourcing accounting services. While employing an individual as an in-house accountant has been a practice, many companies have realized the several advantages of appointing an accounting firm instead. Accounting firms have teams of experts who manage the company’s finances. This is a cost-effective option for the company, as the expense is only for the service received. Therefore, they save employee costs such as salaries, payroll taxes, insurance, and incentives.
Outsourcing Accounting for Ecommerce has allowed businesses to focus on growth. It also allows the company to be in control of the services. Good accounting firms also offer other solutions such as account reconciliation, regular internal audits, risk analysis, etc. In this way, companies can get more and better by paying less. Therefore, due to accessibility and greater efficiency, Ecommerce accounting outsourcing services for small businesses have seen a major hike.
2. Cloud Accounting
Businesses are making rapid shifts to cloud accounting for several economic and functional benefits. Recent research shows that cloud accounting helps businesses save labor costs by 50%. These systems make accounting quicker and easier. As a group can access entry updates in real-time, it also ensures efficiency. It is beneficial, especially because most people have started working from home.
3. Multiple payment options
Cash payments have become very rare since the COVID-19 breakout. Some use credit and debit cards, while some use apps like PayPal, GooglePay, and ApplePay. When cash flows through different mediums, it may get tricky to make appropriate entries. Discrepancies add up when there is a case of chargebacks.
4. Regular account audits
In 2021, most accounting functions will be automated. It also means that the transactions risk failing, getting stuck, or crediting the wrong account. Therefore, accountants need to inspect the bank accounts and transaction histories regularly. Through this, one can ensure that the book entries match the cash flow.
5. Data analysis
As mentioned earlier, accounting is not only limited to maintaining balance sheets. Accountants these days also specialize in interpreting the data and acting as financial advisors to the company. They also make use of advanced technology to visualize data in an understandable format and formulate effective strategies.
It takes massive effort for an enterprise to survive in the e-commerce industry. E-commerce brings several different departments that require expert management. Accounting is one such tricky department that needs to be handled with utmost precision. Therefore, onboarding an Ecommerce accounting firm is a big step towards efficient management.
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Outsourced accountants specialize in bookkeeping, data analysis, advising, risk management, and forecasting. The company is in control of the service, the expenses, and the company data. Thus, companies can work better to upgrade the quality of their services and not get caught in the hassles of the complexities of Ecommerce accounting.
CapActix Business Solution is a certified company that provides accounting and finance solutions for an array of industries. CapActix aims at helping e-businesses by increasing their efficiency. The firm is one of the top B2C service providers of Ecommerce accounting outsourcing in the USA.
CapActix is the firm to consult if one is looking for assistance in finance and accounting. They take pride in providing solutions after carefully researching and understanding the client’s requirements. With a long positive experience in the industry, they have gained a reputation for helping their clients achieve excellence. The team comprises subject matter experts who find innovative solutions using the latest technology. From accounting outsourcing to tax preparation, and from account reconciliation to operational analysis, CapActix manages it all.
If you are an eCommerce business owner and looking for an accounting outsourcing service then drop your inquiry on [email protected] or call us now on +1 201-778-0509