Accounting for any business can, of course, be challenging. However, the world of eCommerce throws up new hurdles capable of rendering accounting for online-based businesses even more complex than doing so for traditional companies; the old rules cease to apply quite as strongly.
In a traditional, B2C business, when you make a sale, the customer’s payment will reflect the sale’s true value. However, in eCommerce, various charges can be deducted before you see the money, making it harder for you to track your obligations to payment service providers and the taxman.
VAT and GST
Even if you keep your eCommerce store UK-based, selling products to other territories would require you to consider VAT (value-added tax) or GST (goods and services tax).
In every country where shoppers can buy your offerings online, you might need to register for VAT or GST, with the exact rules and rates differing country by country – or even, in the US, state by state. Trying to keep on top of these regulatory differences can, therefore, feel pretty bewildering.
Inventory management
You might opt to sell your goods through various channels – like Amazon, Shopify and Etsy. However, operating through various channels runs its own risks, not least to how you manage your inventory – with some of your goods perhaps in production, others in transit and still others in warehouses.
When you consider how your stock could also be separated into different SKUs, countries and marketplaces, the case is clear for a scalable and automated inventory management system.
Selling fees
Listing your products on online marketplaces can help to spur sales, as I have previously acknowledged on this site. However, these eCommerce platforms will take a cut, in the form of a potentially hefty fee, from the revenue you make selling on them.
VAT treatments applicable to your sale will also affect exactly how much money arrives in your bank account as a result of that particular transaction.
Managing returns
One especially appealing method of selling online is using the “fulfilment by Amazon” (FSA) scheme, whereby your products will be stored in Amazon’s own warehouse, and Amazon will primarily handle the customer service, including processing returns.
Unfortunately, though, opting into Amazon’s returns policy means that buyers can later return their goods with scarce justification. Therefore, those items could remain in good condition and, hence, be viable for restocking, so you must be careful to differentiate them from damaged goods.
I reckon that many eCommerce experts would concur with me in recommending Elver, a specialist eCommerce accountancy firm. With Elver meeting your accountancy needs, you can free up more time to promote your goods – and that’s where you can come to me for advice, expertise, and more.
