If you’re an eCommerce business owner, we’re sure you’ve asked yourself this question: “Should I hire a general accountant or an eCommerce accountant? What’s the difference between them?” This is a classic case of general accountant vs eCommerce accountant. Well, don’t worry – we’re here to explain everything in detail. So, let’s dive right in!
Understanding the Role of a General Accountant
We’ll begin with an overview of what a general accountant can do for you.
A general accountant handles various tasks that keep your finances in check. From recording daily transactions to managing payroll, they ensure every dollar is accounted for.
They prepare your financial statements, which tell you how much money you’re making and spending. They also handle tax matters, identifying what taxes you owe and helping you file them on time. This can prevent you from being penalized for late or incorrect filings.
Plus, they monitor your budget to help you stay on track with your spending. They’ll warn you if you’re spending too much and find ways to save money.
However, while general accountants are skilled in many areas, they might not have the specialized knowledge needed for an eCommerce business. They may not fully understand the ins and outs of eCommerce operations or the best ways to structure your business model.
That’s why an expert eCommerce accountant could be a better choice, as they’re proficient in managing all the unique aspects of online sales. They’ll be able to help you with everything from handling refunds to reconciling income from various sales channels.
Key Responsibilities of an eCommerce Accountant
An eCommerce accountant is responsible for tracking every sale, refund, and expense online. They also use the latest software to keep your financial data organized and up to date.
They know how to keep your accounts aligned, whether you sell on your website, Amazon, or any other platform. What’s more, they specialize in online tax issues, like handling sales tax across different states or even countries.
Now, let’s take a look at the specific skill set of an eCommerce accountant and why it matters for your business.
Specialized Skills of an eCommerce Accountant
An eCommerce accountant is an expert at figuring out sales taxes, online payments, various eCommerce platforms, cross-border sales, and so much more. Here’s our summary.
Sales Tax Mastery
Sales tax is a tax charged on the sale of goods and services, usually calculated as a percentage of the purchase price and paid to the government.
One important concept in sales tax is “nexus,” which refers to a business having a significant presence in a state or region. This means that you’re obligated to pay sales tax there.
An eCommerce accountant knows all about these rules and helps you manage them.
They will accurately calculate the right sales tax for each transaction, ensuring that customers are charged correctly based on where they are. This careful management will keep your business legally compliant and maintain your customers’ trust.
Online Payment Proficiency
eCommerce accountants are experts at managing various online payment platforms, from credit cards to PayPal and other digital wallets. They make sure every transaction is accurately recorded in your financial books.
An eCommerce accountant’s skills include integrating payment gateways with your accounting software. This integration simplifies the reconciliation process, ensuring your financial records are clear and up-to-date.
With their help, you’ll have better visibility into your finances, which will help you make more informed decisions.
eCommerce Platform Expertise
As an eCommerce business owner, you’re probably using some of the most popular eCommerce platforms today, like Wix, Shopify, Square Online, BigCommerce, WooCommerce, etc. These platforms are designed to help you sell online effectively, but managing them can get complex.
This is where an eCommerce accountant becomes invaluable. They can configure these platforms to align perfectly with your business’s accounting needs.
This integration is crucial for keeping your inventory records straight, your sales data accurate, and your customer transactions flawless. All of this means less time fixing errors and more time to grow your business.
Inventory Analytics
Knowing exactly how much stock you have and how quickly it’s selling is crucial. That’s where an eCommerce accountant with expertise in inventory analytics can really make a difference.
They will examine your stock levels, figuring out how often items are sold and how efficiently orders are being filled.
It helps them predict just how much inventory you’ll need in the future, which means you’ll avoid having too much or too little stock. Having the right amount helps you meet customer demand without tying up too much money in products that just sit on shelves.
Cybersecurity Basics
In today’s digital world, where online transactions are the norm, cybersecurity is more important than ever. eCommerce accountants are there to ensure that all your financial transactions are completely safe.
They will set up systems that encrypt financial data, ensuring that all sensitive information is securely stored and only accessible to authorized personnel.
Moreover, eCommerce accountants often work closely with IT specialists to strengthen cybersecurity measures. Together, they implement strategies that safeguard your digital assets.
This helps prevent financial loss and builds trust among your customers.
