E-commerce Bookkeeping and Accounting Services
We live in an era where the internet has proven to be a game changer, prompting many firms to reorganize their physical offices into full-fledged online storefronts. This new cloud commercial arena, THE E-COMMERCE, has not only accelerated 24/7 purchasing and selling, but it is also a more convenient platform for contacting clients without regard to geography. Even if the manner businesses are conducted has changed, the accounting rules have not. Using the same old traditional procedures for sophisticated internet transactions complicates e-commerce accounting even further. And, as the saying goes:
“How you handle your accounting will determine the life or death of your e-commerce firm.”
Using the incorrect accounting software or applying the incorrect accounting treatments might result in:
- Mismanagement of inventory
- Integration and reconciliation issues between payment gateway and accounting software
- Incorrect tax computations for online sales
- Failure to plan transportation logistics
- Payroll noncompliance
- Simply a waste of time, money, and reputation.
E-commerce businesses provide a plethora of accounting and bookkeeping issues, therefore whether you hire a professional or handle your own bookkeeping using accounting software, a thorough grasp of the complexities of e-commerce bookkeeping is required.
Nadeem And Umendra Chartered Accountants is one of the UAE's oldest accounting businesses, serving a large number of trade organizations with audit, bookkeeping, and accounting services. We can assist you with the accounting of your trading firm, allowing you to focus on your primary business, which is trading.
Why Should You Hire Someone to Handle Your E-Commerce Accounting?
Having your own e-commerce store is one of the most exciting endeavors you can embark on as an entrepreneur or a major business owner, but simply obtaining a domain name, putting up the website, and having the store up and running is not enough.
YOUR ONLINE STORE WILL FALL INTO MISMANAGEMENT IF YOU DO NOT HAVE A GOOD FINANCIAL SYSTEM. When your business goes live in the virtual market, you'll need a well-organized integrated ERP system to record complex transactions. You must maintain a close check on your company's daily financial statistics and have up-to-date data on all of your activities. However, with this online business, where your items are available 24 hours a day, 7 days a week, handling all of that multiplex accounting is not only time intensive, but also a physically demanding work.
Although there are other aspects that highlight the importance and advantages of outsourcing e-commerce bookkeeping, the following are some of the most important reasons that businesses outsource their e-commerce accounting:
- Calculating sales tax liability for all of those large international transactions may be difficult. How can you be certain that you're not paying more than you have to?
- Fees and software costs can quickly deplete your revenues. How can you ensure that you are fighting for the most affordable prices?
- Managing that massive transaction volume with all of that composite data may be difficult. How do you batch your transactions intelligently?
- Customers' sale returns are not uncommon in internet retailers. How can you design your system to update inventory when consumers return items and include a system control that sends you notifications until your physical inventory reconciles with your system?
- Customer payments are received by merchants/payment gateways such as Network International, Skrill, 2Checkout, PayPal, Pioneer, Secure Pay, POS machines, and others before being transferred to your company's bank accounts. In your system, how can you automate the complete sales-to-receipt process?
- Inventory management in an e-commerce firm can be difficult. How do you know how much inventory you have, what your inventory turnover is, what your re-order level is, and how to appropriately value it?
- E-commerce reporting is a new problem in which your sales and inventory may be viewed online while your expenditures are recorded in the accounting system. How can the data from these two sources be combined to produce relevant information for analysis?
You will most likely want the assistance of a trusted expert to help you uncover the answers to all of these perplexing issues, as well as to delve into further depth, if your E-commerce business's accounting system is:
- You are unable to communicate with your e-commerce website.
- Unable to connect to a payment gateway
- Inability to generate batch-wise pricing
- Inability to display batch-by-batch profitability data
- Unable to categorize sales by agent; Unable to generate statistics by area
- Unable to generate agent-specific commissions reports
- Unable to distinguish between internet and shop sales
- We are unable to provide you with monthly/quarterly/annual profit and loss statements.
- We are unable to provide you with correct tax data.
- Not executing adequate transaction reconciliations, such as stock in hand versus stock in system.
- Incapable of preparing future financial information based on historical financial records already in the system
And if YOU, as the proprietor of your online shop, are:
- Inability to obtain correct inventory/sales reports
- Authorities are constantly skipping reporting deadlines.
