Best Accounting Practices for an Online Business
As technology has progressed, so too has the way many people do business. From watching tv to scheduling home services to ordering clothes & groceries to outsourcing work, it is all available online now and can be done across state lines or even around the world. With the global pandemic in recent years, it has pushed the level of online businesses to all new highs and changed forever the way business is conducted and shopping is made possible.
If you are one of these many businesses, you may have questions regarding accounting practices for online businesses. While there is a lot to consider, below are a few essentials to help keep you moving in the right direction.
Separate Business Account: This may be one of the most important steps you can take as a business owner. It is important to keep your personal and business expenses separate, otherwise things may get very confusing, very quickly. Even if you are just a small business, you should have separate accounts or your finances will become hard to track. Keeping your personal and businesses separate will give you a better idea of your cash flow, which will make your life easier in the long run. Utilizing a company debit or credit card will also help keep your expenses straight and prevent you from going into debt personally for business needs.
Cash Flow: It is important to pay attention to the money that is being moved around within your business. Cash flow is tracking the money going out of your business to pay expenses and the money coming in from customers. Your cash flow acts as a window into how successful your business is and whether you have enough to invest in more inventory or new equipment. Keeping track of your cash flow will also allow you to spot any inaccuracies, so you don’t have larger issues in the future.
Accounting Software: Installing the correct accounting software can greatly help your business. While there are several great softwares you can install, it is important to do your research and install the one that best fits your needs. At Perfect Balance, we are a QuickBooks Certified ProAdvisor and can help you set it up and learn how to use it properly to prevent accounting issues. Many of these softwares have:
- Easy reconciliation for various transactions
- Cash flow integration
- Ability to sync your inventory with the software
Manage Inventory: It is important to keep track of your inventory, how much is coming in, how much is being sold, how much you have of certain items, etc. Keeping track of your inventory is a great way to figure out what the minimal inventory you need on hand is, and then you can be sure you never drop below this number. This is also a good way to ensure that you always have backup product, in case of lost deliveries, product damage, etc.
If you have further questions, or are just looking for a reliable accountant to help you set up accounting services for your online business, contact our experts today!