The surge in the popularity of Shopify is a good indicator of the boom the e-commerce industry faces in recent times. Shopify, an e-commerce platform, is known for offering a wide range of customization services for businesses looking to start their online store, and the importance of Shopify numbers cannot be ignored.

Shopify offers a cloud-based platform for small business owners to showcase their products to the world. Usually, entrepreneurs who are just starting do not have any idea of how online stores work. Shopify makes it easier for small e-commerce business owners to manage their online store better.

If you’re a small business owner looking to expand your scale of operations and profit margins, it is essential to broaden your customer base. Shopify allows you to access markets and audiences all across the global online market.

This access pass is in itself an incentive for business owners on the lookout to start their business on Shopify.

Once these new businesses start their operations on the cloud-based platform, acquiring new customers and meeting the demands of the existing customers are some of the challenges they face. Overcoming these challenges lay the foundation for the success of the business. However, in the process of making a name for the company and gaining the trust of the customers, business owners often tend to ignore the numbers the platform provides them.

All users who are linked with the online platform, one way or another, agree that Shopify regularly provides them with reports and analysis of their performance. A dashboard displaying all your sales during a week or month allows you to observe and evaluate your performance.

Imagine being a part of an online platform where you don’t have to focus on analyzing your performance, keeping a record of your revenue, or bookkeeping. Sounds great, doesn’t it?

However, just as meeting demands and acquiring new customers lays the foundation for the success of a business, not keeping records of your sales figures could result in massive losses for your organization.

Here at Fully Accountable, we have emphasized the importance of bookkeeping and recording the numbers. We have discussed how not doing so can cause the failure of a business.

Although Shopify has a fully automated mechanism to handle your accounts and numbers, it is still important to manage your numbers independently and hire a skilled professional to tackle the figures separately.

To highlight the importance of paying attention to your Shopify numbers, we have compiled a list of reasons why you should pay attention to your Shopify numbers.

Create a Good Accounting System

Entrepreneurs and accountants agree that proper bookkeeping is one of the most crucial aspects of a business. Well-maintained and regularly updated ledgers separate a highly profitable business from a loss bearing one.

Retail owners on Shopify largely depend on the numbers the platform provides them. Although these numbers are essential, they are the tip of the iceberg.

All of us know that business owners want their businesses to grow and expand. Online stores can develop and expand when they offer a new product to their existing customers or tap into a completely new demographic. Successful business owners all around the world agree that a business should commit to a decision only when the implications of the decision are completely known.

The dashboard at Shopify will not tell you the cost of products and capital expenses required in the making of a product. Besides, Shopify will not keep you updated about additional liabilities such as sales tax liabilities.

Tracking the cost of making a product and the return it earns helps in evaluating the performance of the product and how profitable it has been for you. The numbers at Shopify may show you the sales figures for all products. However, having a record of the costs and the related expenses will present a more authentic picture of the product.

A more authentic picture is also what you need when making informed decisions about the business. The numbers you have compiled will help you in making decisions that will enable your business to grow.

Recording day-to-day transactions will help in developing good accounting ethics. Although most of the numbers are easily accessible at Shopify, it is essential to tally these numbers with the accounting details you have recorded separately.

Having a sound accounting system will ensure that the company has sufficient cash flow and profit to keep the business afloat.

Prevent Inaccuracies in Recording Data

Although the numbers on that sophisticated Shopify dashboard are automated, there are likelihoods that the figures presented on the panel may not be correct.

The dashboard allows you to see your sales performance by adjusting the time setting to day, week, and month. However, no matter how sophisticated the data may seem to you there are likelihoods that the data is inaccurate.

The reason for the inaccuracy is that the Shopify dashboard also accounts for the number of canceled orders. It is easy to observe canceled transactions when your business is just starting, as the company is new and there are a minimal amount of sales and cancellations.

However, for an established and growing business keeping a record of cancellations can be challenging. In an established business numerous sales transactions are happening daily with a high amount of cancellation too, there are likelihoods that the dashboard ends up presenting the cancellations also.

Since we have already discussed how feeding the wrong data in a business plan can render the policy ineffective, which is why it is essential to realize the significance of having your accounts maintained.

Maintaining accounts at your end allows you to adjust for all anomalies that can be there in your Shopify numbers.

Boost Your Profitability

In Shopify, it is easy to access data regarding the sales of a good. The platform is designed to provide you with numbers regarding your transactions. It has a full track of what was purchased, the customer who purchased the good and at what price.

It generally gives you loads of information about the sales made. However, there is more to business than just sales. Neither is a high amount of sales the only objective that business likes to achieve nor is it the only information it wishes to attain.

Although the information provided by Shopify is important, it is also important to gain a far better insight into your business because it is essential to record other information too. Knowing just your sales figures will not tell you about the cost of producing the goods sold, nor will it give you information about the profitability of the products sold or the return to the business from the sale of the good.

Profitability is a crucial aspect, questioning the profitability of a business decision or that of a good sold is essential not only for established businesses but also for newly formed young companies. Therefore, to ascertain the profitability of the sales generated it is vital to record all data individually.

