eCommerce is growing exponentially in the UK each year. In fact, 2023 saw the largest annual growth in eCommerce businesses since the pandemic in 2020 – a staggering 57% jump from 2022.
With so many digital businesses (163,000 as of 2023), it’s an exciting sector to be in – and you hardly need us to tell you that. But what you may need some help with is your accounting. It’s not as flashy as your digital marketing or client outreach strategies, but it’s at the heart of everything you do, so let’s go over some strategies that will help you right away.
The challenges
There are multiple big challenges that eCommerce businesses face.
VAT
VAT is a tax applied to certain goods and services. You have to apply the tax to your goods and services if you have an annual turnover of £90,000 or above. The challenge is how complicated VAT can be, especially for those who are new to the system.
If you are registered for VAT, you have to add the tax to your prices and then pass on the tax to HMRC in your returns. In essence, you’re collecting tax for HMRC. On the plus side, that can give you a temporary boost to your cash inflows; on the downside, it increases your workload.
International sales
There’s a lot of confusion around exporting. VAT, Duty, all types of regulations. It’s easy to be put off exporting but there’s a big world out there and with the right help it’s waiting for you.
Just be aware that it’s not as simple as putting your product in the post.
Handling multi-channel sales data
Managing sales data from multiple online platforms and marketplaces can be overwhelming, and without a strong financial tracking system in place, it’s easy to begin struggling with record maintenance, leading to errors in reporting. And if there are errors or gaps in the data, that will make it difficult to keep up with your reporting requirements, and prevent you from making decisions based on accurate data.
Tax compliance
You’re a business owner, focused on increasing your outreach and sales – not on accounting matters. Nevertheless, you will always be the one responsible for ensuring your business is submitting your tax returns on time. But putting together your tax return can be a time-consuming and stressful task, taking you away from your business.
Accounting solutions for eCommerce businesses
A robust accounting system is vital for managing your finances efficiently. Here’s what you can do to enhance your accounting strategy:
1. Take financial management even more seriously.
What we believe is that you should put your financial management and accounting higher on your priority list. It seriously can’t be at the bottom – that’s an easy way to lose track of what is going on with your finances, and if you don’t know what’s going on, you’re no longer in control.
We would therefore suggest consistently keeping your records up to date so you don’t have to rush at the last minute. This will reduce errors and save you time, as you’ll be organised and ready for anything.
2. Training for your staff
You shouldn’t have to do everything yourself, so perhaps you could do it with a financial team? If you already have one, make sure they’re well-trained and have the tools they need to succeed by, for example, providing comprehensive training opportunities.
We can help train your team in bookkeeping, using Xero and more.
3. Use cloud accounting software
Cloud accounting software is a brilliant tool that every eCommerce business should be using. This type of software comes with various tools that can streamline – or entirely automate – tasks like bookkeeping and VAT calculations. You can also connect your account to multiple market platforms, helping you handle multi-channel sales data.
4. Work with an accountant
Engaging with a qualified accountant or accounting firm is another great idea. These individuals are experts in their field, helping you overcome all your accounting and tax challenges while working to save you valuable time and money.
Get in touch with us today
At Artisan Accounts, we specialise in empowering eCommerce businesses with comprehensive accounting solutions tailored to your unique needs.
Let us handle your financial management so you can focus on driving growth and innovation.
Get in touch with us today to start your journey with us.
