How To do your Ecommerce bookkeeping Xero and freeagent
Bookkeeping is a process which involves the recording and management of every company’s financial transaction regarding any services or goods sold, purchased as well as payments made. Bookkeepers are responsible for tracking every cost and income to equip the company with data-based financial decision-making skills. Gm professional Accountants provide bookkeeping services for small businesses.Find out more
Depending on your Ecommerce platform, there will reports that you run and export from your admin panel. You will need to review these reports and make decisions on the sales, expenses and balance sheet accounts. Also whilst posting these to the correct nominal accounts , there will the vat liability accounts and these will effect the vat return. This area requires expertise as the rule of the place of supply of goods needs to be determined and the distance selling rules.
The duty of bookkeepers also involves giving your business a holistic financial picture, balancing your accounts, and strategically making your business’ cash flow management better.
The fundamentals of bookkeeping
An account in business bookkeeping refers to all the debit and credit entry records of a particular type, for example, accounts payable or payroll.
Accounts are classified in 5 basic types
Assets: These are transaction-based resources or valuables belonging to a company such as inventory. These will be inserted from your purchase invoices.
Income or Revenues: This is money the company earns by making sales or offering a service. These will be determined for the reports in your admin panel.
Liabilities. They refer to any obligation and debt a company owes suppliers, lenders, banks, as well as any provider that provides goods and services to the said company, for example, loans, accounts payable.
Expenses: It is the cash the company releases for the payment of assets or services, for example, salaries, utilities etc.
Equity: It is the value of the interest of an owner in a company after the subtraction of all liabilities, for example, retained earnings, stock etc.
The ideal way of setting up small business accounting is to start with the setting up of each account individually. This will enable the recording of each transaction on its rightful category.
Your general ledger, as well as bookkeeping processes, will appear pretty different from that of the nearby ecommerce store. After all, common accounting methods differ based on different business needs.
The ideal way to do bookkeeping
1.Ensure that financial records stay maintained and updated: Bookkeeping is numbers-based work that deals largely with basic math and accounting. Differences in the type of bookkeeping work done depend only on your business type but tasks such as settling accounts receivable together with bank statements, financial transaction recordings, billing, invoicing and tracking payroll are more or less the same.
Other financial responsibilities on your duty will also include:
Incorporating tax in bookkeeping on the income, payroll, employment as well as in tax deductions for small business.
Budget planning to enable the company to sustain its growth
Gathering financial statements for stakeholders to explore! They include an income statement, balance sheets, cash flow, and equity changes.
Bookkeeping is not only about mastering numbers but also what the law requires from businesses. Provided you run a business that maintains regular auditing, considers ensuring that you have legally binding records together with deductions.
2.Monitor everyone’s activities especially spending
The time that goes into financial bookkeeping processes when it comes to ensuring that various financial transactions are accurate is worth mentioning. Besides, as a bookkeeper, you have to balance the books every day while tracking every payment that enters or leaves via employees.
The implication, therefore, is that in order to better equip yourself with bookkeeping and accounting know-how, your communication proficiency and organisation aptitude should be apt. This is necessary because your job description among other things involves collecting receipts from employees, handling travel expenses and reimbursements. This entails creating an easy-to-follow submission and reimbursement system to help record every transaction without missing any. That will assist you to bookkeep sustainably, accurately and in an up-to-date manner.
Comparing Double-entry bookkeeping with single-entry
In bookkeeping, the single-entry method involves recording business transactions whenever you deposit money or pay bills into the account of your company. Just think of how a check register is kept! This is a method that suits smaller businesses more, considering that their transactions are in small amounts.
With double-entry bookkeeping, all sizes of businesses and complexity are applicable. It is a method that involves making an entry into an account and in return, an equivalent and opposite entry is made to another account. Take for instance if you recorded a £100 income, then you will have to make two entries: (1) £100 of debit entry to raise your cash balance sheet and £100 of credit entry to raise the income statement of the revenue account.
FAQ on Bookkeeping
What does a bookkeeper do?
A bookkeeper is an individual who records and manages your company accounts and documents for all financial transactions. With bookkeeping, you can see the financial position of your business at any given time. Bookkeepers’ work is the reason accountants and auditors can easily see the financial health of your business.
How is bookkeeping different from accounting?
Bookkeeping involves making records of financial transactions whereas accounting includes not only recording financial data, but also categorizing, analyzing, reporting, and summarising it.
Gm Professional accountants specialise in online businesses, Our offices are Located in London, Birmingham and Greater Manchester.