- Having difficulty taking advantage of tax deductions,
- Incapable of analyzing market competition,
- You are unable to organize your most useful web articles and
- You've misplaced your transaction records.
You'll only wind up with a SHUT-DOWN if you don't have a good bookkeeping and accounting system. One of the most common mistakes that e-commerce businesses make is not organizing their finances and employing experienced accountants until it is too late.
Accounting firms that specialize in your business might assist you in organizing your processes. We can assist you in establishing a fully integrated ERP system for your e-commerce business that will not only eliminate manual tasks currently performed by your team, but will also provide you with auto reconciliations, stock reports, any type of sales reports, direct integration with payment gateways, and, most importantly, a highly effective internal control system.
What Are the Benefits of Our E-Commerce Accounting Services?
Everything else will fall into place if your books are in order.
A thorough breakdown of our e-commerce accounting services is as follows:
1.Understanding of Business
- Grasp of Company: Gain an understanding of your online business setup.
- Determine how management intends to track sales.
- Recommend the best payment gateway for your online purchases.
- Determine which cloud/desktop software will best meet your needs.
- Give you a thorough comparison report on software prices and fees,
- Understanding your e-commerce business in order to give the best packages
2.Accounting Software Management for E-commerce Transactions:
- Choosing the most appropriate and cost-effective accounting software that works nicely with your web platform (Zoho Books, QuickBooks, SAP, SAGE, XERO, Tally, etc),
- Software installation and configuration
- System modification to meet unique reporting needs
- Setup of a system for the automated creation of VAT reports for submission to the Federal Tax Authority
- Customization of the system for automated reconciliation with the Federal Customs Authority
- Integration of your system with PayPal, WooCommerce, Network International, POS, Banks, and other payment gateways to begin and track direct feeds from merchants and payment gateways to your program. This connection allows for the automatic recording of sales and receipts.
- Allow the program to automatically log transactions in the e-commerce platform.
- Create informative layouts for bills, quotes, emails, users, suppliers, and organizational information.
- Incorporation and configuration of precise functionality for Value Added Tax (VAT) recording and reporting,
- Initial and ongoing Chart of Accounts setup to ensure transactions are categorised and recorded in correct general ledger accounts, which is required for accurate reporting,
- Management reporting templates (monthly, quarterly, and yearly) tailored to the needs.
3.Management of E-commerce Business Transactions (through accounting software enablement/customization or bookkeeping services):
- Daily e-commerce transaction reconciliations between the e-commerce platform and accounting software,
- Detailed batch-wise pricing for a better understanding of your business,
- Area-wise sales categorization to discover the most profitable zones/markets,
- Detailed breakdown of your company's website and retailer sales so that you get a clear picture of your e-commerce business revenue,
- Regular sales reconciliations,
- Reconciliations of cash transactions,
- Merchant fees charged by the merchant service provider are calculated and accounted for.
- Automating bank reconciliation for receipts via POS machines/payment gateways, web portals, and so on by connecting directly with merchant service providers.
- Timely and accurate documentation of sales-refunds, credit card and gift card sales, stock write-offs, and so on.
- Separate accounting for overseas sales in several currencies.
4.Management and Analysis of E-commerce Operations Costs:
- Upkeep of monthly product-specific marketing expenditure
- Upkeep of total marketing expenditure
- Monthly costs of general overheads, wages, and other overheads are maintained.
- Cost allocation on an item-by-item basis for comparing the expenses of various trade products,
- The creation of a precise structure of product-specific platform fees, so that you have a clear view of the expenses levied by platforms,
- Shipping costs are calculated depending on the population of trade consignments and country-specific rates.
- Allocation of delivery costs by product,
- Keeping track of and accurately allocating refund shipping expenses for cancelled sales/purchases
- Allowances for accurate discount computation, recording, and posting
- Appropriate recording and handling of refund obligations
- Members of management are being trained in bookkeeping and e-commerce accounting software.
- Monitoring and quick examination of system flaws
- Cash withdrawals must be recorded separately.
- Accounting and bookkeeping computation and evaluation for past periods
5.Tax Returns for E-commerce Transactions:
- Incorporation and configuration of precise VAT functions (VAT),
- enabling the program to compute and collect tax on internet purchases,
- VAT training for clients' employees
- Separately record the sales tax amount from the gross sales of e-commerce.
