Typical e-commerce accounting mistakes a business does

Accounting considerations for e-commerce businesses are unique. Unfortunately, many business owners are unaware of these subtle distinctions, which leads to avoidable accounting errors. These mistakes can have severe financial and legal consequences for e-commerce businesses and their owners, which can compound over time if left unaddressed.


If you are making any common e-commerce bookkeeping mistakes, resolve to correct them right away with the assistance of any cloud accounting services in Calgary-


  1. Using the incorrect accounting software

Some business owners who transition to e-commerce after years of running a traditional retail business may be accustomed to manually managing their books. It is a huge mistake not to use accounting software to streamline and automate functions. Running a successful e-commerce business necessitates relying on a fast-paced accounting system.

Choosing accounting software is an important decision. The use of the appropriate software for your business type, financial acumen, and business life stage is a critical first step. And cloud accounting services in Calgary know which accounting software is required for your business.



  1. Mishandling sales tax 

The most difficult aspect of running an online business is correctly handling sales tax. To add the appropriate charge to a customer's transaction, sales tax must be calculated at the state and local levels. Once collected, sales tax must be recorded as a liability, reported to the state, and remitted according to a strict payment schedule. Using the right accounting software makes all the difference here because more sophisticated systems, such as QuickBooks Online, will calculate and account for your sales tax liability automatically.



  1. Incorrect revenue recognition

Many e-commerce businesses incorrectly recognise revenue because they keep records based on when they were paid rather than when the sale was made. If, on the other hand, an online sale is made at the end of a month, even if the money from the transaction is not deposited into your account until the following month, the revenue from that sale should still be recorded in the month in which the sale was made. 


  1. Data not being backed up

Backups of data are critical for e-commerce operations. To protect against corrupted files, data loss, or another catastrophic failure, financial data should be backed up regularly and saved in a secure location. A data backup can also aid in restoring good records if a large-scale error occurs during routine operations that would be time-consuming to correct.
Location: Calgary, AB, Canada

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