Observing and recording all business information helps you in deciding on the product. For instance, pursuing the sale of a product that has high sales but low profitability may not be a good idea. Therefore, if you want to make informed decisions about your products, it is essential to be well aware of the numbers beyond those presented to you by the Shopify dashboard.

Avoid Complexity and Confusion

Shopify has made starting and operating a business more accessible, but not having a proper record of the numbers can lead to unnecessary confusion. Throughout the blog, we have discussed the significance of managing accounting data while operating at Shopify.

We have discussed the operational errors that can occur by not maintaining Shopify numbers. However, confusion, complexity, and unnecessary stress are also results of not compiling accounting data. One such case of difficulty arises when the data presented on Shopify does not reconcile with the one in the bank.

When the sources of information are different but the information provided is similar,  there is no cause of concern. However, when our bank statement gives a different reading to the numbers provided at Shopify, it is not only a cause of interest but is also an indication to manage our accounts better.

Most sellers online to tap into a broader customer base tend to provide their users with a variety of options for payment. It is challenging to keep track of all the incoming payments when many options such as (Shopify Payments, Paypal, and Stripe) are provided.

Too many sources of cash payment can cause information overload, and to avoid the confusion that information overload causes it is vital to manage the accounting data. The uncertainty can also be threatening to the existence of a business if it carries on frequently.

Keep a Check on Cash Flow and Inventory

Cash plays an integral role in driving a business forward, together with inventory cash acts as a tool of empowerment for a business. However, if a proper record of the flow of cash is not maintained, then the same device of empowerment can also become a tool of destruction for a business.

For Shopify sellers, both inventory and cash are equally important. The relationship between the two fuels the growth of businesses at Shopify. Cash allows you to purchase stock for sale. The inventory received can then be sold to earn more money.

Although information regarding sales is available on Shopify, information about inventory and the flow of cash is not.

Having a proper record of the cash flow and the cycle of inventory allows you to make crucial decisions regarding the two.

Readily available numbers on inventory help us in determining the status of the stock available. Information about the stock can then be used to determine the levels of inventory needed. The data can also help in signaling an alert when there is little inventory left or when the business is close to losing its entire inventory and eventually the customers.

Therefore, to make crucial decisions regarding your stock and flow of cash; compiling and having access to accounting data is essential.

Recording and taking into consideration accounting numbers can make or break a business. Businesses fail due to many reasons, but not having proper bookkeeping services is a significant contributor to the failure of many companies.

Many retail owners at Shopify do not have the time to manage their accounts. Increasing sales and launching new products already occupy the time of most owners. If owners start observing and recording accounting entries too it can consume precious time and energy; this is why we recommend delegating this responsibility to someone who has the skill of managing them.

We at Fully Accountable provide specialized bookkeeping services to our customers. Our primary goal is to ensure that our customers have ample time on their hands to look after other essential business functions. Therefore, if you are wishing to avoid the hassle of recording numbers and are looking for someone professional to manage them. Contact us 1-877-330-9401 and schedule a strategy call now.

The post 5 Reasons You Should Pay More Attention to Your Shopify Numbers appeared first on Fully Accountable.

The post The Guide To Cash Flow for eCommerce and Online Businesses appeared first on Fully Accountable.

1. Keeping up on Bookkeeping

This may seem like a task you can kind of just push to the side, but if you do that you will quickly fall behind. Most of the time with small businesses, when something is pushed to the side it is forgotten about and keeps getting pushed further and further back because it’s not as “important” as the current task.

Not having up-to-date books will cause:

• Loss of profits, if unpaid invoices are left unnoticed
• Ruined relationships with suppliers because of unpaid invoices, which leads to bad credit rating
• More work come tax season

2. Relying too Heavily on Technology

The problem with trusting accounting technology, is you think it will do all the work for you. However, you still have to make that software work and know how to properly use it. Also, while one form of technology might work for one company doesn’t mean it will work for you and your company. I recommend doing some research first to figure out what will be the best fit for you and your needs.

3. Doing Tasks Last Minute

Many business owners think of accounting more as a chore and not so much part of their job. Since it’s not a top of mind priority, important deadlines are often missed and forgotten about. When accountants wait until the last minute it causes:

• Missed deadlines – which leads to paying more money
• Mathematical mistakes – which takes time to fix and cost money
• No planning for the future – which leads to (you guessed it) paying more money

4. Poor Organization and Record-keeping

Small business owners often lack the time and skills to manage record-keeping and bookkeeping. This is often not something on their to-do list and on top of that it takes time away from the business. Fortunately, there are dozens of apps out there to help make organizing a lot easier. With a little bit of help, you can have a system that works great for your company in no time!

5. Trying to do it all Yourself

Doing all your accounting in-house is not something you should do unless you’re an accountant yourself. A lot of people do this because in their mind this is the most cost-effective, but in reality, time is money and they don’t have the time. For small business owners in particular, they need all the time they can get because usually, they are lacking manpower. Passing the accounting work on to an expert will allow you to focus on the important components of your business.

