Electronic Commerce: A business model that allows companies and individuals to buy and sell goods and services over the Internet
Our US-based client sells products on multiple platforms, such as Amazon, Shopify, Etsy, eBay, etc. Our client has over 50 SKUs and sells on three Amazon marketplaces – US, Canada, and Mexico.
- Sales tax liability: Under new rules, online retailers must remit taxes in nearly every country they do business in. These “economic nexus” rules specify revenue thresholds or sales volume thresholds in each country they do business in. With these rapidly increasing complications, it is difficult to register the business in every state and keep track of tax liabilities.
- Inventory management: Managing inventory is a tricky task for sellers, no matter how small the business is. New products and sales channels only complicate this further. We have to track:
- what the client has;
- what it’s worth, and;
- where it’s located if the client has more than one warehouse or fulfilment center.
Things get even more complicated as the number of SKUs, transactions, countries and marketplaces increases. Even a single sale/purchase impact the total inventory.
- Tracking different types of seller fees: In addition to listing fees, Amazon also charges fees for transactions, advertising, and for fulfilling each order. Tracking everything can be hectic and time-consuming.
- Handling returns: Return items in the following categories: Sellable/non-sellable, damaged, customer damaged, defective, carrier damaged, etc. Ecommerce makes tracking returns difficult. Most sellers let their customers return items that don’t fit, arrive damaged, or don’t work for some other reason. Despite this, returns throw a wrench into our accounting process. Refunds are given to customers, and the returned item(s) may need to be re-added to inventory. If the product(s) are not received in good condition, then we have to write it off.
- Sample categories created for Sales:
- Sample categories created for COGS:
- For tracking inventory movement more accurately, we prepare spreadsheets for all types of returned/damaged products.
- Accounting tasks we do on a weekly/monthly basis:
- Categorize all transactions;
- Stay up-to-date with taxes;
- Distinguish between returns and chargebacks;
- Practice accurate record keeping;
EXTRA INITIATIVES TAKEN BY MAS:
Our extended financial services include unlimited tax advisory services and tax strategy planning. We’ll even file your taxes for you! Also, we maintain regular communication with the client over weekly calls/emails.
He outsourced the workload of the taxation process to us as well as reviewed the books. Bookkeeping is done by their staff under our guidance. Sales invoicing is accomplished through QBD, sales order and purchase order tracking on the site, tracking of funds from bank statements, tracking of shipments (for sales scenarios, product profitability, graphical analysis, state-by-state sales performance). We maintain adequate communication with this client through mails, Skype calling and Slack. We also prepare financial statements and file taxes on a regular basis.
- Better inventory accuracy
- Cost savings by making stock reports for better analysis
- Increased focus on business expansion
As a successful small business owner, he can’t do everything. Bookkeeping services are even tax deductible, making them an excellent business decision.