At Elver E-Commerce Accountants, we have our own in house team of trained and qualified bookkeepers that are assisting e-commerce businesses with their bookkeeping on a daily basis. They understand e-commerce bookkeeping and the challenges that it presents. They’re experts and certified in Xero, our preferred cloud accounting software and A2X, our preferred e-commerce accounting app.
We can provide a full bookkeeping service for your eCommerce business that would typically include reconciling revenue to marketplaces/platforms (our most popular of each are Amazon and Shopify but we work with many others too), posting purchase invoices (efficiently using the Dext Prepare app, which also makes submitting your invoices really easy) and reconciling all company bank accounts.
We often speak to frustrated businesses owners who are fed up of dealing with a bookkeeper that doesn’t fully understand the bookkeeping challenges that an eCommerce business faces. Some of the common issues that our bookkeepers deal with on a regular basis for eCommerce businesses are:
- Marketplace/platform reconciliation – one of the key differences from a bookkeeping perspective between an eCommerce business and a traditional business is that whereas a traditional B2B business might raise a single invoice to a customer and get paid for it, an eCommerce business will typically receive payouts that represent potentially 1,000s of different sales. Each of these sales will be to different customers, potentially in different countries and therefore with differing VAT treatments. Without proper systems and processes in place, it can quickly become a nightmare. Our bookkeeping team can implement technology solutions like A2X that will make accounting for marketplace and platform payouts a breeze.
- International VAT and GST – our bookkeepers can ensure that your bookkeeping data appropriately analyses out your sales between different countries and accounts for VAT/GST liabilities due where applicable. This means that your international VAT and GST returns can be filed using the accounting information taken straight from Xero (our preferred cloud accounting software). Unfortunately, many businesses rely on the accuracy of a third-party app to pull data from marketplaces and platforms for their international VAT returns – the key risk there being that the data isn’t being reconciled back to your bank, so unless there were significant and therefore obvious differences, you’d likely never know there was an issue. We would therefore always recommend filing your VAT returns using the data from your accounting system.
- Reconciling control accounts – a common issue for business owners selling on Shopify and using non-standard payment gateways (Paypal, Klarna etc.) is that there are often discrepancies between the data in Shopify and the amounts received into your bank. This may be because there are timing differences between a sale in Shopify and the payment gateway. If you’re selling internationally, there are also likely to be foreign currency differences between the data in Shopify and your cash receipts. Finally, if you’re using a non-standard payment gateway, Shopify doesn’t hold any data on fees you’ve incurred, so these need to be imported to Xero separately in order for your e-commerce control accounts to properly reconcile. We have processes in place that even the most complex of control accounts are reconciled on a timely and accurate basis.
- Stock deposits – many eCommerce business owners will purchase Stock from China and be required to pay a deposit in advance and then a further payment on receipt of the goods. It’s therefore important to differentiate between these payments when accounting for stock payments in your bookkeeping ledger in order to achieve an accurate cost of goods sold figure.
- Stock valuation – another key factor in getting an accurate gross margin in your P&L is ensuring your stock valuation is accurate. We can provide a full stock valuation service to properly value your stock on a FIFO basis with correct apportionment of costs like shipping duty and labelling. Whether you just want an accurate stock valuation for your statutory accounts or want an accurate P&L every month in your management accounts, we can help.
- Transaction volumes – another common issue for eCommerce business owners is that transaction volumes are typically much higher than those of other businesses. Many cloud accounting software solutions will have transactional volume limits, above which the software may start to not operate as intended. We get around this problem by batching your e-commerce sales data by payout. Therefore a single payout will only result in a single transaction in your Xero account, rather than the potentially several thousand transactions it may be made up of. We also then attach an excel file to each payout transaction with a full breakdown of all the individual transactions behind it, so you can still drill down into the detail should you need to.
If you’d like to discuss further how our eCommerce bookkeeping services could help your eCommerce business, please give us a call on 01942 725419 or enquire online.
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