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Do You Need an E-Commerce Accountant?

Are ecommerce accountants different from regular accountants?

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If you run on one of these e-commerce platforms, consider an accountant that also specializes in businesses on those platforms
Should you have an accountant that has previous ecommerce experience for your online business? These kinds of questions are becoming increasingly common with the dramatic rise in ecommerce business.  In 2020 alone, US ecommerce grew by more than 32% as traditional brick-and-mortar companies made the transition online and new ecommerce businesses started up in record numbers.  Amid this digital push business owners selling online began to analyze their own accounting operations, asking themselves clarifying questions like:
  • Do I have the knowledge base to understand the financial nuances of selling online or do I need a dedicated accountant?
  • What kinds of special ecommerce accounting considerations should I be aware of when keeping the books?
  • Am I making any accounting mistakes with our ecommerce business? And, if so, what are the implications of those errors?
  • How is my tax burden being affected by selling online?
  • What kind of ecommerce accounting financial tools are essential to implement?
Understanding how ecommerce financial operations differ aids in determining whether you need an ecommerce accountant. However, even with that knowledge, an ecommerce accountant’s value will vary based on an individual business’s needs and existing skill sets. business entity question

Relevant Experience

Like any other industry, vertical, or growth stage, having an accountant with ecommerce experience is always going to be a benefit to a company that is selling online. In the same way that a professional services firm, manufacturer, SaaS company, or clothing retailer would want an accountant who is used to the specifics of their industry, an ecommerce company can benefit greatly from hiring an accountant with ecommerce experience. At the core of understanding ecommerce includes advising with and understanding what you sell, where you sell it, and to whom you sell to. While most accountants will understand the issues discussed above, there can be a big difference between an unlicensed accountant who can disappear with your data at any time, and a licensed CPA accountant who is professionally responsible by the State Board of Accountancy to make sure your data is protected. Having a licensed CPA accountant provides you recourse with the State Board for you to report too. If you use an unlicensed person and they disappear, there is no one to call or complain to.

Important Accounting Issues to Be Aware Of

Online selling has considerable differences to account for that can affect your financial health - namely activities such as:
  • Sales Tax - compliance in all jurisdictions;
  • Categorizing chargebacks, expenses and fees;
  • Sales matching Cost of Goods Sold (COGS) from Inventory;
  • Managing inventory count for sales operations and financial cash flow projections;
  • How much to  pay yourself without wasting payroll taxes; and
  • Handling international sales and foreign currency
These ecommerce-specific issues can affect everything from cash flow to financial statements to stakeholder reporting to (importantly) estimating your annual federal & state tax due. Making all of these key pieces of information when running a successful ecommerce operation. A licensed CPA accountant with ecommerce experience is going to have a strong grasp of best practices related to these types of activities. strategy

Ecommerce Accounting Options

As the adage goes, “If you’re asking if you need it, you probably need it!” Owners with less financial acumen are more likely to need an experienced accountant to lean on, regardless of the accountant’s background. And when the details related to selling get more complicated, this becomes even more crucial. So, if you are worried that you may need an ecommerce accountant, chances are you have already experienced instances where you would have benefitted from having an accountant on staff with this kind of expertise, or you are anticipating that need arising soon. Whether you are already behind the ball, or trying to stay ahead of it, it is never too early to start looking for an accountant that meets your criteria. Once you have identified the need for a specialized accountant, now is the time to start evaluating your options. Obviously, hiring a dedicated, top-tier accounting leader is going to be the best route to take, but what if you cannot find what you are looking for or what if your budget will not allow it? Your options include: #1. Utilizing ecommerce accounting software such as QuickBooks Online #2. Hiring an in-house ecommerce accountant #3. Outsourcing to a third-party accounting company that specializes in ecommerce #1 - If there is significant financial experience currently in the company and bandwidth among business leadership, an accounting platform may provide enough assistance to keep the books correctly. Otherwise, an in-house or outsourced hire will be necessary to oversee the company’s accounting activities. #2 - Hiring a dedicated in-house accountant is something to consider only if you’re firm is at the right stage of growth. Having an in-house accountant will give you more control and dedicated resources but comes at a significantly higher cost. Also consider that no single individual will be able to replace a full-team of dedicated specialists.  #3 - And while you can hire an accountant in-house, do you really have the additional time and bandwidth to manage this person? Do you know what you are managing daily to know how this role should be performing? Hiring an outsourced licensed CPA accountant avoids you having more in-house costs and responsibilities. Obviously, hiring an outsourced licensed CPA accountant avoids you having more internal costs and responsibilities, and outsourcing will be more cost-effective than hiring someone in-house. But do you really have the additional time and bandwidth to manage this person? Do you know what you are managing daily to know how this role should be performing?  Communication is usually the number one issue when thinking about hiring an accountant internally. However, hiring a great CPA accounting team will provide you with ongoing communications and avoid you having to sacrifice on responsiveness and ease of communication. The right licensed CPA accountant, partnered with you and your business, will help meet your specific needs with your desired level and style of communication. insogna cpa icon

Get Started Now

When you need an ecommerce accountant, look no further than Insogna CPA.  Our experienced team of accounting and tax professionals has the depth and breadth of ecommerce experience required to keep financials straight, taxes lower and your wealth continuing to build. Contact us now to find out how we can help!

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