E-commerce only represented 7.4% of global retail sales in 2015, but that figure rose to 18% in 2020, and we expect it to reach nearly 22% by 2024. As these numbers continue to grow, it encourages more people to find efficient ways to start their businesses.
As you scale your business, you need to find professional input for your company's accounting sector. For this reason, you must hire an accountant. They can explain your business accounts and help you make the right choices for your business's growth.
This article will discuss five reasons your e-commerce business needs an accountant.
1. Helps You File Tax Returns
As your business's turnover surpasses the tax threshold, you must register for value-added tax (VAT) to send monthly, quarterly, or yearly returns. Several companies pay their VAT quarterly to pay their collected VAT while offsetting what they've paid out when making purchases.
You may also need to complete self-assessment, corporation tax returns, and payroll requirements.
Accomplishing these tasks can be daunting for most business owners. Fortunately, you can avoid errors and penalties and file on time when you hire an accountant.
2. Can Determine between Sole Trader or Limited Company
Several people set up an e-commerce business because they think it's a straightforward process. They only need a vacant room in their home and a mobile phone if they want to work as a sole trader. However, an accountant might disagree because you'll be shouldering the risks and heavy responsibilities alone.
Your accountant may explain why a limited company is best for your e-commerce company. While it may be more complex and costly to maintain, it may help you pay less tax on the company's profits and reduce the business risks you'll shoulder. It also frees you from responsibility when the company takes a bank loan.
3. Deals with E-commerce Taxes When Selling Overseas
If you have customers from overseas, you must also ensure your business complies with other countries' customs fees and value-added taxes.
These requirements can be confusing, especially if you're the only one handling them. Fortunately, hiring an experienced accountant can help you navigate these schemes and work with them daily.
4. Can Determine If Cash Basis or Accrual Accounting Works Best
Cash basis accounting is the most basic business accounting form, where you only enter transactions into your accounting based on your cash flow. However, this method makes it challenging to determine how much you owe for stock because it's prone to mismatches.
It’s best to consider accrual accounting for e-commerce retailers. This method accounts for the purchases once your buyer receives the goods and accounts for sales after they place the order, ensuring you always know what's going on. However, accrual accounting is more complex for starting e-commerce owners.
Fortunately, an accountant can speed up the process and ensure it fits perfectly for your business operations.
5. Understands E-Commerce Earnings
Every payment you receive online means having several deductions. It's also crucial to remember how to account for them and get your business taxes right. Fortunately, hiring an accountant can help you better understand these important terms and use the information for your company's growth.
An accountant can also help you resolve issues handling net deposits, such as getting paid in batch payments, several different transaction types, and platforms not collecting taxes on your behalf. They can also help you sell across other countries or areas.
Accounting for a Successful Business
Running an e-commerce business allows you to reach a broader target audience. However, this expansive venture comes with a heavy responsibility. Hiring an accountant can help you make the right financial choices for your company.
If you need an accountant in NYC, look no further than Yasso Bookkeeping Solutions! We offer reliable accounting and bookkeeping services to help small businesses. Schedule a call now!