E-commerce businesses are growing rapidly across the globe. In fact, e-commerce has been one of the fastest-growing industries in the world. With sales continuing to increase globally, it is no wonder many businesses are investing in online shopping stores and services. Moreover, with so many businesses investing in e-commerce services, there is an increasing demand for e-commerce accounting services. Fortunately, by outsourcing your accounting needs to a third-party specialist, you can focus your time and effort on what is most important – running your business as efficiently as possible and expanding where necessary. Here are some reasons we think investing in e-commerce accounting services is beneficial.
What is e-commerce accounting?
E-commerce businesses are growing rapidly and are gaining more preference than traditional businesses in many fields. However, maintaining their accounting and bookkeeping is more complicated. Since all the transactions are online, it becomes even more important to keep accurate records for timely and reliable final statements and reports. The numerous and sometimes unclear tax laws combined with the growth opportunities add to the importance of e-commerce accounting and bookkeeping. Therefore, businesses need to set up an effective accounting system to avoid any discrepancies and errors in the records. There are two ways a business can manage its books of accounts, in-house accounting and outsourcing.
In-house accounting requires businesses to hire a professional or team of professionals working as business employees to manage the books. On the other hand, outsourcing involves hiring an expert third party to handle your accounting process. Outsourced accounting services have gained significant value in recent times due to their several benefits, such as time-saving, resources saving, better accounting systems, cost savings, regulatory compliances, etc.
Benefits of e-commerce accounting services
As mentioned above, accounting services benefit e-commerce in numerous ways and help make their accounting process more efficient and reliable. Reliable financial statements and reports help make better business decisions, expand the business, and attract more investments. The following are some ways in which accounting services help e-commerce businesses:
- E-commerce businesses are complex: There are plenty of industries where outsourcing accounting services makes sense. However, depending on the industry, accounting professionals may struggle to identify the best practices for your specific requirements. E-commerce businesses have unique accounting complexities that make outsourced accounting services a more viable option. With the rise of e-commerce, businesses have had to adapt to a number of new challenges, including inventory management and reporting. Managing inventory online creates additional complexities that don’t exist with physical products. E-commerce businesses also increase the need for accounts payable and accounts receivable, resulting in more complexity in the accounting process. Moreover, estimating taxes and state sales or use taxes are complicated due to the constantly evolving e-commerce landscape.
- Outsourced accounting services can save you time and money: Accounting and bookkeeping are not the core competencies of most businesses. It is, however, critical to ensure your business is compliant with financial reporting standards. As a result, accounting is often pushed to the bottom of the to-do list. This, in turn, means financial reports are often delayed, which makes it harder for the business to make informed decisions. E-commerce businesses are more likely to struggle with timely financial reporting. Accountants may struggle to keep up with inventory changes, complicated tax calculations, and changes in the industry. By outsourcing your accounting process to a third-party service provider, you can free up your internal team to focus on other important business operational activities for growth and expansion.
- It is an effective way to meet compliance requirements: As mentioned above, e-commerce businesses have additional complexities that make financial reporting more challenging. Outsourced accounting firms have experience working with clients in a variety of industries. As a result, they can help identify potential hurdles and provide solutions to meet compliance requirements. By outsourcing your accounting services, you can be confident you are meeting compliance requirements. Outsourced accounting firms understand the industry’s specific requirements, offering assurance that financial reports are accurate and on time. This, in turn, helps to safeguard your business. Non-compliance with relevant regulations and laws leads to businesses paying hefty fines and penalties, and sometimes it can also cause business closure.
- E-commerce businesses are increasingly vulnerable to cyber fraud: As more businesses embrace e-commerce, the cyber threat is growing. Cyber fraud is a growing industry with the potential to cost businesses billions of dollars. With more businesses embracing e-commerce, the demand for e-commerce accounting services has also increased. Fortunately, by outsourcing your accounting and bookkeeping processes to a third party, you can rest assured you are receiving the highest level of security. Outsourced accounting services are far more likely to have security systems and protections in place than smaller in-house teams. However, it is important to choose your e-commerce accounting provider carefully. Ensure they have the proper expertise and level of security needed to meet your business needs. It is also vital to conduct due diligence to ensure the provider is reputable and trustworthy.
By now, it should be clear that accounting services make a lot of sense for e-commerce businesses. With increasing complexities, e-commerce businesses often struggle to meet compliance requirements. Furthermore, cyber fraud is rising, making investing in outsourcing accounting services more important than ever to ensure data safety.
E-commerce businesses must ensure all their financial data are accurately recorded in the right books so that their statements show the true financial picture and help file the right and timely taxes. Maintaining proper accounting records helps businesses get up-to-date information about the financial status and health of the business. Though accounting services benefit e-commerce businesses, it is crucial to choose the right service provider that meets all the expected business requirements from the service provider.
Consider all the important factors related to the business, such as services required, budget, the scope of work, etc., along with the factors related to the prospective service provider, including their qualifications, experience, reputation, client reviews, etc. Prepare a list of questions and factors to confirm and choose the service provider that best matches the list.