Even though it has a fancy name, e-commerce is pretty simple: it’s purchasing any goods or services online. For example, it’s hard to find someone that hasn’t used Amazon, which happens to be the biggest e-commerce business in the world.
Amazon has changed the e-commerce game with more and more people doing their shopping online. Five years ago, purchasing items through a device like Alexa was considered something reserved only for a time with flying cars and teleportation. But now you can order that pack of light bulbs in less than 20 seconds and have it on your front porch tomorrow.
If you’re an accountant and looking about your next step, have you considered serving the e-commerce business space? Regardless of where you are at, read on about some vital things you need to know about the sector.
Ecommerce is Booming and Will Continue to be Booming
If you were to guess at the percentage of purchases made online, what would your guess be? There is no prize here…but guess anyway!
Right now, about 14% of the total retail purchases are made online. In the next five years, that is expected to climb to 20% of total retail purchases. This turns out to be 1 out of every 5! That’s pretty amazing.
Not only that, but the number of digital buyers is expected to continue to climb as well. More digital buyers mean more and more purchases will be made online.
Ecommerce taxes can be confusing
If you join a business that is only operating in one market then that’s pretty fantastic for you. You’re only going to have to be on top of one country’s tax codes and laws. Sure, there will still be plenty of paperwork to pile through but at least it’s just one.
But then you narrow it down and you think, at least in the US, that each state has its own tax laws. Managing taxes in Delaware is certainly different than managing taxes in Tennessee.
What happens, though, if your company is working in multiple markets around the globe? Are there certain tax restrictions that apply to Australia that don’t apply to Japan? Are you allowed to ship everything? When is tax day anyway?
That’s why e-commerce accountants always have to be on their toes, up-to-date on any new developments and making sure they are aware of the various differences.
Having a little marketing knowledge helps
Even though you may be crunching numbers, dealing with auditors, and going over the budget, it will help to have just a bit of marketing knowledge as well.
In a digital world, it can be difficult to have one’s e-commerce business stand out from the rest. Apart from the big names, there will be plenty of other competitors out there vying for all of those digital buyers.
You aren’t going to be an expert, but it can help to have an outsider’s voice in the room from time to time. Help your business choose the domain name, weigh in on email campaigns, and give honest feedback about ad designs. Don’t worry so much about SEO and analytics, you can always act as a breath of fresh air or a litmus test for certain projects.
Inventory and Returns Will Give You Headaches
One of the good things about being in the e-commerce business is you’re going to have plenty of product to ship around. One of the more frustrating things? You’re going to have plenty of product to ship around.
There’s plenty of other costs to factor in with your inventory: costs for preparing the product, costs for wrapping the product, costs for shipping the product and so on and so forth. It can be hard to keep track of at the beginning. Managing your inventory is a tall task because you will have to track so many items over different markets and regulations, just like your taxes.
Returns are perhaps the biggest headache for any e-commerce accountant. Sometimes, returns are a normal part of the business because an item was damaged on the way. As an accountant, you’ll have to decide when to write off the return and make sure the inventory isn’t expensed twice. You’ll have to double and triple-check everything in order to make sure your books are up to date and correct.
You’ll need great software
Most people like to save money, but there are some things that are worth investing in. A solid mattress is one of them. You’re going to be spending ⅓ of your life in bed, so make it worth it.
The same comes with your accounting software. You don’t want to skimp out on one that may or may not get the job done. Be sure and do your homework on which software will work best for you. Plenty of programs offer free trials, so play around with one until you find the one you’re most comfortable with.
You’re going to need them to track cash flow, help with inventory, and every little thing in between.
For more great advice on all things accounting, check out the other blogs on Accounting Path.