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What are the phases of an eCommerce Business? Stage 1: Profits Under $100,000 (Part 2)

Not sure if someone is a CPA? Just search your state board of public accountancy and look up the person’s name. Most people who call themselves “accountants” or “bookkeepers” aren’t licensed CPAs, which means you might not get the transparency and protections a CPA provides.

Having a knowledgeable CPA is just one part of the equation; the other part is ensuring your CPA understands eCommerce and its nuances. “Firms that can offer more than just compliance services will stand out as the industry evolves.” Your CPA should have the same priority as you: helping you reach your goals.

🚩 Getting Started

First on your list is to create a solid business plan. The U.S. Small Business Administration (SBA) agrees: “A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business.”

Your business plan is also the first document you can show your CPA. A comprehensive business plan usually includes:

✅ Executive summary
✅ Company description
✅ Market analysis
✅ Organization and management
✅ Service or product line
✅ Funding requests
✅ Financial projections

But let’s be honest—how many people actually create these business plans before starting a business? In our experience, very few. The most important thing is keeping an updated cash-flow forecast.

While having a plan is a good idea, you don’t need all of this to get your first online sale. Sometimes, eCommerce businesses just happen. You buy some products, list them online, and—boom! You’re in business. Just don’t forget to hire a CPA.

Also, consider using third-party applications to manage your multiple online selling channels; this is an area where we can help you. Many eCommerce businesses move quickly through the growth phases, and you’ll want to be ready to succeed as your business expands.

Ready to take your eCommerce business to the next level?

Our team of eCommerce accountants is here to help. Let’s make your business thrive together. Contact us now and let’s start achieving your goals!

What are the phases of an eCommerce Business? Stage 1: Profits Under $100,000 (Part 1)

You’ve decided to take the leap and start an eCommerce business. Congrats!

Whether you’re just thinking about selling online, have started dipping your toes into online selling, or your business is taking off after your first “big” month with profits trending over $30,000 this year, this is the start of your hard work and investment into building your business to reach your goals. It’s time to nail down the big ideas, strategize over your growth targets, and develop a well-thought-out business plan. Clear out that storage shed or guest bedroom and begin accumulating stock. It’s time to take action so that you can live out your dream of building your own successful eCommerce business.

In the early days, you’ve likely done some homework and figured out what’s important: marketing your products, determining what capital to use to start, and getting those first sales in the door, especially during the fourth quarter. Achieving these three goals is crucial to kick-starting your success. You’re probably doing all your own sourcing, buying, pricing, and listing online, as well as managing fulfillment (or maybe utilizing a co-packer), customer service, inventory management, and sales taxes. And that’s before you even think about completing all the back-office tasks, such as accounting, inventory count, and minimizing your taxes.

✅ Accounting 101

Getting your accounting set up from the beginning is crucial for your eCommerce business. The more you delay this step into Phase 2 (or worse, Phase 3), the more mountainous the amount of work required to clean up this information—and the significant cleanup costs that come with it. Have you considered how you’ll provide your lender with financial statements if you’re seeking financing or a mortgage?

Accounting isn’t just syncing and categorizing your transactions. Are you properly recording gross revenues? Most merchants only sync net amounts to their books. If you value your time and would rather automate as much accounting work as possible, the costs easily outweigh focusing more of your attention on selling more products online. Maybe you manufacture or assemble your products. What about recording COGS from inventory to match your revenues? Or maybe you’re reselling products by arbitraging? With all the platform fees, do you have any easy way to determine true net profitability per product sold, with overhead included?

Then there’s your business structure to consider. Many start out as a DBA (Doing-Business-As) with their county registration. Just remember, this doesn’t protect your business name with your state, so if you’re building a brand or storefront name, someone could register it too and easily compete against you—or worse, legally claim your brand name. And if you’re selling on Amazon and/or other platforms, changing your business name and EIN# can potentially cause you to lose all your reviews, forcing you to start from scratch again from a marketing viewpoint. Setting up an LLC is beneficial in most cases when starting out. We can help advise on the best structure for tax strategy planning so you can maximize your tax savings with your eCommerce business.

💖 Client Testimonial

Insogna CPA has done our Amazon Business taxes for the last two years. They are the best accounting team that we have worked with to date and we plan to be long-term clients. Excellent staff who truly care about satisfaction and diligence. Great for all Amazon sellers.”
– Nick Ehle, Owner

You may be selling through eBay, the Amazon Marketplace, Etsy, and/or perhaps your own website. 🛍️🛒

Your customers have mostly stumbled upon you or found you through word-of-mouth, and you wish you could focus more of your time and efforts on marketing and growing, instead of worrying about educating yourself in legal and CPA stuff. Expertise is developed over many years in business. So, the value you pay to a professional will help you alleviate any unnecessary time figuring this out for yourself and hoping you made the right decisions. The potential of losing your customers is a real concern. We have seen this before, where someone quickly set up shop on a marketplace and did not think through the long-term consequences, such as their business evolves.

