Do I Need Ecommerce Bookkeeping for My Online Store? Here’s Why It’s Non-negotiable

Running an ecommerce store provides you endless possibilities for growth, creativity, and reaching customers all over the globe! 

But between crafting compelling product descriptions and strategizing your next marketing campaign, there’s one crucial aspect that often slips through the cracks: bookkeeping. 

You might be wondering, “Is it really that important?” The truth is, ecommerce bookkeeping isn’t just a mundane task; it’s the backbone of your business’s financial health. 

Choosing doola Bookkeeping as your partner in this aspect will undoubtedly make the process more efficient, accurate, and secure. 

With our expertise and customized solutions, you can focus on growing your online business while leaving the financial management to the professionals.

In this blog, we’ll explore why keeping your books in order isn’t optional but absolutely non-negotiable for every successful online retailer. 

So grab a cup of coffee, and let’s dive into how proper bookkeeping can elevate your ecommerce game!

What Is Bookkeeping?

Bookkeeping involves keeping accurate and organized records of all financial transactions, including sales, purchases, expenses, and revenues. 

It provides a clear picture of your business’s financial health and helps you make informed decisions about its growth and success.

One key aspect of bookkeeping is recording all relevant data systematically. This includes tracking cash flow, inventory levels, invoices, tax payments, and employee salaries. 

By accurately tracking these numbers on a regular basis and keeping detailed records, you can keep your finances in check and ensure compliance with tax laws and regulations.

Bookkeeping also plays a crucial role in preparing financial statements such as balance sheets or profit and loss statements. 

These reports provide an overview of your ecommerce store’s financial performance over a specific period and are vital when seeking loans or investments for growth opportunities.

Moreover, proper bookkeeping makes it easier to regularly monitor receivables so you can ensure timely payment collection from customers to keep the cash flowing.

The Risks of Neglecting Ecommerce Bookkeeping: Watch Out Online Business Owners

For online business owners, it can be easy to overlook or neglect bookkeeping.

However, the risks of ignoring bookkeeping in your online business can have serious consequences.

Without proper record-keeping and tracking, you may not accurately understand your business’s cash flow and profits. 

This can lead to overspending or overestimating revenue, which can also make it difficult to file taxes correctly and could result in costly penalties from the IRS.

Another danger of neglecting bookkeeping is failing to identify potential fraud or errors. This could include unauthorized transactions or customers falsely claiming refunds or discounts. 

Neglecting bookkeeping may give the impression that you are not taking your finances seriously, which could deter potential investment opportunities.

If you are seeking investors or loans, having organized and accurate financial records is crucial in demonstrating the viability and success of your business. 

Moreover, neglecting bookkeeping can put you at risk during an audit from the IRS. If you get audited, you will be required to provide detailed books and records, including income statements, balance sheets, tax returns, and more. 

Also, you might have to catch up on months’ worth of financial transactions and records to be ready for the tax season. 

Therefore, it is non-negotiable for online business owners to invest time and resources into proper bookkeeping practices.

Benefits of Effective Ecommerce Bookkeeping

If you are running or starting an online business, ecommerce bookkeeping is what will put you on the path to success and growth. 

While the benefits are endless, we have listed the most lucrative ones for an ecommerce business.

Therefore, it is a non-negotiable aspect that any ecommerce store owner should not overlook.

✔️ Better Inventory Management

With effective bookkeeping, you can accurately track the cost of goods sold (COGS) by recording all inventory-related expenses such as shipping costs, packaging materials, etc. 

This helps determine which products are more profitable and which ones require adjustments to improve profitability.

✔️ Tax Preparation Made Easy

As an ecommerce business owner, you are responsible for collecting and remitting sales tax on your online transactions in various states, depending on where your customers are located.

Effective bookkeeping ensures that all necessary information is recorded accurately, making tax preparation much easier when it comes time to file.

✔️ Secondary Source Of Evidence For Audits

In case your ecommerce store undergoes an audit from tax authorities or potential investors/financers, having well-kept books acts as secondary evidence showcasing the legitimacy of your financials.

✔️ Enhanced Tracking And Reporting

Bookkeeping enables detailed tracking and reporting on various metrics, such as sales by product, customer, or channel, conversion rates, and more. 

By analyzing these reports, you can identify areas of improvement and make data-driven decisions to optimize your business operations.

✔️ Time And Cost Savings

With organized financial records, you won’t have to spend hours searching for receipts or invoices when it comes time to file taxes or prepare financial statements. 

Additionally, having a clear understanding of your expenses can help you identify areas where costs can be reduced.

Implementing Bookkeeping for Your Ecommerce Store

Once you have recognized the importance of bookkeeping for your ecommerce store, the next step is actually implementing it. 

It may seem like a daunting task, especially if you have no prior experience with bookkeeping or accounting. 

However, with the right approach and tools in place, managing your finances and keeping track of your sales can become a seamless part of running your business.

🎯 Choose the Right Accounting Software

The first step towards efficient bookkeeping is choosing the right accounting software that meets the specific needs of your ecommerce business. 

There are many options available in the market. When making this decision, you should look for a solution with affordable pricing, useful features, user-friendliness, and integration capabilities.

This is why doola Bookkeeping is the ideal solution, as it is specifically tailored for ecommerce businesses. 

We can help you streamline your financial processes, reduce errors, and provide valuable insights into your business’s performance.

🎯 Implement Automated Processes

Our bookkeeping software seamlessly integrates all your accounts and bank feeds. This means that all your online sales data will be automatically synced to their system daily. 

No more manual entry or exporting and importing data from various sources — saving you time and effort while ensuring accuracy.

It can also automate sales data imports, expense categorization, and bank reconciliations to ensure accuracy and identify discrepancies promptly.

🎯 Keep Track of All Transactions

Whether it’s an online sale or expenses incurred in inventory purchases, you must record every transaction in your books. 

This will help you clearly see your revenue generation and spending patterns in your business.

Our platform creates a digital ledger for tracking receipts and invoices to ensure that all important documents are stored safely and can be easily retrieved if needed.

🎯 Streamline Back-office Operations

Accurate inventory management is essential for ecommerce businesses to avoid stockouts, overstocking, and other discrepancies. 

doola Bookkeeping software allows you to solve the complexities of online retail accounting, like the cost of goods sold (COGS), inventory levels, and sales taxes. 

By properly tracking these numbers, you can view detailed reports that give you a better understanding of where your money is going and how it affects your overall profitability.

Streamline Your Ecommerce Finances with doola Bookkeeping

Running an ecommerce business involves managing a lot of moving parts. With so much going on, it’s easy to overlook the financial aspects of your business. 

However, proper bookkeeping is crucial for the success of your ecommerce store in the long term.

With doola’s bookkeeping services, you can automate all aspects of your back-office operations, allowing you to focus on other important areas of your business.

We will ensure that every transaction is recorded accurately and organized in a dashboard that makes it easy for you to access and review.

This also makes it easier for you to keep up with tax regulations and deadlines. We take this burden off your shoulders by handling your tax compliance needs. 

This includes filing quarterly taxes, sales tax returns, and any necessary tax forms for employees or contractors.

We also provide monthly and year-end statements that give insight into the profitability trends, help you make informed business decisions, and plan for future growth.

Book a demo with us to learn more about how we can streamline the commerce of your ecommerce bookkeeping.