E-commerce has been a game-changer for businesses large and small. It’s created entirely new industries and upended traditional ones. It’s also had a profound effect on the field of accounting. In this post, we’ll explore how e-commerce has changed accounting and what that means for businesses today.
Data-Driven, Global, Complex
The biggest way that e-commerce has affected accounting is by making it more data-driven. In the past, accountants would have to estimate things like the cost of goods sold or advertising expenses. But now, with e-commerce platforms like Shopify, companies can track this data down to the penny. This has made accounting more accurate and allowed businesses to get a clearer picture of their finances.
E-commerce has changed accounting by making it more global. With businesses selling products and services all over the world, they need to be able to track their finances in multiple currencies. This can be a challenge, but there are now accounting software programs that can handle this for businesses. This has made it easier for businesses to expand their reach and sell to customers in any country.
Another way that e-commerce has affected accounting is by making it more complex. With traditional brick-and-mortar businesses, there are only a few streams of revenue to keep track of. But with e-commerce businesses, there are often dozens (if not more) of different ways that customers can pay for products or services.
This can make it tricky to track finances and ensure that all revenue is accounted for. With businesses selling online, they need to be able to track things like taxes, shipping costs, and return rates. This can be a challenge, but there are now accounting software programs that can help businesses keep track of all this data. Software such as QuickBooks, Xero, and FreshBooks has made it easier for businesses to track their finances and make sure they are compliant with tax laws.
How you should respond to this change?
E-commerce has changed the accounting landscape, but that doesn’t mean businesses should be afraid of it. In fact, embracing e-commerce can help businesses become more efficient and save money in the long run. Here are a few ways to do that:
1. Use accounting software: As we mentioned before, there are now accounting software programs that can make it easier to track your finances and stay compliant with tax laws. QuickBooks, Xero, and FreshBooks are all great options.
2. Hire an accountant: If you’re not comfortable handling your finances yourself, then consider hiring an accountant. They can help you keep track of your finances and make sure you’re compliant with tax laws.
3. Stay organized: One of the most important things you can do is to stay organized. Keep track of your income and expenses, and make sure you have all the documentation you need. This will make it easier to file your taxes and keep track of your finances.
4. Stay up to date: E-commerce is always changing, and new technologies are being developed all the time. Make sure you stay up to date on the latest changes so you can be compliant with tax laws and keep track of your finances.
5. Seek professional help: If you’re ever feeling overwhelmed by your finances, don’t hesitate to seek professional help. An accountant or financial advisor can help you get your finances in order and make sure you’re on the right track.
Overall,
E-commerce has had a positive effect on accounting. It’s made it more accurate and allowed businesses to get a better understanding of their finances. However, it has also made it more complex, so businesses need to be prepared for that when they make the switch to selling online.
E-commerce made the field of accounting more data-driven and complex, but also more accurate and transparent. For businesses, this means that they need to be extra diligent about tracking their finances and keeping good accounting records. But overall, the benefits of e-commerce far outweigh the challenges—especially when it comes to accounting!