Choosing the right legal structure (LLC or Inc) is not only important for liability protection and taxes but is also very important to set up when initially creating your Amazon store online. To sell on Amazon, for example, you are best off having an Employer Identification Number (EIN) rather than using your Social Security Number as a DBA (doing-business-as) entity. Setting up your entity from the start is recommended because switching after you are already established on selling platforms can be very costly and time-consuming. These small details are exactly what an experienced CPA can help advise you with, and why many eCommerce business owners look to partner with a CPA early in their business growth.

Though you want a CPA who can deliver the best advice to your business, you’re also probably working with a limited budget and are interested in getting the most bang for your buck. That’s why it’s essential that you join forces with a licensed professional, like us, from the beginning to avoid costly ‘catch-up work’ in the future as you grow.

There is a host of what we like to refer to as “Craigslist bookkeepers” out there; people who advertise their services as though they are professionals but do not actually hold a license. They also cannot provide you with the state board protections that a licensed CPA can, the same protections that provide greater transparency and allow you to trust that your information will not just ‘disappear’ one day when you are not able to get a hold of your ‘Craigslist bookkeeper.’ If you decide to spend your hard-earned money on professional services, be certain that you’re getting the best professionally trusted advice and expertise.

Ready to take your eCommerce business to the next level?

Our team of accountants is here to help you every step of the way. Let’s chat and see how we can make your business thrive in 2024 and beyond.

What are the phases of an eCommerce Business? Stage 4: Profits $ 1 million+ (Part 2)

Expanding into the global marketplace? You’re not alone. Many eCommerce businesses are diving into omnichannel marketing, content personalization, and automation. “At this level, you need a combination of resources to run your business most effectively” (Scharf, 2018).

❓ Where do you go from here?

Outsourcing might be necessary for global expansion operations. A strong CPA team is essential to strategize the financial impacts of this growth. This is where a fractional CFO can make a significant difference.

Your accounting team is monitoring your numbers in real-time. Your virtual controller is helping forecast and plan, while your fractional CFO ensures every financial box is checked when expanding into omnichannel and international sales. “In the past, complicated taxes and high shipping costs made expanding sales overseas a major challenge for SMBs, but new technology has lowered the barriers for small businesses looking to take advantage of untapped markets” (D’Angelo, 2018).

💻 Technology at the Core

Technology will be central to your eCommerce business’s growth. From accounting to inventory to sales to taxes, you need a strategy to ensure all systems communicate efficiently, minimizing unnecessary human interaction. “The Shopify/ReCharge combination for subscription recurring billing comes to mind. These services work great together, but they become questionable as massive growth occurs. This is mainly due to the two components not being able to pass data back and forth in real-time, making manual data entry and reporting a bottleneck for scaling” (Hubbard, 2020). With massive growth, it’s crucial to reassess the technological foundation supporting your business processes and customer experiences.

Overhauling your technology systems and network processes might feel tedious, but it’s a worthwhile pursuit. Ensure your software offers the best consumer experience on the front end and accessible, collaborative back-end systems. Your business process commerce architecture will help your team communicate better, work more efficiently, and stay agile in meeting your business goals.

Refining your tech stack is an excellent way to increase performance and multiply profit margins. This allows your CPA team to perform more tasks through software automation, accessing real-time data to enhance operational capabilities and financial health. “Be diligent with these details because they are what can make or break you” (Thomason, 2020).

🏅 Outstanding Service, Knowledge, and Support

“Outstanding service, knowledge, and support. I highly recommend this firm for personal or business tax or financial assistance. A big benefit they offer over others is they run everything digitally, so there are no more physical papers to deal with – yeah!! Great job Insogna – hope I get more opportunities to work with you and recommend others do also.” – Jerome H., Client

To continue scaling your business, invest in researching new technologies to support your growth. “A focus on scalability means investing in the business’s overall commerce architecture, the ecosystem of software components that operate the business. This includes the e-commerce platform, CMS, ERP, CRM, OMS, PIM, marketing suites, analytics and reporting, etc.” (Hubbard, 2020). A valuable CPA team can advise on your tech stack, ensuring maximum technological efficiency. Streamlining at this level makes your life easier and can put your personal wealth on autopilot as you surpass your projected annual profits.

What’s Your Next Phase?

Depending on your goals, your Phase 4 will look different. Whether you aim to maintain your lifestyle, grow marginally each year, or accelerate into omnichannel eCommerce sales, an experienced CPA team is invaluable. They exist solely to help you achieve your goals.

Whichever phase your business is in today, don’t entrust your success to unlicensed bookkeepers. Get a CPA firm aligned with your vision that charges a fixed monthly price for all your needs and provides unlimited communication and access.

