Bookkeeping is very important for managing your online store’s accounts efficiently and understanding the fundamentals of your business finances.
However, it can be a time-consuming process so it’s best to automate as much of your ecommerce bookkeeping as possible, below we look at some ways you can do this.
What is Bookkeeping?
There are various fundamental bookkeeping tasks relating to financial transactions, with some of the most important being:
- Recording online sales
- Reconciling payment gateways
- Matching bank statements to pay-outs or invoices
- Monitoring and managing cashflow
- Matching outstanding bills to statements
- Keeping up to date and accurate records.
Thanks to cloud accounting software many of these tasks can be automated for you, although it’s important to also be able to understand and interpret the data fed back to you in reports.
It’s important to have records of each of these bookkeeping tasks, with each task needing to be completed at different intervals:
Daily Bookkeeping Tasks
The number one priority for any business – especially small businesses – is cashflow. In fact, 38% of small business owners who have suffered cash flow problems have been left unable to pay debts and it’s easy to run into problems if your bookkeeping isn’t accurate.
Therefore, keeping a running total of the ins and outs of your business is ultimately the most important daily task and something most good pieces of cloud accounting software will be able to do for you.
Another daily task is keeping a record of receipts, very important for accounting records on expenses. Many cloud accounting software packages now include the option to take a picture of expense receipts, ensuring it is kept as a record against the specific transaction and simplifying the bookkeeping process.
Depending on how you take payments, you can set up weekly automated tasks for invoice management. Cloud accountancy packages are able to send out invoices directly to your client, as well as overdue reminders, thank you emails and – if connected with your bank account – mark off if the invoice is still overdue or has been paid.
Don’t forget to include regular payments to suppliers as well, many cloud accounting packages allow you to mark regular payments in the specific payment category for how it relates to your business – saving you or your accountant time when it comes to your annual tax return.
On a monthly basis it’s important to review incoming and outgoing payments vs bank statements and check for any irregularities such as missed payments or unexpected fees.
It’s also important to review your monthly turnover and profit margin, comparing this to previous months.
Some businesses also require monthly VAT returns, although most will only be required to do these quarterly.
If you’re VAT registered in the UK, you’ll have to send a VAT return every quarter.
Again, many cloud accountancy packages have VAT payment automation, which helps when keeping financial records and working out how much needs to be paid.
Whether you’re a limited company or a sole trader, every year you’ll need to provide a tax return declaring their income for payment of relevant tax.
Automated bookkeeping can assist with this with many cloud accounting software packages able to either fully or partially complete your tax return on your behalf.
This type of solution is much more suited to sole traders though as this software won’t have the insight provided by an experienced ecommerce accountant.
How can Automated Bookkeeping Help Your Business?
We’ve discussed how important bookkeeping is for online businesses, but what are the benefits of automating these processes?
By automating your bookkeeping you can:
- Simplify your bookkeeping records, easily categorising it for interpretation by you or an accountant.
- Securely store your data online, accessing it quickly when needed.
- Reduce mundane and time-consuming tasks such as chasing customers for payment.
Need Help Automating Your Ecommerce Bookkeeping?
Once you’re clear about how you want your bookkeeping system to work, you can choose the cloud accountancy software to put it into practice.
Of course, this raises a further question: which cloud accounting platform to choose?
Bookkeeping is an essential pillar of good business accounting. Is it time to automate yours?
For more details about cloud-based accounting for ecommerce, please contact us for a FREE 30-minute consultation.