Accounting may not be the most exciting part about running an ecommerce business, but it is necessary to keep your operation organized, tax compliant, and cash flow positive. Proper bookkeeping also gives you insight into your online store’s performance and potential for growth. According to Statista, there are about 1.3 million accountants in the US. If you are a startup, business owner, or entrepreneur, the idea of hiring an ecommerce bookkeeper can seem daunting. Don’t worry; this guide takes you through the top 15 considerations every ecommerce business should know before partnering with an accountant.
Not sure if your business is ready to hire a bookkeeper? Check out this guide for the telltale signals that you need accounting help for your business.
Small businesses might assume their operations are nominal and therefore don’t require veteran bookkeepers, but this is the farthest thing from the truth. Bookkeeping and accounting are cornerstones of your business, and you need someone with extensive experience to help you optimize your operations. Experience also looks slightly different to each person, so keep your business needs in mind when selecting a bookkeeper. For example, someone who worked for ten years as a part-time bookkeeper for their friend’s bakery doesn’t necessarily have the right experience to handle the books of a growing ecommerce business. Just as you look for the right fit when hiring an employee, you should look for the right fit when hiring a bookkeeper.
When you begin discussions with potential bookkeepers for your ecommerce business, these questions from LedgerGurus will help you dig into their experience:
- Have they previously worked with your sales channels?
- Do they understand online payment processors?
- Are they familiar with online accounting software?
- Do they understand COGS and inventory?
- In general, are they tech-savvy?
Experience is important, but formal education is a must. Your bookkeeper should have a background that includes business and accounting, as business education alone doesn’t equate to top-notch bookkeeping skills. Make sure your bookkeeper has the formal training to help you not only solve any problems that arise but also prevent them from happening. Accountants with this expertise come from solid accounting education backgrounds that teach policy, procedure, strategy, tactics, and ethics. An accounting degree serves as the foundation on which to build experience and become a stellar bookkeeper.
Chances are, if you’re running an ecommerce business, you’re not an accountant. More than likely, you’re busy handling sales, marketing, website maintenance, and other aspects of your business and don’t have the time and resources to oversee your current bookkeeping solution. That’s why it’s always best to have a professional bookkeeper by your side who can ensure that everything is accurate and provide you with solid financial oversight for your business. Education and experience are critical here because your ideal bookkeeper will be able to keep your books in mint condition for a reasonable price.
4. Banking Technology
The rise of online banking has made conducting business that much easier because you can send and receive payments from anywhere. The major advantage of online banking is digital record keeping, but the one downside is that there are security risks. Ensure your bookkeeping and accounting solution is safe and secure so you can rest easy knowing your financials are well protected.
5. Software & Systems
If you’re still writing checks to pay vendors and employees, it’s time to get up to speed with accounting technology. Bookkeeping software has simplified many accounting processes, resulting in a streamlined transfer of information from your online store to your software to your bank. It’ll keep everything accurate, and you’ll save time that you can reinvest in growing your business. A good bookkeeper will get you set up on the latest and greatest software systems.
Are you ready to eliminate all the busywork between your sales channels and your accounting systems? Take Webgility for a spin FREE for 15-days. No software installations required. No credit card required. Create a free account to get started right away.
6. Accounting Policies & Procedures
Your business already has policies and procedures that determine how and when accounting tasks are completed, but there’s a good chance you could use a refresh. Your bookkeeper can help to establish when bills are paid, how often to review the books, how transactions are posted, and much more.
7. Data Entry, Reporting & Reconciling
Bookkeeping is much more than manual data entry. It requires a level of familiarity with the business to understand its cash flow and day to day operations. When you partner with a professional bookkeeper, you’ll always have real-time financial reports so you can stay nimble and react to unexpected situations (like a machine failure or another expense) without spending your precious time on documentation to provide the bank. Tax season will also be a breeze because you’ll already be prepared.
8. Cash Flow Management
Cash flow will make or break your business, so it’s an important metric to track. Many small businesses have sacrificed cash flow to solve a short-term crisis, only to see the business close shortly thereafter. Great bookkeepers can foresee these situations and step in before problems arise, showing business owners the bigger picture and guiding them toward better financial decisions.
9. Tax Prep & Planning
Even though tax season is the same time every year, it still seems to sneak up on most online sellers because it’s so soon after the holidays. The last thing you want to do is rush through your tax prep—you could miss write-offs that save your business money, or even worse, face an audit. Once again, a reliable bookkeeping solution will save the day with its accurate, up-to-date reports that are just a few clicks away.
10. Credit Management & Strategy
Lines of credit can be a tremendous help to small businesses, but you have to be careful. Credit cards can come with penalties for carrying high balances, and loans often have to be paid down to zero before you can borrow again. Both require discipline and strategy on the part of the business so its credit rating doesn’t plummet. A good bookkeeper will recognize this and ensure credit management is the top priority.
Top-rated bookkeeping firms always have the credentials, but that doesn’t always mean that they are reliable. Before you partner with a bookkeeper, be sure to read reviews and research prior (or current) client experiences before committing. Don’t be afraid to ask for references that you can call. Long-standing companies with established portfolios are usually happy to provide client testimonials that speak to their timeliness and efficiency. You can also get specific and ask a potential bookkeeper how they would handle a financial situation unique to your ecommerce business.
12. Industry Background
The most significant advantage of working with an ecommerce bookkeeper is familiarity with the industry you’re in and how it influences your financials. If your bookkeeper understands industry trends, they can more effectively oversee your accounting and identify patterns and errors.
Professional bookkeepers are famously known for being organized and detail-oriented. It comes with the territory. However, each bookkeeper’s organization style is largely based on their experience and how their firm interprets, reports, and retrieves financial data. Review policies and safety nets can give you insight into the firm’s operations, and streamlined workflows will have a positive impact on your business’s bottom line.
14. Communication Style
Unfortunately, some bookkeepers are just better at managing numbers than managing client relations, so you have to decide ahead of time how you’ll ideally communicate with your bookkeeper. At the very least, this person should be a good listener and a patient explainer who can make sure you understand what’s happening with your books. Beyond that, it depends on your preferred communication style and other individual needs. A one-size-fits-all approach will be unlikely to meet your expectations.
Perhaps most importantly, you need an experienced bookkeeper who will prioritize you and your business. This person needs to be willing to work for you and with you in a way that coincides with your needs and aligns with your future plans. This partnership with your bookkeeper means respecting your time, communicating proactively, and giving you the tools to work toward your goals. Reading reviews and researching your prospective bookkeeper’s customer service habits ahead of time may save you in the long run.
By guest contributor Taylor Knauf