- Accurate computation of sales tax liability, taking into account tax reliefs as prescribed by regulations,
- To avoid significant fines from the Federal Tax Authority, sales tax returns must be filed on time (FTA).
- Assist all clients who have signed up for e-commerce accounting services by acting as tax consultants in UAE.
6.Inventory and Order Management in E-commerce:
- Integration and configuration of inventory monitoring with e-commerce accounting software.
- Inventory valuation in accordance with International Accounting Standards (IAS)
- Timely and accurate recording of sales and sales returns in order to create accurate inventory re-stock numbers
- Reconciliations across order placement channels on a regular basis,
- Calculation and precise handling of given items or gift cards
- Reconciliations of sent orders across fulfillment channels on a monthly basis,
- Local and foreign orders are recorded separately.
- Unsold stock must be computed and recorded separately.
7.Reporting: Overall Business Position Report:
- This report allows you to assess the effectiveness of your complete e-commerce organization. This allows you to rapidly examine the primary profit/loss indicators, allowing you to take action depending on current business efficiency.
- ROPO Analysis Report (research online, buy offline): Allows you to view how online advertisements effect your physical/online sales vs. the cost of the ads, allowing you to categorize successful online ad campaigns through your e-commerce platform, attracting offline/online clients.
- Cohort Analysis Report (customer behavioral analytics): A complete report on behavioral analysis of customers. This will assist you in increasing and forecasting client preferences and choices.
- Client Lifetime Value Report (LTV): Allows you to calculate customer earnings over time. This can help you anticipate income over a customer's lifetime and show you how much expense you should pay for a certain group of consumer preferences for your e-commerce firm.
- RFM Analysis Report (recency, frequency, monetary value): Allows you to categorize lucrative consumers or groups of customers, ensuring the success of your e-commerce firm. This will assist you in building your own base of devoted clients and creating tailored segments.
- Micro-Conversion Report for Your Website: Allows you to detect weak points in your e-commerce sales funnel. This can assist you in developing strategies to persuade every consumer who visits your e-commerce business to add things to their shopping basket!
- Foreign Exchange Gain/Loss Report: A thorough currency gain/loss report from overseas sales used to assess how worldwide sales effect revenue via exchange rates.
- The most profitable products are: Product-specific sales reports that help you understand your most successful goods.
- Reports on Product Comparison: Weekly/monthly product comparison reports are provided so that you can examine monthly/weekly fluctuations.
- Product-specific Sales Report: This report compares product-specific sales to available stock, allowing you to handle items before stock-outs occur.
- Shipping Costs: Weekly/monthly shipping cost reports by product.
- Analysis of Insurance Costs:Weekly/monthly product-specific inventory insurance cost reports
- Product-by-Product Profit Analysis: A monthly batch-by-batch (product-by-product) profitability report that shows the profit per product.
- Gifts/Discounts: Report on gifts and goods discounts
- Agents Commission Report: An agent-by-agent commission report is available.
- Internal Controls: A monthly evaluation report on the effectiveness of installed internal controls as well as areas that need to be improved.
- Revenue Analysis by Area: Revenue analysis by area so that you may focus and aim on the most income-generating places.
- Analysis of Rivals: A product-by-product comparison of competitors' products to gauge market competitiveness.
- Analytical Sales Analysis: Sales comparison reports, such as current year weekly sales vs previous year weekly sales (same period), e.g., January 2019 Week 1 versus January 2020 Week 1, and so on.
- Profit & Loss Report by Period: Year-by-year P/L comparison reports (Jan-Dec 2019 vs Jan-Dec 2020) to assist you assess your e-commerce business success for effective planning and policymaking.
8.Analysis and valuation of businesses:
Nadeem And Umendra Chartered Accountants will help you with the whole company appraisal and analysis of your e-commerce site by:
- Payroll administration
- Management of cash flows
- Detailed reports for business analysis (review our reporting section)
- Accurate Calculation and recognition of revenue
- Accounting software support and administration
- Reconciliations of business banks and trial balances
- Preparation of the balance sheet and revenue statement
- Debt management