As an e-commerce business owner, you’re aware of the responsibility of accounting and bookkeeping. While it is important to have your own understanding of e-commerce accounting and bookkeeping, there comes a time where it’s necessary to engage with an accounting professional or firm to bear some of the load.
In this article, we’ll go through the pros and cons of hiring an e-commerce accountant or bookkeeper, how the stage of business you’re in impacts the decision and what to consider when you do decide to hire an accounting professional.
Pros of hiring an e-commerce accountant or bookkeeper
There are many positive ways engaging with an accountant or bookkeeper can positively influence a business. Here are some pros to consider:
- Increased free time: Having someone dedicated to looking after the financial aspects of your business frees up your time. This means you can focus more on other areas and prioritize growing your business.
- Maintained accuracy: With trained accountants as part of your business, your records will be regularly checked and audited. This ensures your financial records are accurate and taxes are filed correctly.
- Ongoing financial advice: The e-commerce industry can see fluctuations in activity because of a variety of factors. With an accountant or bookkeeper, you’ll have access to consistent advice to help you make better business decisions when these changes happen.
- Overall financial health: Because your accountant or bookkeeper will continually keep responsibility over your finances, they will monitor key metrics and KPIs to track the financial health of your business.
Cons of hiring an e-commerce accountant or bookkeeper
Although there are many benefits to working with an accounting professional or accounting firm, there are also some cons to be aware of before you make a decision. Consider the following:
- Additional costs: Hiring an accountant incurs additional costs to your business. It’s important to ensure your business is at a stage where it can sustain the consistent cost of engaging with an external accounting professional or firm.
- Risk of a wrong hire: One of the risks involved in hiring an accountant/bookkeeper is engaging with one who doesn’t provide a return on investment. For example, an accounting professional may lack e-commerce experience. This can be avoided through thorough research and reading reviews.
- Confidentiality and trust: Hiring someone to look after the financial aspects of your business means they will gain access to sensitive financial information. To find a trustworthy person or firm, it’s important to ask the right questions to determine their level of experience and their integrity.
How your e-commerce business’s stage impacts your decision
When considering when to hire a bookkeeper or accountant for your ecommerce business, there are some things to consider. One important element in your decision is having an understanding of the stage your business is at. Consider the following three stages to determine where your business stands.
- Early stage: At this stage, it is likely you’re working on a limited budget. This may require doing the books yourself initially but as you grow, this can change. Consider accessing resources online to learn more about accounting or bookkeeping processes that you don’t understand.
- Rapid growth stage: In the rapid growth stage, it’s easy to feel overwhelmed as sales increase quickly. It’s critical at this stage to hire help to ensure your business remains compliant and that important financial mistakes aren’t made. The investment in an accountant is important to ensure your growth remains sustainable.
- Mature stage: When your business reaches this stage, you’ll already notice that your financial and tax situation has become more complex. It’s crucial at this stage to have accountants to monitor your finances, auditing and managing your e-commerce bookkeeping.
Key factors to consider when hiring an accounting professional
We discussed before how the stage your business is at has an impact on the different accounting help you need. Once you’ve determined that you want to hire help for your e-commerce bookkeeping and accounting, there are some key factors to consider to determine if someone is the right fit for you. Consider the following questions:
Do they have previous experience with e-commerce clients?
It’s important to check if the person or firm has had previous experience with e-commerce clients. Although they may be experienced as an accountant or bookkeeper, without having experience in the world of e-commerce they may not be as well-informed as someone who deals with other types of businesses.
It’s important to ask the person you’re considering hiring about their experience in the e-commerce industry, if they are familiar with the challenges business owners in e-commerce face as well as the services you would require that are unique to e-commerce businesses.
Do they understand the right tax obligations?
With e-commerce businesses, you might be subject to various international taxes depending on the countries you sell and ship to. This can easily become complicated around tax time for any business. Having an accountant or bookkeeper with a thorough understanding of how different international tax rules apply to you as a business owner is an advantage that will help you maintain compliance long term.
Are they using cloud accounting and other cloud software?
If you’re operating an online business and seeking an accountant who possesses a great understanding of cloud-based accounting software, you’re on the right track. Proficiency in this essential tool is crucial for seamless financial management. By using cloud-based accounting software, you can enjoy a range of advantages such as accessing your books from any location, obtaining real-time information whenever needed, and establishing a cloud-based ecosystem.
A cloud-based ecosystem begins with creating a collection of cloud-based applications and forming an interconnected tech stack that facilitates seamless communication between them. For example, your accountant should have a comprehensive understanding of how to integrate your e-commerce store with accounting software to ensure data is most accurate.
Key takeaways on hiring an e-commerce bookkeeper or accountant
Accountants and bookkeepers can serve as invaluable resources to your business. In particular, when they are familiar with the e-commerce business landscape, they can provide a service that helps your business thrive. Engaging with an accounting professional or firm can be a challenge, but once you consider your business stage and understand the benefits of hiring an accountant or bookkeeper, you’re able to make an informed decision.