How to find an Accountant for Ecommerce

Key Takeaways for Ecommerce Brands:

1. ‍Ecommerce businesses benefit significantly from hiring specialized accountants who understand the unique financial challenges of online sales, such as managing multiple sales channels, navigating complex tax jurisdictions, and integrating various payment platforms.
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2. Signs that you need an ecommerce accountant include selling across multiple channels, operating in different tax jurisdictions, seeking funding, struggling with accounting software, and having difficulty balancing payouts.
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3. An ecommerce accountant provides crucial services beyond basic bookkeeping, including choosing the right legal entity, ensuring sales tax compliance, managing payroll, identifying tax deductions, preparing for audits, and offering strategic financial advice.
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4. When hiring an ecommerce accountant, businesses should define their specific needs, set a budget, prepare targeted interview questions, and consider alternatives like bookkeepers, fractional CFOs, or specialized accounting software – with many opting for a hybrid solution.

Running an ecommerce business is an exciting venture, but it comes with its own set of unique challenges, especially when it comes to managing finances. From the intricacies of online sales tax to inventory accounting, financial management can quickly become overwhelming for brand owners. That’s why partnering with an accountant – specifically one specializing in ecommerce – can be a game-changer.

While general accountants can handle basic bookkeeping and tax filing, ecommerce specialists bring invaluable industry-specific knowledge to your business. They understand the technology stack that powers online stores, know how to integrate various payment processors and platforms, and stay current with the ever-changing regulations that affect digital commerce.

Whether you’re struggling with financial headaches or simply looking to optimize your operations, working with an ecommerce accountant can transform your business. In this article, we'll explore the telltale signs that it’s time to bring an accountant on board, the specific benefits of choosing an ecommerce specialist, the essential services they provide, and how to find the right professional for your business.

When to Hire an Accountant

Knowing when to hire an accountant can be the difference between financial clarity and chaos. As your business grows, so do the complexities of managing your finances, and there comes a point when handling your books on your own is no longer sustainable. Brand owners typically reach this point when they are:

Selling on multiple sales channels

Expanding across multiple sales channels – such as Shopify, Etsy, and Amazon – is a great way to maximize a business's potential, but it also brings added financial complexity. Each platform processes transactions differently, with varying fee structures, payment timelines, and refund policies. Managing this variety requires detailed bookkeeping to ensure that every transaction is properly recorded and reconciled.

An accountant who specializes in ecommerce can streamline this process by consolidating data from all your sales channels and ensuring accuracy in your financial reports. They’ll help you navigate platform-specific complexities while keeping your books balanced and up-to-date. With their expertise, you’ll gain clear insights into the profitability of each channel and avoid the risk of financial errors.

Selling in multiple tax jurisdictions

Selling in multiple tax jurisdictions introduces a whole new level of complexity to your ecommerce business. For example, if you’ve reached sales tax or VAT thresholds in various states, you’re legally obligated to collect, remit, and report taxes in each location. This process involves navigating a patchwork of tax laws, staying updated on changing regulations, and ensuring compliance to avoid penalties.

An experienced accountant can take the guesswork out of tax compliance. They’ll analyze your sales data to determine where you have nexus, calculate the correct amounts to collect and remit, and ensure your filings are submitted on time, allowing you to focus on growth while staying confident that your tax responsibilities are under control.

Looking for funding

If you’re seeking funding to grow your business, your financials must be in top shape. Lenders and investors want to see clean, accurate financial records, including profit and loss statements and balance sheets. They’ll also expect your business to use accrual accounting, which provides a more accurate picture of financial performance than cash basis accounting.

An accountant can ensure your financials meet these rigorous standards. They’ll prepare detailed reports that showcase the health of your business and provide insights into key metrics like cash flow and profitability. Additionally, they can help you forecast future performance, which is often critical for securing loans or attracting investors.

Having trouble with their accounting software

Accounting software can be a powerful tool, but setting it up and using it effectively requires time and expertise. Many business owners struggle with initial configurations, understanding key features, and maintaining consistent entries, leading to frustration and inaccuracies.

An accountant can simplify this process by setting up your software correctly and tailoring it to your needs. They’ll train you or your team on best practices and ensure the software integrates seamlessly with your sales channels and payment processors. With an expert handling the technical details, you’ll gain confidence in using the software to track your finances and generate accurate reports.

Struggling to get payouts to balance

One of the most common frustrations for brand owners is not being able to balance their payouts. It’s easy to mistakenly record the total payout from a sales platform as revenue, even though it may include deductions for fees, refunds, and taxes. This can lead to significant discrepancies in your books, making it difficult to gauge your true financial performance.

