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E-commerce Accounting Essentials: How to Streamline Your Financial Processes for Growth
- E-commerce accounting is the management of financial transactions and data specific to an online business and includes tracking inventory often spread across various warehouses, handling taxes variation between states and platforms and preparing financial statements which consist of income statement, balance sheet and cash flow statement.
- Essential tips for e-commerce accounting routines include tracking everything daily, reconciling books monthly, managing financial statements monthly and handling taxes annually.
- E-commerce accounting includes using a cash basis accounting method which records transactions as money changes hands.
- Additionally, e-commerce businesses can use accrual accounting where expenses are recorded when an invoice is received, and revenue is recorded when the transaction is completed respectively.
- E-commerce business owners can turn to automation software to simplify operations, minimize errors and save time.
- Some of the best small business accounting software listed include QuickBooks, FreshBooks, Wave, Xero, Zoho Books, Sage and OneUp.
- Similarly, some top free accounting software includes Zoho Books, Wave, ZipBooks, Odoo, ProfitBooks, CloudBooks and FreshBooks.
- Maintaining accurate financial records is crucial in e-commerce accounting to prevent landing in the red and in avoiding questions from the IRS.
- Managing financial statements monthly helps in keeping your business flexible and ready for whatever comes your way, while handling taxes annually eases the process of filing for taxes.
- E-commerce accounting may appear overwhelming, but it becomes easier once the principles are broken down and the right approach and automation software is implemented.
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