April 3, 2020
5 things every ecommerce seller should know about DIY accounting

5 things every ecommerce seller should know about DIY accounting

Hey everyone, this is Veronica Wasek with Five Minute Bookkeeping. In this video, I am talking
to e-commerce sellers and talking about the 5 things that every e-commerce seller should know about doing your own bookkeeping. (bright music) The 5 things that every e-commerce seller should know about doing
your own bookkeeping or DIY-ing your bookkeeping. Let’s go ahead and take a look. So why even bother with doing your accounting
and bookkeeping? For most business owners and
especially e-commerce sellers, we’re really worried
about the taxes, right? Tax time, but what that
does is, first of all, it makes you procrastinate
and makes you just to be reacting to tax deadlines instead of being proactive about really managing your business and getting a clear profit, a clear view into your profitability. Peter Drucker says that you cannot manage what you can’t measure, and it’s true if you don’t know how
your business is doing and you can’t make critical
decisions for your business. So, the first thing you should know about DIYing your
bookkeeping is the reason why you should be doing it. It should be so that
you can get a clear view into your profits and be
able to manage your business with the financial
insights that you’ll gain from maintaining your finances. Number two, you need to understand that maintaining your books
isn’t doing data entry, isn’t just importing
your banking transactions into your QuickBooks. There’s a whole lot
more that goes into it. There is an aspect of that
we do have to capture, transactions into QuickBooks, but that also requires time,
it requires dedication. So if you’re going to do your books, you need to be able to set
time aside to work on the books and to do it on a regular basis. Otherwise you’ll just
put it off and once again you’ll be back to getting
things done only for tax time. Number three, most e-commerce sellers who are trying to DYI their
books just jump right in to working on their QuickBooks without first really crafting a plan and having a strategy for setting up a financial management system that’s customized to their business. So what do I mean by a
financial management system and crafting a plan? Well it’s all about
really setting a strategy. So really planning what it is that you’re going to be doing. Are you selling through multiple channels? How are you going to manage inventory? How are you going to report on your taxes? Next is structure, it’s
setting up your QuickBooks Online in a way that
matches your operations and how you’re doing business. Number three is software. Identifying other software that will integrate with QuickBooks, be able to streamline those processes and automate manual processes. Four is systems. The who, the what, and the when. Who’ll be doing the financial tasks? When will they be done? What will be done? And number five, safeguards
and protecting your money, especially if you’re going
to delegate some financial tasks to people in your
company or organization. Number three, understand that
there are key financial tasks that you should be performing each month. And for an e-commerce seller,
there are six main tasks. One is recording transactions, so actually capturing the
transactions into QuickBooks. Second is reconciling. That is a very important part of ensuring that all the transactions that are in QuickBooks are
actually valid transactions and you have no missing transactions or duplicated transactions. Number three is reviewing. Once the transactions have
been recorded in QuickBooks and reconciled, you want
to go through a process, where you’re reviewing some
of the key reports to ensure that everything looks in line. Maybe there might be some expenses that are recorded into the wrong account. You may have things
that are miscategorized. So we want to take time
to review the books and make sure that the numbers make sense. Number four is revise. So, after we do that review and perhaps see that some, maybe an amount is miscategorized, we want to revise or make corrections to the books to ensure
that they’re accurate. Number five is restrict. And that is the process used
to basically close the books, so that you don’t accidentally make changes to transactions
that you have already recorded and reconciled. And finally remit, and
that is your sales tax. And for e-commerce sellers,
sales tax is a really big deal. So you want to make sure
that you are remitting your sales tax liabilities. Number four, understand
that e-commerce sellers face some very specific challenges
in doing their own books. The reason is because on the sales side, we have a lot of transactions going on. There’s income, returns and
refunds, fees, reserves, loans, debit cards, sales taxes. There’s a lot going on on the sales side and those components of
sales need to be broken out, and on the other hand what we see being deposited
in the bank account are different amounts and
they need to be reconciled. So there has to be a reconciliation done between the amounts
sold and the components of those amounts versus
the amounts deposited in the bank account and the
components of those deposits, because you’ll see separate
deposits by payment processor. We might see Amazon
payments, Shopify payments, Stripe, PayPal, Square. There might be fees
that are being deducted from all of these amounts so there is another layer of complexity that e-commerce sellers
need to understand in terms of doing their own books, it’s not as easy as you would think. And number five, understand
that as an e-commerce seller you also need to track inventory
and cost of goods sold. And that can get fairly
complicated especially if you’re a multichannel seller, and if you’re trying to track
inventory in QuickBooks. I wouldn’t recommend
actually tracking inventory in QuickBooks at a detailed level. And at that point, then
you have to start looking at some apps to track inventory
separate from QuickBooks. And number five, tracking
inventory and cost of goods sold. That’s another layer of
complexity that e-commerce sellers have to deal with and
it’s something that starts to get fairly complicated
and actually then starts to go into more accounting
rather than DIY bookkeeping. So a lot of things to
keep in mind especially if you’re multi-channel
seller and really considering how you will track inventory in QuickBooks or even if you need to
use a cloud inventory app. So there’s a lot to think about there for inventory and cost of goods. I’ve shared with you the five
things that every e-commerce seller needs to know about
DIYing or doing their own books. I specialize in working
with e-commerce sellers, so check out the description box below for a way to get a hold of me
if you need any assistance. Also check the description box
below for my free resources and the link to join
my Facebook community. If this content is helping you, make sure that you comment, like, share, and subscribe to this channel, so you can get all of my latest videos.

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