Who Is An E-Commerce Accountant?
So, you’ve started an e-commerce business or have an existing one but your accountant is still a traditional one. You first thought that, “accounting is accounting”, right? How different could accounting for e-commerce businesses be from any other business? 😋
Over time, as you discuss your e-commerce business and accounting issues with your accountant, you may have felt that they are “out of touch” with your world. 🧐
You know that running an e-commerce business is anything but traditional. There’s specific technology involved, sales tax issues, inventory issues, and so on.
Well, we can definitely tell you that accounting for e-commerce businesses is the same. It’s different from, say, a restaurant or manufacturing business. It requires specialized skill and knowledge.
It’s time, you thought, that you need a specialist! 😎 This is where you recognize the benefits of hiring an e-commerce accountant who “gets it” when it comes to e-commerce businesses on Shopify, Amazon, your own website or any alternative platform.
So, before we move forward, let’s just start with this:
An “E-Commerce Accountant” is an accountant who specializes in working with e-commerce businesses and can offer tailored accounting, tech, tax and workflow solutions specific to YOUR growing business.– Think Accounting Team 😄
Why You Should Hire An E-Commerce Accountant
1. Knowledge of cloud accounting systems
You run your e-commerce business in the cloud. Most of the receipts you get are soft copy. So, why would you want to take a stack of paper to your accountant in a shoebox at the end of the year?
A great e-commerce is typically a cloud accountant who uses accounting platforms like Xero and Quickbooks Online to do your bookkeeping and accounting. These cloud accounting platforms enable transparency of data sharing with the business owner, paperless workflows, eliminate clunky data entry and much more!
If you want to be actively involved in your business decision making based on your updated numbers, a cloud based e-commerce accountant is like a business partner!
2. Knowledge of E-Commerce app stack
Gone are the days when you worked with 2-3 applications to run your business. Today, you may use anywhere between 20-30 apps to run your business.
Same way, an e-commerce accountant recognizes the benefit of specialized apps that solve issues specific to an e-commerce business. For e.g., here is a typical app stack for some of our e-commerce clients:
- Merchant platform – Shopify and/or Amazon
- Accounting platform – Xero or QBO
- Paperless receipt capturing – Receipt Bank
- Bank and credit card statement fetching – Hubdoc
- Integration between Shopify/Amazon and Xero/QBO – A2X Accounting, Entriwise and more…
- Payments platform – Plooto
- Currency Exchange Service – Transferwise
- …and more! 🤓
3. Knowledge of E-Commerce Sales Tax Rules
Sales tax rules for an e-commerce business are complex. Let’s talk about Canada first.
We have Alberta with just GST, 4 provinces with their own PST, and different HST rates for Ontario and Atlantic provinces. More importantly, the sales tax that you should charge is based on where your goods are “consumed”, not where you ship from!
Finally, where you should register for provincial PSTs or not is dictated by specific thresholds set by each province. We’ll have more on this in another blog post.
Now, most e-commerce businesses ship to USA or other countries as well. If you do a bit of reading in e-commerce forums, you come to realize that sales taxes in USA feels like 100x more complex than Canada. Each state has it’s own rules for when a “nexus” is established, requiring you to collect and charge state sales taxes there. This could be based on dollar value of goods shipped or the number of transactions or a combination!
Needless to say, sales taxes for an e-commerce business are complex and you need a specialist by your side who can help you navigate through this maze. 🤠
4. Fits Your Way Of Business Lifestyle
You started your e-commerce business perhaps because you wanted location freedom, time freedom, travel … and so on.
Well, do you fancy a “visit to your accountant’s office” during tax time? Probably no.
You want to work with an accountant who does remote bookkeeping, paperless document handling, Zoom calls, digital signatures, and more to fit YOUR lifestyle. Well, a cloud based e-commerce accountant does that for you!
You should still make sure that you work with a reputed accounting firm who, first and foremost, gets your books and taxes done correctly. That should be a given anyway, shouldn’t it? However, if these benefits come on top of that, you’ve found a match that can help you run your business from anywhere. ✈️