Bookkeeping and Accounting for Ecommerce Businesses

Every business needs to do some form of bookkeeping and accounting, but this would be a rather short (and very unhelpful) article if we just left it at that. So, whilst it’s a legal requirement for everyone, it’s arguably even more vital for ecommerce businesses and online stores dealing with hundreds of transactions through multiple payment systems. That’s a lot of data to try and organize!

Do ecommerce businesses need to use accounting software?

Using accounting software isn’t mandatory, although any business covered by Making Tax Digital rules will need to keep records digitally. This doesn’t necessarily mean you have to use dedicated bookkeeping software though, so you might be happy sticking with spreadsheets (and then using bridging software to submit your tax return).

As long as you can send HMRC your tax return and pay the bill on time, required, you submit your tax returns by the deadlines and you pay all your tax bills on time, this option might be ok for you.

Ecommerce businesses tend to have lots of transactions to account for though, which translates into lots of lines on a spreadsheet. It’s not very user friendly.

Can accounting software make ecommerce record keeping easier?

The quick answer is yes – very probably. Casually glossing over the fact that we’re an accounting software company, there are lots of ways it can help.

For example, recording transactions taking place across multiple payment platforms, possibly in multiple currencies, can be an utter nightmare if you’re trying to collate reports and statements.

Most bookkeeping software (yes, Pandle included) comes with data feeds so you can connect your accounts straight to the bank, PayPal, Stripe, whatever, and transactions will be imported automatically. We could have just said “it’s better and easier” but that’s what everyone says.

Update your accounts as you go

Software will allow you to automate a lot of tasks but it’s still essential to tend to your bookkeeping on a regular basis. It’s a bit like mowing the lawn on a regular basis, rather than going out there once a year to rescue the cat.

Anything that can be automated, do it. Anything that needs your manual input, don’t leave it to the last minute (i.e. when it’s tax return time). This might be an easy way out in the short-term, but it will only lead to stress and unnecessary errors further down the line.

We recommend adding accounting admin to your to-do list at least once a week so you can stay on top of everything and spot any mistakes or missing information before it becomes a bigger problem.

Keep your personal and business finances apart

Separating personal and business finances is a legal requirement for limited companies, but it’s best practice for sole traders too.

Keeping a clear distinction between what is business-related and what isn’t, will make it easier to track expenses, claim tax relief, and complete your tax returns. It will also help make sure you don’t end up underpaying or overpaying tax. Plus, if you work with an accountant, they’ll thank you for the added administrative clarity, too.

Having a separate business bank account also means you won’t need to worry about them seeing all the personal transactions on your bank statement. You know, if that’s something you’d rather keep private.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.