Working with an experienced bookkeeping firm to keep your financials in order and most importantly, accurate, is a wonderful asset to your business. Not only can they save you time by not having to handle these activities yourself, they can prepare all your financials so when it comes time to meet with your tax accountant, you’re ready, and Boom, taxes are done! What a great way to reduce that year-end anxiety!
The Importance of Connecting with the Right Firm
I can’t stress enough, though, the importance of connecting with a bookkeeping service that understands the ecommerce business. While the basics are the same regardless of the type of business, there are many aspects of an ecommerce business that are unique. Understanding things like Amazon and other online merchant fees, seasonal inventory, product sourcing and freight/shipping can make a huge difference when recording transactions in your accounts. Proper recording, also referred to as coding, can save you many headaches throughout the year, and money at tax time. On the other hand, the wrong coding can cost you…big time!
We recently audited last year’s books for a new client. In doing the audit, we determined that their previous bookkeeper had recorded revenue incorrectly and they paid taxes on over $200,000 of income that did not exist. Needless to say, our client is now amending their tax returns.
Profit First Experience is a Huge Bonus!
For Profit First ecommerce businesses, it’s even more important to have the right bookkeeping team in place. Because of the multiple bank accounts and transfers from one account to another, they need to have a clear understanding of how and why this method works so they understand the decisions that are made.
If you’re not using a bookkeeping firm, but instead are taking care of all the recordkeeping yourself, I encourage you to consider making a change as soon as your business will support it. Especially if bookkeeping is not your thing. Partnering with an experienced ecommerce bookkeeping firm will allow you to focus on what you know best—building and growing your business.
Can You Afford to Hire a Bookkeeping Service?
In a previous blog, I outlined the Profit First steps involved in determining if you can afford to hire a new team member. You can use the same steps to help you decide if your company can support an outside bookkeeping service. Once you’ve done the work to determine if you can afford the help, how do you go about finding one that has the ecommerce experience you need? What professional and personal traits should you look for in someone that you’re going to trust with your most personal and confidential information?
When searching for new team members for bookskeep, I always keep our company values high on my list. Along with general accounting knowledge because we train them on the ecommerce skills, I also look for qualities in the individual that align with the values we established early on. Depending on your level of accounting skill and how much of a learning curve you’re open to, I recommend you look for a bookkeeping service that—
- Exhibits the values and traits that are important to your company, such as integrity, trustworthiness, good communication skills, a desire to learn and embrace new technology, etc. And always check references.
- Possesses general accounting knowledge and capability with QBO or Xero.
- Is fully familiar with the unique needs of an ecommerce business; sales channels and inventory accounting.
- Understands the Profit First method and how you are using it in your business (if you’re not using Profit First, shouldn’t you be?)
Take the Time to Find the Right Firm
Using this list as a guide, create your wish list first and then begin your search. Be careful not to get in a hurry to fill the position with just anyone, hoping they will “catch on.” Skills are important and you deserve to have the right people in the right positions. Take your time and the results will show that it was well worth it.
If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you!