Get your eCommerce business on the right track. Contact us today and let our experts guide you to success.

What are the phases of an eCommerce Business? Stage 4: Profits $ 1 million+ (Part 1)

You’re not just running a business; you’re managing an enterprise. With multiple channels in play and a growing team, your processes must communicate seamlessly to drive strategic ecommerce decisions.

Does this sound like you?

👉 Your online business is booming.
👉 You’re expanding your HR needs with a growing staff.
👉 You’re seeking strategic advice to grow and retain your wealth.
👉 Your need for commercial space is increasing.
👉 You’re facing higher taxes and want strategies to minimize them.
👉 You’re contemplating expanding sales channels.

Your vision is vast, stretching towards new horizons. Yet, your workdays are long, and the pressure is mounting. Delegation feels challenging as you start hiring the right people for your thriving eCommerce company.

Your business has likely outgrown your home, and you’re eyeing more commercial space. While you’ve funded your growth so far, additional capital is essential to reach the next level. Your energy is high, but profits aren’t meeting your expectations—yet.

“An established business proves its survival in a competitive marketplace, but competition remains fierce as it evolves” (Hubbard, 2020). Now isn’t the time to rest. Continuous innovation, efficiency, and real-time financial forecasting are crucial. This is where a trusted advisory CPA can make a difference.

We advocate for an annual retirement contribution strategy, treating your business’s value as a bonus upon sale. Over the years, this approach builds significant savings and growing dividends, allowing you to retire on your terms—not just when you sell your business. – Chase Insogna, CEO of Insogna CPA

🛠️ Building a Successful Team

The first step to growth is people. The right hires are crucial as your 24-hour workday can only stretch so far. While working nonstop is possible for a while, burnout and health issues can arise. Today’s technology makes outsourcing easier than ever.

Hiring a CPA firm with expertise in accounting, payroll, virtual controller, fractional CFO, and tax strategy needs can be transformative.

An immediate benefit is having a full accounting department at your disposal. “For about the same price as hiring a bookkeeper, you can get an entire accounting department to support you” (Scharf, 2018).

💻 Embracing Omnichannel Marketing

Marketing today involves multiple devices and channels—social media, email, phone, and more. Omnichannel marketing integrates these interactions, delivering cohesive brand messages and reducing friction in the buying process. Companies with omnichannel strategies retain 89% of their customers, compared to 33% for those without (Bullock, 2020).

💡 Client Testimonial

I started with this team for my small business. They explained everything clearly and handled our personal taxes too. We’ve continued with them through many changes—closing my small business, job changes, hiring nannies, and moving across the country. Their pricing is straightforward, and they clearly know their stuff!” – Maggie J., Client

✅ Streamlining Your Accounting Needs

Instead of multiple outsourcers, a full accounting department ensures efficient, effective communication among key financial players. This synergy supports your business and personal goals, freeing you to focus on growing your eCommerce venture and enjoying life beyond work.

✍️ Planning for the Future

With your business established, you can now focus on personal wealth and retirement goals. Many business owners we meet lack a retirement plan beyond their business. This is misguided. Rarely does a business sale capture all the hard work invested.

Your accounting team can help you invest profits wisely. “Whether planning for a loan or monthly expenses, understanding cash flow is essential before making significant investments” (Odjick, 2020). Your CPA can provide insights into your current cash flow and how to stretch it to meet your goals.

Next Steps in Your eCommerce Journey

As you consider expanding to multiple selling platforms, omnichannel marketing becomes increasingly relevant. Leveraging various channels can enhance customer engagement and drive conversions.

Let our team of eCommerce accounting experts guide you through every stage of growth. Contact us today to discuss how our personalized strategies can help you achieve your business and financial goals. Whether you’re looking for business accountants, ecommerce accountants, or seller accountants, we’ve got you covered. Let’s build your future together.

What are the phases of an eCommerce Business? Stage 3: Profits $ 500,000 – $ 1 million (Part 2)

Remember that business plan from Phase 1?

This phase in your ecommerce business journey is the perfect time to assess cash-flow forecasts to plan for your business goals as you move into becoming a $1M+ online seller. This is where you present your current financial state, which helps with securing funding (if needed) and getting that commercial space you’ve had your eye on — because your house simply cannot handle another delivery.

Once you’ve acquired commercial space, you’re likely looking to hire additional people, if you haven’t already staffed up while working from home. Have you considered employment or contractor agreements? Benefits to keep talent motivated and working with your business? Additional insurance needs? These are all important questions as you grow your e-commerce business team from 2 to 10+ people. Your CPA is the best person to advise you on setting up payroll in a way that allows for expansion without cutting corners or missing employer regulations.

Tax strategy is another vital service your CPA can help with, especially as your profits are increasing rapidly.

