The Pivotal Role of Bookkeeping in the Success of an eCommerce Business
Online bookkeeping can be a headache. However, it’s an integral part of any e-commerce business, and it’s important to understand how your accounting needs and costs can vary from traditional business needs.
Bookkeeping isn’t just a way to keep a tally on the business, it is a way to make sure that all the expenses that go into running a business are justifiable. You will want to keep track of all the expenses incurred, such as:
Advertising cost differences;
Shipping and handling cost differences;
Spare inventory cost differences;
Financing cost differences;
Cost of goods sold;
It’s an excellent idea to get a clear idea of how you want to track your business’ income and expenses, and how you want to set up a bookkeeping hierarchy. With proper bookkeeping, you are able to stay on top of your costs, minimize your expenditures and improve your business’ performance.
How Bookkeeping Keeps Your Business Tax Compliant
Bookkeeping isn’t just a way to keep an eye on the money you make or spend. It is also an integral part of business tax compliance as it ensures your tax documents contain the following key financial information:
Taxable income of the organisation
Tax offsets and credits
Amount of Goods and Services Tax (GST) collected
Repayments of loans to the company
Fringe Benefits Tax (FBT)
Taxable Payments Annual Report (TPAR)
What to Consider When Choosing the Ideal Bookkeeping System for You?
There is a wide variety of bookkeeping systems available, and it is important to understand what you want to track, how you want to keep track of it, and how much you are willing to spend. Here are some important factors to consider:
1. Be Sure to Choose a Bookkeeping System with an Appropriate Accounting Features
Bigger businesses need more complex accounting features. Accounting software can help you organize your financial data in a centralized way, but it is also important to have flexible accounting features that can help you expand your business in the future.
2. Be Sure to Choose a Scalable Bookkeeping System
Accounting features that can help you manage your finances, in the long run, need to be flexible enough so that you can grow with your business. With that in mind, it is important to choose a bookkeeping system that fits your needs now, without locking your business into a system that may be difficult to replace or expand.
3. Single-Entry vs Double-Entry Bookkeeping: Choose the Right One that Suits Your Needs
Single-entry bookkeeping is sometimes referred to as ledger bookkeeping, keeping track of every transaction as it happens. For example, when you sell a $100 product, you would record that you made $100. On that note, the simplicity of single-entry bookkeeping makes it a great starter for small businesses.
Double-entry bookkeeping is more complex, as it adds an additional layer of recording, with one entry for debits and one for credits. This is important because transactions are recorded twice, providing a check on the accuracy of the information, for example, if you sell a $100 product, you would record the sale twice, once for income, and once for inventory.
This double-entry system can also help you better track your income and expenses over time, and it allows you to analyze the financial health of larger enterprises.
The Bottom Line: The Importance of a Reliable Bookkeeping System in Your Business's Financial Independence
Bookkeeping isn’t just a way to keep a tally on the business, it is a way to make sure that all the expenses that go into running a business are justifiable. That's why it is important to choose a bookkeeping system that is reliable, accurate and flexible, as well as scalable for your business needs.
How Can We Help You?
Running a business is often a balancing act, but we can help stabilise your strategy by offering financial mentoring services to grow your venture. New Wave Accounting handles one of the best accountants on the Gold Coast, so get in touch with us and see how our end-to-end accounting and bookkeeping expertise can help scale your business.
We understand that keeping tabs on your finances and taxes can be overwhelming, so check out our services and learn more about how we can help you today!