In 2015, the global retail sale on the eCommerce platform was 7.4% and was expected to reach nearly 22% in 2022. Thousands of Entrepreneurs have taken their businesses to e-commerce platforms in the last few years. Accounting is the most painful part of a business. However, your cash flow management and other accounting activities will decide the growth or demolition of the company.
There are accountants for e commerce businesses available in the market. These are professionals with years of experience and have closely worked with your industry. They can help you set up an eCommerce business, file tax returns, deal with overseas tax, and cash flow management.
Here are a few ways how hiring an accountant in London for your eCommerce business is beneficial:
Accountants will help you set up an e-commerce company.
Individuals would like to act as sole traders and earn a salary from their profit by selling a product. Here, you don’t need to have a physical set-up, and any room in your house is the office. Take your business to any online platform and make your phone the personal assistant.
But, an accountant will always recommend you to select a limited company. It can be challenging to operate, and it is costly to maintain. However, you pay less tax on the profit earned. Also, if there is any litigation in the business, you are not sued by law but your business.
Accountants suggest businesses which accounting type to choose.
There are two types of eCommerce business accounting systems:
- Cash basis accounting
- Accrual accounting
Cash basis accounting is the most basic form of accounting used in small eCommerce businesses. Any cash movement in or out of business is recorded in books. You can keep track of how much cash is in your accounts. Additionally, you don’t have to pay your income tax for the unreceived payments during your tax return.
But, it becomes challenging to track the stocks you owe, as no transaction is done and no record is available on the books.
When your business starts growing, accountants recommend you accrual accounting. All your income, expenditure, and sales are recorded, even when no transaction is made with your bank account.
Accountants manage your business.
It is difficult for owners to maintain the database regularly. But, it is the responsibility of an accountant to categorize all transactions, make a budget, ensure timely taxes, accurate data recording, and distinguish between returns and chargebacks.
To start a business, you have a lot of responsibilities, and being within budget is tricky. Accountants manage your cash flow and track down the unnecessary expenses in the company.
They create financial statements that give you a clear image of profits and losses in the business.
Ecommerce business is associated with return policies and chargebacks. A company must record these data under “Returns and Allowances”, and accountants can help owners to track them.
Accountants reduce the business operation costs.
When the business grows, operation costs also increase. Home offices change to work stations, more employees and inventories are needed, all these costs money. An accountant can create a budget according to your current financial status and business requirements.
Also, you can outsource all your accounting tasks to a firm. By doing so, you are saving money on bookkeepers, in-house accounting experts, tax advisors, financial planners, etc.
Accountants, do your taxes.
If your business turnover exceeds the primary threshold level of taxation, you need to register for VAT. Businesses must record this information regularly, and accountants handle such data.
There are several other taxes a business needs to file in time. Tax returns need accurate data for every transaction made in the company.
Some e-commerce businesses conduct international sales, where they need to pay customs fees, VATs, etc. An accountant can help you deal with all these.
Conclusion
An accountant has the technical skills and experience to take your company’s revenue to another level. They can advise you about the latest trends, government rules and regulations, auditing, tax rules, etc.
Though small eCommerce businesses don’t need to hire accountants, it is a must for large companies. As the company size grows, the financial structure becomes complex, and so does the financial activities.
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