xero navigating covid

Selling online with e-commerce?

Here’s why you need an accountant

With many businesses still closed and everyone spending more time online, it’s no surprise that there’s been an explosion in demand for online shopping.

Going online is a great opportunity for small businesses. It can help expand your offering and grow your customer base (including international reach). However, setting up a successful e-commerce platform comes with its own challenges.

It’s essential to have your financial house in order before you start expanding into new areas. It’s also vital to implement best practices from the beginning of your e-commerce journey to avoid headaches down the line.

Fortunately, accountants can offer expert guidance through the world of digital sales.

Breaking down reports

If you don’t know your numbers, you’re flying blind – but Amazon, Etsy, eBay, and other online sales platforms all use vastly different reporting methods. If you’re using multiple platforms, this can quickly become tricky to manage. Fortunately, accountants can interpret the various reports and ensure nothing slips through the cracks.

It’s vital that e-commerce businesses understand the options available for reporting provided by the various selling platforms to obtain correct information. For example, there are so many different Amazon reports. An accountant that is across e-commerce can make sure that you’re using the right one.

Management reporting is also essential for any business launching in a new industry. Financial reporting allows you to view the areas of your business that are profitable and make relevant business decisions. eCommerce is fast-moving and requires sellers to quickly adapt to remain profitable. Entrepreneurs require transparency and easy access to their accounts so they can make quick business decisions.

Juggling tax regulations and legislative changes

eCommerce business leaders have the luxury of storing and sending goods from wherever they like. That can mean keeping costs down, faster delivery times or boosting supplier relationships. However, there are hidden tax implications to where you choose to store your stock if you’re selling in multiple countries.

Choosing an accountant with a sound knowledge of currency, import and export rules, and the compliance issues around that are vital for e-commerce businesses.

Additionally, European governments are implementing rapid legislative changes to e-commerce regulations. A change is coming as Governments’ become increasingly aware that they need to have stringent checks and controls on e-commerce sellers to ensure tax compliance.

It’s becoming clear that at the heart of all strategic planning should be the contingency for prudent advice on taxation.

Currency conundrums

One significant benefit of e-commerce is the ability to sell globally. However, this means that foreign income needs to be considered. While losing amounts to currency transactions can seem minor at the time, these losses can quickly add up. Accountants are in the best position to advise on ways to minimise exchange losses.

Setting up a currency account will enable you to hold funds in a certain currency and then make relevant payments in that currency also, meaning no exchange into your domestic currency needs to take place.

Bring on an accountant

Expanding your business onto an e-commerce platform is a great opportunity. It’s important to work with an accountant who understands online sales and cross-border tax implications to help you avoid any pitfalls along the way.

Visit our dedicated COVID19 area for more resources and inspiration to help you emerge stronger from the COVID-19 pandemic or call the Salisbury Team in Albury-Wodonga in 02 6041 3014.

Source: Selling online? Here’s why you need an accountant – Xero Blog. (2020). Retrieved from https://www.xero.com/blog/2020/07/selling-online-heres-why-you-need-an-accountant/