An accountant can resolve these issues by accurately reconciling your payouts and breaking them down into their correct categories. By partnering with an accountant, you’ll avoid the headaches of unbalanced payouts and gain a precise understanding of your financial health.

‍Why Hire an Accountant Who Specializes in Ecommerce‍

Ecommerce businesses operate in a fast-paced and complex environment that presents unique financial challenges. Unfortunately, general accounting expertise often doesn’t fully address these challenges. Ecommerce accounting, on the other hand, can provide solutions that align with your industry, thanks to their ability to:

Navigate the ecommerce landscape

The ecommerce industry is unlike any other, with its blend of high-volume transactions, diverse product lines, and dynamic sales strategies. Managing inventory across multiple SKUs, reconciling payments from various sales channels, and adhering to tax obligations in different jurisdictions are just a few of the challenges ecommerce brands face. 

An accountant specializing in ecommerce understands the nuances of online sales, from platform fees to refund policies, and can implement systems that streamline your operations. Whether you’re managing inventory turnover or preparing for tax audits, a specialist ensures you can maintain accurate financial records, gain valuable insights into your business performance, and avoid costly errors or penalties.

Embrace technology for financial efficiency

The digital-first nature of ecommerce requires a tech-savvy approach to financial management. From cloud-based accounting tools to integrations with sales platforms and payment processors, leveraging technology is key to staying organized and efficient.

Ecommerce accountants are well-versed in the latest financial technologies and understand how to tailor them to the needs of online businesses. They can pull data from multiple sources, automate repetitive tasks, and create dashboards that provide valuable insights, empowering you to make informed decisions based on up-to-date financial information.

Stay ahead in a rapidly changing space

The rules governing ecommerce are constantly evolving, and staying compliant can feel like hitting a moving target. Tax laws, data privacy regulations, and international trade rules frequently shift, making it challenging for business owners to keep up. Ecommerce accountants stay informed about these changes, ensuring your business complies with all the latest requirements.

‍What an Ecommerce Accountant Will Do for You‍

Choose the right legal entity for your business

An ecommerce accountant helps you select the most suitable legal structure for your business, such as a sole proprietorship, LLC, or corporation. They consider factors like liability protection, tax efficiency, and long-term goals to ensure your choice of entity aligns with your business strategy and minimizes unnecessary financial burdens.

Bookkeeping

Accurate bookkeeping is the foundation of financial health. Focusing on recording, tracking, and managing financial data, ecommerce bookkeeping includes tasks like mapping your chart of accounts, reconciling sale channels, categorizing transactions, tracking inventory and COGS, invoicing accounts receivable, reconciling bills (accounts payables), tracking sales tax liability, and recording interest and depreciation.

Multichannel accounting

Selling across multiple platforms introduces challenges, such as reconciling varied fee structures and tracking diverse revenue streams. An ecommerce accountant specializes in consolidating and managing financial data from all your sales channels, providing a clear and unified view of your business’s performance while ensuring every detail is accounted for.

Manage your payroll

Payroll can be complex, especially as your team grows or operates in multiple regions. Ecommerce accountants ensure employees and contractors are paid accurately and on time, while managing payroll taxes, deductions, and compliance with local labor laws.

Ensure sales tax compliance

Sales tax compliance is one of the most challenging aspects of ecommerce. An ecommerce accountant helps you navigate tax obligations across jurisdictions, calculate accurate amounts, and file returns on time. By keeping you compliant with tax laws, they prevent costly penalties and allow you to focus on growing your brand.

Claim tax deductions on business expenses

Knowing which expenses are tax-deductible can save your business significant money. An ecommerce accountant identifies and categorizes eligible expenses, such as software subscriptions, marketing costs, and inventory purchases. They ensure you maximize your deductions while staying compliant with tax laws, boosting your bottom line.

Tax filing

Filing taxes for an ecommerce business requires precision and attention to detail. An ecommerce accountant prepares your tax returns, ensuring they are accurate and submitted on time. Their expertise helps minimize your tax liability, address complex issues like cross-border transactions, and avoid common mistakes that could trigger penalties or audits.

Prepare your business for a tax audit

Audits can be daunting, but an ecommerce accountant ensures your financial records are audit-ready. They organize documentation, address discrepancies, and guide you through the audit process. Their preparation minimizes the risk of penalties and ensures compliance, so you can handle an audit without disrupting your operations.

Prepare your business for investment or sale

When seeking investment or preparing to sell your business, an ecommerce accountant plays a crucial role in showcasing your financial health. They create clear and accurate financial statements, highlight key performance metrics, and prepare forecasts that appeal to potential investors or buyers, increasing your chances of securing favorable terms.

