5 Signs Your E-commerce Business Needs an Accountant

Sales, stock, supplier costs, payment fees, refunds, and tax can pile up when you run an e-commerce business. You need accurate records for all of these, especially when you sell through your own website as well as marketplaces such as Amazon or eBay. 

Doing the accounts yourself can work when the business is small, but it can become much more challenging once your business starts to scale. You may also find yourself spending more time checking figures than working on products, customers, or sales. 

So, if you’re wondering whether you need an e-commerce accountant for your business, but are still unsure, here are some signs:

1) Your Accounts Take Up Too Much Time

Managing sales from your website, Amazon, eBay, and other platforms can leave you with a lot of transactions to record. Payment fees, refunds, discounts, shipping costs, supplier invoices, and other expenses all need to be included in your records.

HMRC requires businesses to keep records of sales, income, expenses, and supporting documents such as receipts, invoices, and bank statements. 

If you are spending several hours each week checking transactions, updating spreadsheets, or preparing figures for your tax return, an accountant can handle much of this work and help keep your records organised.

2) You Are Unsure About Your Profit

Your total sales do not show how much your e-commerce business is actually making. Product costs, packaging, delivery, advertising, storage, marketplace fees, payment processing, software, and returns can all reduce your margins.

Stock also needs to be recorded correctly, including its value at the end of the accounting period where the relevant accounting method requires it. 

An accountant can separate turnover, direct costs, overheads, and profit, helping you see which products and sales channels are generating money.

3) VAT Is Getting Complicated

The current UK VAT registration threshold is £90,000 of taxable turnover over a rolling 12-month period, or if you expect to exceed that amount in the next 30 days. E-commerce businesses can face additional VAT considerations depending on where goods are stored, where customers are located, and whether sales are made through online marketplaces.

International sales can add another layer, particularly where goods are imported or sold to customers outside the UK. VAT-registered businesses must also keep certain records digitally and use compatible software for Making Tax Digital for VAT. 

An accountant can help you understand which rules apply to your business and keep the relevant VAT records and returns in order.

4) Your E-commerce Business Is Growing

More orders often mean more stock purchases, supplier invoices, warehouse costs, fulfilment fees, staff, and sales channels to manage. You may also be looking at a limited company, employing staff, selling internationally, or adding another platform, all of which can bring new accounting and tax responsibilities.

You may also seek expert financial support from professionals. Some accountants provide eCommerce accounting for online retailers, start-ups, dropshippers, subscription businesses, and larger e-commerce companies.

5) You Are Planning to Bring in an Investor

Investors may look at revenue, profit margins, expenses, cash flow, stock levels, debts, and forecasts before deciding whether the opportunity makes sense.

Your financial records therefore need to be accurate and easy to understand. An accountant can prepare management accounts, financial reports, cash flow forecasts, and other figures that can help demonstrate the current position of the business. 

Ready to Find an Accountant for Your E-commerce Business?

As your e-commerce business grows, keeping on top of the finances can start taking up more of your time. You may be dealing with more sales, VAT, payroll or rising costs while trying to understand how much profit the business is actually making.

If you feel like you need support, speak to a few accountants who have experience with e-commerce businesses. Explain how your business works, where you’re struggling and what you want to achieve. These conversations can give you a better idea of where an accountant could help and whether they’re the right fit before you commit to working with them.

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