Good financial management is vital for any industry. Yet when it comes to the highly competitive and constantly evolving industry of e-commerce, many businesses come face to face with a number of specific financial challenges that can seriously complicate their accounting practices.
Thankfully, with accounting software like QuickBooks and the help of a CPA, your business can avoid the top stumbling blocks facing the e-commerce world today.
Managing Customer Data and Transactions
When it comes to online transactions, data security is vital. These days, customers don’t only expect a secure payment portal and run-of-the-mill cybersecurity practices. When making an online purchase, your customers provide you with additional information like their contact details, addresses, and purchase histories. This information also needs to be safeguarded. A breach in this trust poses a threat to customer security, and to your company’s image and reputation.
As such, your accounting software should allow for secure data storage and access – just like the DigiCert® certification granted to QuickBooks. This guarantees that your data is secure, through SSL encryption technology, password-protected logins, and firewall-protected servers. 
Moreover, by integrating customer management applications in QuickBooks, you can easily sort and access any of the information you’ve gathered.
However, what really elevates your financial management in e-commerce accounting is how you use this information. For example, a CPA can assist you in understanding and interpreting your data, in order to gain insights such as customer needs and maximize sales opportunities.
Inventory Management
Beyond keeping track of customer data, a significant challenge to many e-commerce businesses lies in inventory management.
While manual stock entry may seem like an attractive option for smaller businesses, it can also be unnecessarily time-consuming. Even if you have the required time and staffing resources to undertake manual entries, there’s always the chance for human error. This is especially true for e-commerce businesses sourcing their inventory from multiple suppliers.
That’s where QuickBooks’ automated inventory system comes in. The software allows for standardization of all inventory management processes, from ordering to shipping, while allowing you to view your inventory in real time. This means you can prepare for possible issues like supply chain disruptions before they impact your bottom line. Real-time inventory monitoring can also help you avoid over- or understocking. After all, overstocking can lead to increased carrying costs, whereas understocking can result in an unhappy customer.
The added importance of a CPA
By combining this with CPA expertise, you get the ability to maximize inventory management through forecasting. In a nutshell, better forecasting means better inventory control. A CPA that understands the intricacies of your e-commerce business can help you scale your inventory management as your business grows, and provide ongoing support.
Multi-Channel Sales Challenges
A common feature in the e-commerce industry is the use of multiple sales channels. This could mean selling from your own website, an online marketplace like Etsy, or via social media. The advantage of this is that your company can maximize sales, improve brand awareness, and reach a larger customer base.
Yet on the down side, multi-channel sales can further complicate inventory management, while making it difficult to determine your profitability through sales tracking. This, in turn, can impact your accounting management and tax calculations.
QuickBooks simplifies e-commerce accounting by allowing your business to sync sales data from e-commerce platforms like Shopify or Amazon, while also letting you keep track of your inventory. This way, your business can focus on growing sales rather than wasting time and resources trying to navigate multi-channel sales.
With the added assistance of a CPA, you can have access to effectively compiled data to help with enterprise resource planning (ERP).
Dealing with Sales Tax
Whether your business sticks to a single sales channel, or branches out to multiple channels, you can’t escape the sales taxes associated with e-commerce. Unfortunately, sales tax can be notoriously complicated, for a number of reasons.
Essentially, the rates and rules of sales tax can differ depending on where you and your customers are located, which states you trade in, and whether or not you have a sales tax nexus, which is the level of connection between your business and a taxing jurisdiction.
How QuickBooks and a CPA can help
QuickBooks can help you by auto-generating and filing your sales tax reports, after calculating the total sales tax rate. To do so, the software uses your business’ geographic information and sales tax category, as well as your customers’ sales tax exempt status.
However, the process can still be confusing, especially for new e-commerce businesses. To completely understand the nuances of sales tax, CPA expertise is vital. Not only can they help your business conduct a tax nexus study in order to ensure state and local tax compliance, but CPAs can keep track of the tax laws that apply to sales per state. Moreover, a CPA can help your business with filing claims for any tax discounts or allowances.
Similarly, a CPA can help you to manage the impact of sales tax on your 1099-K, along with payroll requirements, self-assessment tax returns, and corporation tax returns for LLCs.
Despite the potential challenges of e-commerce accounting, it’s possible to easily navigate this complex field. After all, the synergy between QuickBooks and CPA guidance can ultimately help your business with improved financial health, compliance, and strategic decision-making.
Speak to one of our CPAs to help you take your e-commerce business to the next level, by scheduling a discovery call.
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