Follow us on social media and share your feedback

Download our app‍s‍:

Download on the App StoreGet it on Google Play
UK
  • Singapore
  • Hong Kong
  1. Osome Blog UK
  2. Growing Your Online Store: 5 Basic Accounting Tips

Growing Your Online Store: 5 Basic Accounting Tips

Growing Your Online Store: 5 Basic Accounting Tips

Running an online store is no easy feat, involving day-to-day operations, marketing to accounting. While accounting may not be what inspires you to go to work every day, it is a crucial part of the business.

Accurate accounting for your e-commerce store can help you identify profits and is beneficial for your business’s long-term growth. Here are 5 accounting basics to level up your finances and grow your online store.

  1. Track Your Cash Flows

As a business owner, you must get the full picture of your online store's financial situation. Other than maintaining a record of your expenses and revenue, you will have to go more in-depth to make sure that your business is doing well. If you are unable to account for your business's financial state, it will be challenging to seek ways to improve your business.

As such, make it a point to keep track of your accounts to assess your liquidity levels. This also allows you to better understand your payment cycle and effortlessly plan for your online store's growth plans. For more precise future business forecasts, be sure to generate accurate and factual cash flow statements.

  1. Factor in your Cost of Goods Sold (COGS)

Good accounting practice should take into account the Cost of Goods Sold (COGS), as these expenses are part of your business as well. An expense is the cost of operations that a business incurs to generate revenue, or otherwise known as COGS. This factors in every penny involved from acquiring materials to the sale of the final product.

Some businessmen tend to forget to include labour costs and rent as expenses. You must understand what goes into the COGS line item, how to keep it in check, and how to bring down the costs involved to increase your profit margin. Ensure that you maintain a record of your fixed expenses and that these figures are recorded accurately to reflect the total amount to make your gross and net profit calculation a breeze.

  1. Keep Your Bank Accounts Separate

When it comes to running your own business, it is sensible to have more than one bank account. This will prevent your personal and business finances from getting mixed up. Additionally, the separation also makes things more effortless for you when running your business, since the business finances are clearly distinguished from your personal finances. Trust us -- you’ll be thankful for this tip especially when tax time comes around. Moreover, if you require funding from investors and creditors, your strong business financial records can improve the likelihood of approvals.

Before you head down to the bank to start an account, do some homework and keep a lookout for business accounts and compare their fee structures, the benefits of specific options, and the cost of running the account.

  1. Effectively Manage your Inventory

Inventory management is an integral part of accounting.

Inventory management is the practice of tracking your online store’s stocked goods and keeping an eye on their weight, amounts, dimensions, and location. The objective of inventory management is to reduce the cost of holding inventory so you can know when it’s time to stock up on products or purchase more materials to manufacture them.

Practice good inventory management by recording the amount of stocks you can have at any given time. This should be your ideal inventory management system and focused on the turnover rate. Be mindful to keep track of your inventory so you know that you are not holding more stocks than you should, or running out of stock.

Constant updates of your inventory can help you manage your business operations more efficiently, as your online store will require new measures and practices as it expands.

  1. Develop a Bookkeeping System

Bookkeeping and accounting may seem similar, but the two terms are vastly different.

Bookkeeping is the daily process of detailing transactions, categorising them and reconciling bank statements. On the other hand, accounting is more in-depth and scrutinises your business progress, deciphering the data put together by the bookkeeper through financial statements. As a business owner, you can decide how you want to develop your own bookkeeping system. Here are some ways you could consider:

  • Doing it yourself with software, or simply use an Excel spreadsheet to keep track
  • Outsourcing to a part-time bookkeeper who is cloud-based or local
  • Hiring a bookkeeper or accountant in-house, when your business can do so

Need help? Outsource your Bookkeeping and Accounting

We know how challenging it can be to run an online business, but we are here to help.

Tip

If you need to focus on the core business at hand and find yourself searching for tips on how to do bookkeeping for your e-commerce business, consider letting experienced professionals in the UK, which Osome can offer. We convert statements from e-commerce platforms into books, provide accounting services, tax filings, and profitability reports, so you don’t have to do it yourself. We know how to read docs from any platform, consolidate numbers for each SKU, product group, and market, and show you where your money comes from.

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

The Best Way to Set Up a Business in Singapore from the UK
Foreigner's guide

The Best Way to Set Up a Business in Singapore from the UK

Singapore taxes are low, company formation for foreigners is easy, and a foreigner can own 100% of a Singapore business. If you decide to move, the quality of life is high.

Seller Spotlight on Merch Master: How a Clothing Merchandise Agency Does Accounting
Entrepreneur's Bootcamp

Seller Spotlight on Merch Master: How a Clothing Merchandise Agency Does Accounting

This is a part of a series on Osome Seller Spotlight where we get to know the people behind the businesses we serve.

4 Ways To Find the Best Co-Founders for Your Business
Entrepreneur's Bootcamp

4 Ways To Find the Best Co-Founders for Your Business

Sometimes you need someone to either help you improve and execute your great idea or to help you raise the capital you need before setting up a company. That is where the need for a cofounder arises. Here are 4 tips to find the right one.

A Guide To Bookkeeping For When You've Never Done It
Entrepreneur's Bootcamp

A Guide To Bookkeeping For When You've Never Done It

The process of bookkeeping refers to recording, classifying, and organizing any financial transactions within your organization. We go through the basics for new business owners.

What Small Medium Businesses Should Know About UK Budget 2021
Running My Business

What Small Medium Businesses Should Know About UK Budget 2021

What does the budget mean for UK SMBs? And what can they do with it? Let's explore.

Filing Annual Returns in the UK: A Quick Guide
Entrepreneur's Bootcamp

Filing Annual Returns in the UK: A Quick Guide

Whenever you register your company in the UK, you are required to submit your company's Annual Return to Companies House annually.

What Is an Annual General Meeting and Does My Company Need To Hold One?
Entrepreneur's Bootcamp

What Is an Annual General Meeting and Does My Company Need To Hold One?

Get a sense of whether your company needs to have a General Meeting (AGM) before presenting its financial statements to its investors (members).

The Pros and Cons of Registering my E-commerce Company for VAT
E-commerce

The Pros and Cons of Registering my E-commerce Company for VAT

While most business owners have the misconception that VAT registration is tedious and an additional bill to look after, VAT can also be advantageous to your business.

Starting an E-commerce Business From Home
E-commerce

Starting an E-commerce Business From Home

What good will going online do for me? In this article, we discuss how choosing to go online can work out to your advantage in the long run.

T-shirt Business: How To Start One the Fuss-Free Way
E-commerce

T-shirt Business: How To Start One the Fuss-Free Way

People shop online more often than from traditional stores. Here’s a guide on how to get started with t-shirt selling.

What Businesses Need to Know About Data Regulation Post-Brexit
Brexit

What Businesses Need to Know About Data Regulation Post-Brexit

The UK's general data protocol remains largely in line with the guidelines in the General Data Protection Regulation (GDPR), although there are new standards to be aware of.

Optimising Cash Flow Over Profits for E-commerce Entrepreneurs
E-commerce

Optimising Cash Flow Over Profits for E-commerce Entrepreneurs

As an e-commerce business owner, you might constantly worry about bringing in profit and overlook the importance of cash flow. Understand the difference between profit and cash flow.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?