Facilitate expansion into other regions

Expanding into new regions involves navigating different tax laws and regulatory requirements. An ecommerce accountant simplifies this process by ensuring compliance with local financial rules and handling the complexities of cross-border transactions (if needed), so your business can expand seamlessly and confidently.

Provide expert financial advice

Ecommerce accountants offer valuable insights to guide your financial steps. They help you create budgets, manage cash flow, and identify growth opportunities based on your financial data. Their expertise enables you to make informed choices, overcome financial challenges, and drive sustainable growth in a competitive market.

‍The Difference Between an Ecommerce CPA and an Accountant‍

The roles of an ecommerce CPA and an ecommerce accountant might seem similar at first glance, but they possess distinct characteristics and levels of professional expertise that set them apart.

A CPA (Certified Public Accountant) is a licensed professional who has passed the rigorous Uniform CPA Exam and meets additional state-specific licensing requirements. This certification allows them to provide a comprehensive range of high-level financial services, including auditing, tax planning, financial strategy, and legal representation before tax authorities.

In contrast, an ecommerce accountant does not have the same legal certification or financial advisory capabilities as a CPA. They typically focus on the day-to-day financial management of an online business, performing tasks such as maintaining accurate records, processing transactions, reconciling accounts, and preparing basic financial statements.

For ecommerce businesses, choosing between a CPA and an accountant depends on the company's size, complexity, and specific financial needs. A small, emerging online store might find an ecommerce accountant sufficient for their initial financial management. However, as the business grows and faces more financial challenges, the expertise of an ecommerce CPA becomes increasingly valuable.‍

Alternatives to Hiring an Ecommerce Accountant

Bookkeepers

Bookkeepers are responsible for recording and categorizing your financial transactions, reconciling accounts, and ensuring that financial records are accurate and up-to-date. While bookkeepers are essential for creating your financial records, they generally don't provide strategic financial advice or long-term planning.

Fractional CFOs

‍Fractional CFOs provide financial planning & analysis (FP&A). They can help with tasks such as financial modeling, cash flow analysis, budgeting and forecasting, risk analysis and assessment, performance measurement and benchmarking, and IT system selection. They can also give insight into industry trends, capital investments, or expansion plans. 

Specialized accounting software

An ecommerce accounting software – like Finaloop – delivers real-time reconciled financials, including P&L statements, balance sheets, and cash flow statements. In addition, automated accounting services integrate with unlimited apps and banks, give brand operators cash and accrual flexibility, and provide tax services.

Many brand owners opt for a hybrid solution, combining the services of an ecommerce accountant and specialized software. This approach has much to recommend it, especially when using a service like Finaloop, which not only provides up-to-the-minute financials but can also introduce you to a CPA firm in its partner network. 

‍The Right Process for Hiring an Ecommerce Accountant‍

Finding the right ecommerce accountant requires a structured approach to ensure they meet your business's unique needs. Here’s how to navigate the process effectively and confidently:

Define Your Needs

Start by assessing your business’s size, financial complexity, and specific requirements. Consider whether you need help with bookkeeping, tax compliance, or strategic financial planning, and use this to create a clear job description for potential accountants.

Set Your Budget

Determine how much you’re willing to invest in an accountant based on your business revenue and priorities. While CPAs may charge more, their expertise can be valuable for complex needs, whereas smaller businesses might opt for a bookkeeper at a lower cost.

Prepare questions

Form a list of questions to evaluate candidates. Ask about their experience with ecommerce businesses like yours and the outcomes they achieved. Explore their familiarity with cloud-based tools, their communication methods, and how they track and report their progress to clients.

Find an Accountant

Search for accountants on platforms like LinkedIn, accounting directories, or through industry referrals. Freelancers may offer flexibility and affordability, while firms provide a team approach with specialized knowledge. Weigh the pros and cons to decide what fits your business best.

‍FAQs‍

What does an ecommerce accountant do?

An ecommerce accountant specializes in managing the unique financial needs of online businesses. They handle bookkeeping, tax compliance, multi-channel accounting, sales tax management, and financial reporting while leveraging technology to streamline operations and provide insights to optimize business performance.

Do you need an accountant for ecommerce?

If your ecommerce business is growing or facing financial complexities, hiring an accountant can save time and prevent costly errors. They ensure compliance with tax laws, prepare accurate financial records, and provide expert advice to support decision-making and business growth.

How to find an ecommerce accountant?

To find an ecommerce accountant, define your needs, set a budget, and ask relevant questions about their experience with online businesses. Search on platforms like LinkedIn or accounting directories, and consider referrals or specialized firms that cater to ecommerce clients.