Bookkeeping and accounting is an inevitable part of running an e-commerce business but when should you start to find professional help? The right accounting professional can significantly improve your profitability and longevity. However, you have to weigh up time and money, as well as when external expertise will become most valuable to you.
In this article, we’ll go through the difference between a bookkeeper and an accountant before delving into what’s suitable depending on what stage your e-commerce business is in. Then, we discuss the pros and cons of outsourcing your bookkeeping and accounting. Finally, we give some practical tips on how to find an accounting professional.
What’s the difference between a bookkeeper and accountant?
Before we delve deeper into when to outsource to a professional, it’s useful to understand the differences between bookkeeping and accounting. Bookkeeping generally refers to the functions involved with recording financial transactions. Bookkeepers make sure records are up-to-date, accurate and organised.
On the other hand, accounting involves using the information gathered from bookkeeping to analyse and provide insights on the financial situation of a business. In many scenarios, these two functions overlap. There are many types of accountants such as a tax accountant or management accountant.
Early stage e-commerce business
If you’re in the early stages of your e-commerce business, maybe it’s still a side hustle or you’re still working by yourself, you can generally manage your own bookkeeping. At this point, you’re likely doing less than $20,000 per month in sales revenue. The world of taxes is confusing and it will definitely be useful to have an accountant that helps with tax returns.
For bookkeeping, there are tools you can use to manage on your own. Amaka’s accounting integrations allow you to connect your e-commerce platform to QuickBooks, Xero or MYOB. It automatically syncs transactions to the right accounts and speeds up bank reconciliation. Having a specialised accountant at this stage can be helpful but definitely isn’t necessary.
Growth phase e-commerce business
Once you’re dedicating all your time to your business, maybe you even have employees under your wing, having an accountant becomes significantly more impactful. At this stage, you might be making around $20,000 to $50,000 in sales revenue every month. Timely financial insights, cash flow forecasting and other areas of accounting are increasingly complex and important.
In the growth phase of your e-commerce business, working with an accounting firm who specialises in e-commerce will help you level up your processes. With an intimate knowledge of your finances, they can give recommendations that help you scale. Accountants in this space can guide you through how to make bookkeeping easier as well.
Established e-commerce business
Finally, for established e-commerce businesses with multiple sales channels or massive sales volumes, an accountant becomes pretty much necessary. You’re generating over $50,000 a month in sales revenue and probably have a constantly evolving inventory. It’s time to make sure your entire digital ecosystem of apps are communicating and running smoothly.
At this stage, an accountant is crucial to help you drill down on what’s performing well and what’s not. Get breakdowns based on category, channel, SKU, etc. and figure out what activities are giving you the best return on investment. At this stage, entirely outsourcing your bookkeeping makes sense as well. This gives you more time to focus on your core business.
Pros and cons of outsourcing your e-commerce accounting
When it comes to the question of getting external accounting help vs. doing it in-house, there are a few pros and cons to discuss. For e-commerce businesses that don’t require someone working on your books full-time, it’s typically much more cost-effective to outsource rather than have a dedicated employee.
The next major benefit of outsourcing your e-commerce accounting is the expertise. Professionals tend to have a wider range of experience and can provide a higher standard of work and more nuanced insights into your business. This then allows you to use your time and internal resources where it really makes the most difference.
Despite the many advantages, there are some disadvantages as well. Outsourcing means you have to give away some control. It can be difficult to find a professional that you can trust with the financial health of your business. Secondly, it can be difficult to maintain communication with an external accounting professional and even more difficult if they’re from a different location.
How to find an e-commerce accountant near you
If you’re looking for an accounting professional, we have a directory of firms who specialise in e-commerce and technology. In the directory, start by choosing your location. Then, you can filter by the e-commerce platform you use such as Shopify, Amazon or WooCommerce and/or filter by the accounting software you use.
Want to discuss your options with a human? You can reach out to one of our friendly integration experts through a free 30-minute Zoom call or through our Help Desk. Not only are they specialised in our accounting automation solutions, they can match you with one of our accounting advisors based on your needs.
For those wanting to do a search on their own, there are a few different methods. Of course, you can do a basic Google search. However, word of mouth can be a great way to narrow down options. You can look at forums or Facebook groups for e-commerce, your e-commerce platform or your accounting software. If you can find ones based in your city, even better!
Key takeaways when to find an accounting professional
Ultimately, hiring a bookkeeper or accountant for your e-commerce business at any stage can be useful. However, in the earlier stages, you may only need someone to do your taxes. As you start to grow, it becomes more and more important to find a specialised e-commerce accountant that can really help you organise your finances.