Accounting for online sellers, eCommerce sellers, and other online business owners can sometimes become a serious headache. It’s the part of the business that is the “boring necessity.” Although it can be boring and hard to understand the area in your business, it is a necessity. If you want to be compliant with the needs of investors, banks, etc. you must invest in this area of your business. If you want to really save money in taxes for your small business, you must have organized financials. For a more detailed look at how all the different parts of an accounting system work click here: Accounting 101.
With that said, here are the top 5 tips to running a successful online business.
1. Hire A Pro
Bookkeeping and accounting for online sellers come with their own specific challenges. It always makes sense to work with professionals who are well versed in this area. Good financial partners can provide answers to popular questions like what is the best accounting software for online business, how to do accounting for online sellers, what is eCommerce accounting, and much more. The most important benefit of hiring professionals to handle your accounting and tax needs allows you to focus on running your business. Plus, this is one of the areas that should save you a lot more than it costs.
2. Choose the Right Business Entity for Your Business
One of the most common questions we get is “should I be an LLC or S Corp?” or “which is best an LLC or S Corp?” This is another reason why number one on this list is “Hire A Pro.” A good tax attorney or a competent CPA would be able to walk you through the different tax implications, ownership limitations, etc. that each business entity offers. It is important to create a business entity because it separates you personally from your business, or in other words, provides you with liability protection. This means that your personal belongings (house, car, etc.) are not at risk if issues arise in the business. As long as you follow number 3.
3. Keep Business Accounts & Personal Accounts Separate
After establishing a business entity, it is extremely important to not mix personal funds with business funds. You’ve created an entity outside of yourself, now you have to treat it as an entity outside of yourself. Business revenue, expenses, purchases, and everything else needs to flow through the business accounts. Personal income, expenses, etc. must flow through the personal accounts. The way to exchange money between business and personal accounts is through transfers or payroll. The risk is, if you treat your business entity like it isn’t separate from you personally, your liability protection can be ignored and your home, car, etc. becomes fair game again. This makes it easier to follow number 4.
4. Track Everything
Tracking everything is a lot easier when you use business accounts that flow into your accounting system (i.e. QuickBooks). A lot of our online business clients tell us things like “Amazon tracks everything” or “I can just run a report of all my expenses from my sales software.” These systems are helpful, but they do not track all your business expenses. When you use your business account for all your business expenses and keep track of them, you’ll begin to see how much of a deduction those pens, staples, tape, printer paper, scissors, etc. actually get you. There are a lot of expenses that will be missed and forgotten without having solid accounting systems in place.
5. Hire A Pro
Yes, you’re reading it right. Number 1 and Number 5 are the same tips. In accounting, there are a lot of details and strategies involved that require specialized knowledge. The most successful businesses invest heavily in their accounting departments because they understand the benefit of having strategic financial guidance as they grow. To be honest, we all know they would not do this if it didn’t make sense. Accounting isn’t a chore that you “get around to when you have free time.” Accounting is the Language of Business that guides you in making business decisions, saving money, and understanding how your business is truly performing.
How Right Choice Helps
Right Choice Accounting Solutions is proudly a black owned, CPA led outsourced accounting and tax firm. Right Choice offers a one-stop shop accounting and tax solution that covers high level strategy, accounting insights & analysis, financial statement preparation, tax planning and preparation, basic bookkeeping, and much more. Schedule your FREE intro call TODAY to learn more about what makes us the Right Choice for your accounting and tax needs.