Cross-Border Accounting
Managing financial transactions across countries comes with its own set of challenges, from guiding trade laws to handling currency exchanges.
eCommerce accountants are experts in these areas. They’ll make sure your global business operations comply with international standards. It’s their job to help you avoid potential legal and financial problems.
They understand the details of tax regulations in different countries, which is vital for setting prices and managing taxes efficiently. This ensures that your business doesn’t pay more than necessary.
If you aim to go global, an eCommerce accountant can simplify entering new markets by managing all the financials of international trade. This support lets you concentrate on expanding your business while they make sure your finances are in order.
Fulfillment Accounting
Fulfillment accounting involves eCommerce accountants keeping a close eye on the costs of storing, packaging, and shipping items.
They make sure these expenses are properly recorded in your financial statements. This accurate recording helps show the real profits and costs, giving you a clear view of your business’s financial health.
By understanding where your money goes in the fulfillment process, they can pinpoint areas where you might save money. It could be finding more cost-effective packing solutions, cheaper storage options, etc. This leads to improved profit margins.
When is the Right Time to Hire an eCommerce Accountant?
If you’re thinking about expanding globally or you have way too many tax obligations and financial data to handle, it’s surely the right time to get assistance. Let’s see how an eCommerce accountant can help you in these areas.
Global Market Expansion
As you start selling to customers in different countries, you’ll face new tax laws, currency exchange issues, and international trade regulations.
An eCommerce accountant can manage everything regarding global transactions, ensuring you comply with international tax standards.
They’ll handle currency conversions accurately and advise you on tax obligations in different markets. This expertise is vital to maximize your profits while expanding globally.
Complex Tax Obligations
Tax obligations quickly become complicated. eCommerce accountants understand the complexities of sales taxes, VAT, and other tax responsibilities that vary by location.
They ensure you comply with each area’s regulations, helping you avoid costly penalties for incorrect or late tax filings.
Also, as your business grows, the tax rules you need to follow can change. An eCommerce accountant keeps track of these changes for you, making sure your business always stays on the right side of the law.
Financial Data Overload
As your eCommerce business grows, so does the volume of financial data. Handling all this data can quickly become overwhelming.
An eCommerce accountant helps by organizing this data into clear, actionable reports. With their expertise, you will understand your business’s financial health and make better decisions based on accurate data.
They can pinpoint trends, track profitability, and identify areas where you can cut costs or boost revenue.
Preparing for Financial Audits
Financial audits are detailed examinations of your company’s financial records to verify their accuracy. They can be conducted by external organizations, including the IRS, especially if there are questions about your tax filings.
During an audit, every financial statement and transaction is observed.
An eCommerce accountant will ensure all records are complete, accurate, and in order. They also know how to present these records in a way that satisfies auditors.
If the IRS is involved, having an accountant who can communicate effectively on your behalf is crucial. They understand the legal and financial language used in audits and can respond to queries with the right documentation and explanations.
What Is EcomBalance?
EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, Ebay, Etsy, WooCommerce, & other eCommerce channels.
We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here’s some free resources:
- Monthly Finance Meeting Agenda
- 9 Steps to Master Your Ecommerce Bookkeeping Checklist
- The Ultimate Guide on Finding an Ecommerce Virtual Bookkeeping Service
- What Is a Profit and Loss Statement?
- How to Read & Interpret a Cash Flow Statement
- How to Read a Balance Sheet & Truly Understand It
Final Thoughts on Selecting the Right Accountant
Now, let’s conclude this with a straightforward comparison to help you make the right choice.
A General Accountant
- Basic financial management: They handle everyday financial tasks such as recording transactions and managing payroll.
- Tax preparation: General accountants are adept at preparing your tax returns and ensuring you comply with local tax laws.
- Financial reporting: They compile your financial statements, giving you insight into your business’s profitability and spending.
An eCommerce Accountant
- Specialized knowledge: Understands the specific needs of online businesses, including managing multiple sales channels and digital transactions.
- Sales tax expertise: Skilled in handling complex sales tax issues across different states or countries.
- Global trade insight: Offers expertise in managing cross-border accounting challenges, helping your business expand internationally.
Overall, our advice is to hire an eCommerce accountant if you want to streamline all your online operations. You won’t make a wrong choice with a general accountant, either; it’s just that an eCommerce accountant knows digital waters way better and could be more beneficial to you.
Be sure to do thorough research, check all the options available to you, and take your time to make a well-informed decision. We wish you the best of success with your business!
