Should you hire an accountant?
Well, yes, if you want a streamlined financial landscape for your business.
But what if you’re at the beginning of your business? Do you need an accountant now?
Or should you hire one when you’ve reached the first taxation season?
Every business owner makes this decision at different stages of their business.
However, at certain times, the signs are clear that you need a professional ecommerce accounting service to manage your business.
So what are these signs exactly?
Let’s talk about them.
Key Takeaways
- E-commerce accounting is more than basic bookkeeping; it requires you to track and manage diverse sales channels and ensure tax compliance amongst other various things.
- A small e-commerce business owner should have the foresight to understand its evolving business needs.
- Hiring an accountant is a strategic move that allows you to focus on core business activities without neglecting its financial responsibilities.
- The right accountant should understand your industry along with domestic and international regulations.
Understanding the Importance of Accounting For Ecommerce Businesses
Traditional accounting is different from ecommerce accounting.
It is simplistic and you can easily get a hang of it as you’re only concerned with two components: income and expenditure.
On the contrary, ecommerce accounting is far more complex.
Not only do you have to track, organize, and analyze sales data, but your core business decisions are driven by this information.
On top of that, you have to consider different tax returns, deductions, platform and shipment fees, and other miscellaneous costs.
Managing extensive financial data without proper expertise can backfire in the name of cost saving.
Precision becomes key when one small error can cause a grand failure.
While 21% of small business owners have admitted to having limited bookkeeping skills, 35% of self-employed contractors stress over complex accounting tasks.
From regular bookkeeping to tax planning and financial forecasting, an accountant can transform your business operations by increasing efficiency.
6 Clear Indicators That You Need An Accountant For Your Ecommerce Business
Not everyone has proficiency in handling complex financial transactions.
But when you run a business, you either need to do most of the heavy lifting yourself or hire someone to do it for you.
Here are some of the strong indicators that you need an accountant.
Recommended: 6 Questions to Ask Yourself Before Outsourcing an E-commerce Accountant
1. A Large Amount Of Your Time Goes Into Managing Your Books
58% of small business owners spend more than 60 hours a week on bookkeeping — that’s a lot of time consumed that could have been spent strategizing for your business.
Of course, as a small business owner, every minute detail is crucial and requires your attention.
But to spend 60 hours a week handling finances is a tad much.
And, if this has been the case for you for a while, it’s time you think about delegating this task to an in-house accountant or outsource it to someone with the right expertise.
This will help you focus on your core business activities and reduce the chances of errors, that someone like you, with an insufficient skill set and lack of time, is likely to make.
2. You Were Penalized for Wrong Tax Filing
While it’s common for small business owners to handle their own finances, their confidence takes a hit during tax season when they face an onslaught of complicated regulations.
Tax preparation is at the forefront of your business’s compliance with the law.
You risk facing hefty penalties and substantial sanctions by undermining the stringent policies of the IRS.
A report by TaxJar claims that 88% of ecommerce businesses struggle to stay tax-compliant.
Therefore, if you’ve been penalized by the IRS for inaccurate tax returns, it may be time to hire an accountant.
Hiring an accountant is one of the best ecommerce accounting practices as they will audit your financial statements and ensure timely and accurate submission of tax returns.
3. You’re Planning To Bring In An Investor
Make it a business rule to have your numbers in place before you bring in an investor.
Knowing where you stand financially can make a huge difference in terms of understanding your risk-bearing capacity as well as your financial projections.
So when you plan on getting an investor on board, know this:
- They want to get accurate financial data.
- And they want it on time.
An investment analysis of your business can dig up old financial data.
The health of every financial activity that you record makes or breaks your investment deal.
So before you take the plunge, make sure your finances are well-organized. And for that, you need to hire an accountant with expertise specific to the ecommerce industry.
4. Your Expenses Have Increased
As your business grows, your expenditure climbs the upward ladder with it.
For example, you may have initially started with Excel to track expenses, but now you’re using an ecommerce accounting software that comes with monthly subscription fees to handle your basic accounting.
You might have additional expenses including marketing, production, and inventory costs.
It is important to understand that every expense adds up when you’re scaling, making it challenging to manage it all with ease.
Most importantly, it’s important to have a better understanding of where you’re spending your money.
This allows you to cut costs and even make informed financial decisions for your business.
5. You’re Planning To Invest
Financial planning is crucial in determining the fate of your business.
When I talk about investing, I’m only talking about your investment in other projects or other businesses.
I’m also talking about the major projects or changes that you’re planning to make in your own business.
So make sure you have the required skill set and financial know-how before making big investments.
If your business is moving up the ladder and is ready to invest, hiring an accountant would be the best thing you can do.
An accountant will help you weigh both the pros and cons of an investment.
Apart from accounting experience, they come with a fresh perspective, a viewpoint that is driven by numbers and reality not just passion and the desire to expand.
6. You Don’t Have Answers To Complicated Financial Questions
It’s not easy to run your own business. When you are the owner, people expect you to have an answer for everything.
The best way to answer complex questions is by correctly interpreting data.
Questions like budget allocation, increments, tax optimization, and other financial steps require answers.
And for that, you need expertise, something that only a professional accountant can offer.
Most people believe that accountants are simply responsible for tracking and reporting data. But they can support you in more ways than one. Here are some of these ways:
- They can help you budget and forecast.
- They can recommend employee compensation through a detailed evaluation.
- They can create efficiencies in running different business processes.
- They can help you prepare tax returns to avoid hefty penalties. This is the same money that can be used for growing your business.
Sometimes, you can’t interpret complex financial data correctly, hindering your ability to make informed financial decisions.
An accountant can highlight potential risks and help you take proactive measures to avoid costly mistakes.
This way, you can focus on growth while they look out for you from behind.
So How Do You Choose The Perfect Accountant - My Opinion
Ecommerce accounting can either make or break your business, so you must choose an accountant who understands your vision and business needs.
Before you hire an accountant, make sure they check the following list:
- They should be fully certified and have experience relevant to your industry.
- They should understand your financial needs and budget restrictions.
- You should be able to afford their services.
- They must understand and be equipped with ecommerce accounting software, specifically a cloud-based solution.
- They must possess knowledge of domestic and international tax regulations to help you prepare for tax season.
Fulfill Your Ecommerce Accounting Needs With Ledger Labs
Your needs evolve as your business grows.
The right way to approach this is by identifying the threats at early stages and tweaking your strategies to avoid making mistakes that most other business owners make.
The need to hire an accountant becomes inevitable when most of your time is spent tracking day-to-day financials.
By hiring an experienced accountant you can free up your valuable time to focus on core business activities.
You need someone who can manage your business accounting with the right set of tools and expertise.
And this is where the role of Ledger Labs becomes prominent.
My team has more than 12 years of experience and can help you manage your accounting no matter where your business stands.
We have the answers people expect you to have.
Book a free consultation worth $250 with me and let’s find ways to streamline your ecommerce business.
