As an ecommerce business owner, there are a multitude of tasks you have to juggle. It can sometimes be overwhelming to manage them all, but the good news is that you can save yourself a lot of headache by simply making yourself aware of potential pitfalls. In this guest blog, online accounting software provider, KashFlow, flag up the five most common mistakes small ecommerce businesses are guilty of making, which should be avoided at all costs.
1. Failing to record all expenses and income
With everything being digital nowadays it can be easy to forget about the things that aren’t recorded automatically for us. If you’ve just bought something new for your office using cash, make sure you don’t get caught out by failing to keep your receipt. If you have to use cash, develop an easy system for instantly recording that expense. Some accounting software will have mobile phone apps where you can take a snap of receipts, recording that transaction in a matter of seconds. Remember also not to fall into the trap of blending your business and personal finances – keep them separate to avoid any extra confusion.
2. Not reconciling your accounts
Ideally, you should reconcile your accounts every four weeks. Good accounting software should allow you to easily run reconciliation reports. Matching your accounting to your bank statements will keep your accounts accurate. Failure to do so will only land you in hot water as potential problems in your cash flow won’t be spotted and addressed.
3. Not signing up for cloud accounting
If you haven’t already moved your accounting to the cloud, then now’s as good a time as any. Soon the way you do your tax return will change forever. ‘Making Tax Digital’ is a new piece of legislation from HMRC that means starting from April 2018, most businesses and self-employed individuals will be required to handle quarterly record keeping communications to HMRC digitally.
Ecommerce businesses of all sizes are seeking out the best way to balance their books and many are looking to cloud accounting software to juggle their accounts payable and accounts receivable. By using cloud accounting software like KashFlow you’ll be able to submit your data directly to HMRC. You can spread the cost of the software by making payments monthly, and you can access it anywhere that has an internet connection, so you don’t have to be chained to a desk. What’s not to like?
4. Not taking advantage of connecting bank feeds
And here’s another reason for adopting cloud accounting software for your business. Manually entering all your banking transactions into spreadsheets is tedious and time-consuming, and it will only lead to errors and discrepancies. Any accounting software worth its salt will automatically import your bank and credit card transactions on a daily basis, saving you serious time and money.
5. Never looking at your reports
Not understanding trends or the general financial health of your business will only lead to disaster. If you have no clue what you can spend or what your potential growth might be, then you’ll be seriously unprepared for the loss of a client or a sudden downturn in your industry. Reporting should be carried out regularly, to help give you the insight into how your business is faring at any moment in time.
It’s a well-known fact that running your business requires a lot of dedication. With your responsibilities continuing to pile up and up, it can be tempting to let your accounting duties fall by the wayside. As an ecommerce business owner, you should always keep on top of your accounting and financial affairs. Taking your eye off the ball for just one moment could cost you dearly. Don’t forget that when your accounts are in order, so is your business.
KashFlow is a simple accounting package for small business owners that improves cash flow, saves time and increases productivity. Accessible from anywhere with an internet connection KashFlow has no accounting jargon and offers free and fast support. For a free, no-obligation 1-2-1 demo of the software just call the KashFlow onboarding team on 0800 133 7529.