A CPA also knows the deductions you can take as a small business owner and can maximize those deductions for you, minimizing the overall amount you have to pay on taxes.

Without professional, ongoing, forward-looking support, you might end up paying more taxes than you legally need to.

A CPA sets you up for success by forecasting cash-flow, determining estimated taxes to pay, and advising on deferred retirement options and personal wealth growth.

Speaking of strategy, strategic planning is the highest leverage benefit that a CPA brings to your business at this growth stage.

“In this third stage of the e-commerce lifecycle, reinvigorating your company’s momentum and growth should always be strategic.”

This is an area where CPAs excel, and you want a CPA who understands your e-commerce business.

Depending on your strategy or the direction your business is moving in, your CPA will make both short- and long-term predictions about your e-commerce future.

They will also provide advice specific to the phase your business is in now, as well as the phases you aim to reach. CPAs can provide you with a general managerial accounting background, plus access to the quantitative data you need to make well-informed business decisions. This may include setting profitability goals, creating acquisition strategies, and developing risk management processes.

As your business grows and you begin to move into Phase 4, a qualified and professional CPA team will provide you with invaluable insight and wisdom for your company’s goals. With retail e-commerce sales expected to reach $4.2 trillion in 2024, up from $3.5 trillion in 2019, the future is bright.

Why You Need a CPA for Your eCommerce Growth

If your goal is to continue growing your e-commerce business into Phase 4, you’re likely already seeking advisory and strategy help.

The right CPA firm is an invaluable expert to have on your advisory team, helping you strategize and reach your goals.

Ready to take your e-commerce business to the next level? Contact us and let’s get started on your journey to success.

What are the phases of an eCommerce Business? Stage 3: Profits $ 500,000 – $ 1 million (Part 1)

Does this sound like you?

❓ Your online ecommerce business is outpacing your growth projections.
❓ You may have (or be looking to add) multiple employees.
❓ You want strategic advice on how to minimize your taxes before year-end.
❓ You’re aiming to push your sales over \$1 million, seeking efficient technologies and cash-flow forecasting to meet your revenue goals.
❓ Your business is taking over your home, and you’re running out of space.

At this phase in your business growth, take a moment to pause and congratulate yourself.

Yes, you may:

💡 Want to grow your business even more.
💡Have a to-do list longer than a novel.
💡Have more responsibilities and stressors than ever.

But that’s exactly why it’s crucial to stop and recognize how much hard work you’ve invested in building this company from the ground up. If you can’t appreciate your own hard work, why should anyone else?

That being said, you’re likely facing a whole new variety of challenges, from how to save money on taxes to hiring employees to cash-flow forecasting for the next Q4.

“You need to understand your data and keep an eye on key metrics to ensure the numbers are going in the right direction.”

A licensed CPA can become a vital asset to your business’s goals, tax strategy, and financial future.

For a business person, hiring a CPA is like constructing a financial “safety net” and securely placing it beneath your holdings. It’s a form of business insurance you can’t purchase from an insurance company.

But you’re not just gaining procedural and technical knowledge; you’re also expanding your team — the people who have your back when you need financial direction and business advice.

It’s astounding to new entrepreneurs that businesses can be built from the ground up by a small, select number of people.

Having a CPA on your team is invaluable due to their role as both a soundboard and a strategist. Seeking an objective opinion on your business’s state of affairs is one of the best ways to stay grounded and supported as you grow your eCommerce business.

“Look actively for mentors — their advice can be priceless, even for little things like acquiring business licenses. One of the smartest decisions I ever made was finding someone who could show me the ropes.”
– Darren DeMatas, eCommerce CEO’s founder

Even if you’re determined to figure out everything yourself, a CPA advisor can help guide you through uncertainties, complex processes, and maximizing tax deductions without taking away any of your authority over business decisions.

An experienced CPA provides strategic context for your decisions, which remain yours to make, and can significantly impact your financial future.

Why You Need a CPA for Your eCommerce Growth

In addition to having a CPA as a strategic partner, they can help you make sense of numerous complicated processes. Running a successful eCommerce business means tracking your business and personal finances.

Just like your health is checked by a doctor, your assets should be checked for general wellness by a licensed CPA.

Start by determining your net worth and seeing its trend.

Next, calculate your debt-to-income ratio.

Armed with these numbers, you’ve completed the most challenging step.

You can then track your spending and know where your money is going. This way, you’ll know if you’re overspending.

After that, you can set up an emergency fund account and focus on your investment strategy. But first, ensure your financial health is… well, healthy!

Assessing your current wealth is vital for managing your cash flow and helping grow your business.

A CPA advisor can help create a budget for your business and personal finances, determine how much to pay yourself from your company, estimate your income taxes, and identify opportunities for tax-deferred savings to minimize your current year’s tax burden as much as legally possible.