Inventory management, calculation of taxes on the sales made from the online shop, and running an online store is a very difficult task. Just like a normal business, E-commerce accounting has to be done.
Calculation of the number of products sold, returned, and exchanged has to be maintained which is not an easy task. E-commerce websites take orders from the whole country as well as from the whole world (in some cases) and it becomes very difficult for them to analyze the sales taxes.
Bookkeeping of e-commerce businesses comes with so many issues, that normal businesses do not come across. Some of the challenges that are faced in bookkeeping for online selling are as follows:
Tracking Inventory through Multiple Sales Platforms: Various online selling platforms have an integrated inventory tracking feature which facilitates to manage and record the stock. In case you are selling on multiple online platforms, then a platform cannot record the sales made from another platform, and a proper record of inventory cannot be made. It makes it crucial to have a common platform to track and record inventory and to update the accounts. A common platform for recording all the sales made and returns is a must for proper bookkeeping for e-commerce business.
Account for alternate sales: There are various modes of payment for online sales. Some are paid through cash, some through debit or credit cards, and some through other modes. The sale proceeds from cash will not be indicated in your bank statement unless you put that money into your bank. The cash sales will be shown in your books but will be missing from the bank statement. While offering gift cards, the payment obtained will be indicated in your bank account statement, but there will be no change in inventory until the gift card is used.
Sales made abroad: With the help of online platforms, you can easily sell your goods in any country. Various online platforms make it simple to sell in different currencies. To note the sales made to a foreign country, the final payment in your bank account, which will be in the terms of domestic currency, an accurate currency rate is required to convert among the different currencies.
There may be a chance that there is some disparity among the amount of foreign sales and the payment made in the bank account, it will be recorded as a profit or loss on forex.
The above-mentioned are some common accounting challenges faced in online business. E-commerce accounting in the USA is available, which helps in recording all the transactions without any error.