Moral of the story: Accounting IS an important task, don’t push it to the side and if you aren’t comfortable doing it yourself (sorry YouTube videos probably won’t work for this one) you should think about outsourcing. Being smart about it, in the beginning, will save you money in the long run!

Learn more about Outsourced Accounting!

The post 5 Dangers of DIY Accounting appeared first on Fully Accountable.

Although the terms are sometimes used interchangeably because bookkeepers and accountants share common goals, they refer to two different kinds of financial services. Let’s dive into key differences.

What is Bookkeeping?

Accurate bookkeeping is the cornerstone of any successful company. The bookkeeping process refers to the daily recording, storing, and retrieving of day-to-day financial transactions for your business (in QuickBooks or other software). The most common business transactions include:

• Purchases: This involves recording all the purchases your business makes, whether they are supplies, inventory, or other operational costs. Accurate recording ensures that you can track expenses and manage budgets effectively.
• Sales: Bookkeepers track every sale made by the business, recording the revenue generated. This helps in maintaining accurate income statements and understanding the financial performance of your business.
• Receipts: Recording receipts is crucial for tracking cash flow. It includes documenting all money received by the business, whether from sales, loans, or other sources.
• Payments: All outgoing payments, including bills, salaries, and other expenditures, are recorded. This helps in managing liabilities and ensuring that all financial obligations are met on time.
• Invoices: Bookkeepers handle the creation and tracking of invoices. This ensures that clients are billed correctly and payments are received promptly, maintaining a healthy cash flow.

In general, bookkeepers are required to have at least 2-4 years of experience or an associate’s degree in the field. Bookkeepers need to focus on accuracy and be fluent in key financial topics. In most cases, the bookkeeper’s work is overseen by an accountant.

Many business owners who aren’t sure which service to choose start with bookkeeper records, and then add on accounting services as their business grows.

What is Accounting?

While bookkeeping simply involves recording your business’ financial transactions, accounting services take things a step further and also include interpreting, classifying, analyzing, reporting, and summarizing your financial data.

That means accountants won’t just record your numbers and send you a financial report — they actually review and analyze everything and tell you what it all means and what you should do with that information. Accountants provide higher-level financial services than bookkeepers

Depending on your specific needs, accounting services can include things like:

• Financial Statements: Accountants prepare comprehensive financial statements, including balance sheets, income statements, and cash flow statements, providing a complete picture of your business’s financial health.
• Classification: Accountants classify and categorize financial data, ensuring that all transactions are recorded correctly and consistently, which is crucial for accurate reporting and analysis.
• Bank & Credit Card Reconciliations: This involves comparing your internal records with bank statements to ensure that all transactions are accounted for and to identify any discrepancies.
• Analyzing Sales Data & Stats: Accountants analyze sales trends and statistics to help you understand your business’s performance and identify areas for improvement.
• Financial Projections: Accountants create financial projections to help you plan for the future, make informed business decisions, and secure funding or investment.
• Cash Flow Management: Effective cash flow management ensures that your business has enough liquidity to meet its obligations and invest in growth opportunities.
• Consulting & Training: Accountants provide consulting services and training to help you understand your financial data and implement best practices for financial management.

Accountants usually have a degree in accounting or a related financial field, and can also get additional certifications (like a CPA). To become an eCommerce CPA, an accountant must pass the Uniform Certified Public Accountant exam and have experience as a professional accountant.

Bookkeeping vs. Accounting Differences

Though bookkeeping and accounting complement each other, they’re not exactly the same thing, so the difference between accounting and bookkeeping is worth noting. Both are crucial for the financial health of a business, but they serve different purposes and require different skill sets.

Focus and Scope

• Bookkeeping is primarily concerned with the accurate recording of financial transactions on a daily basis. It focuses on the day-to-day management of financial data, ensuring that all transactions are documented and organized.
• Accounting takes the information recorded by bookkeepers and goes further by analyzing, interpreting, and summarizing it. Accountants provide insights and financial advice based on this data, helping business owners make informed decisions.

Skills and Qualifications

• Bookkeepers often need to have a good grasp of financial topics and attention to detail. They typically have at least an associate’s degree or relevant experience.
• Accountants generally have more advanced education, often holding a degree in accounting or a related field. Many accountants also pursue certifications such as the CPA, which require passing rigorous exams and meeting professional experience requirements.

Responsibilities

• Bookkeepers handle tasks such as recording purchases, sales, receipts, payments, and invoices. Their role is to maintain an accurate and up-to-date record of all financial transactions.
• Accountants perform more complex tasks such as preparing financial statements, conducting audits, analyzing financial data, creating financial projections, and providing strategic financial advice.

Decision-Making

• Bookkeepers provide the data needed for decision-making but do not typically engage in the analysis or strategic planning.
• Accountants use the data provided by bookkeepers to analyze and interpret financial information, offering insights and recommendations for business strategy and growth.

Which Is Right For You?

In general, the larger or more complex your business is, the greater the need for both an expert bookkeeper and a certified accountant. Many smaller businesses begin with bookkeeping services, and then add other accounting services as they grow.

Bookkeepers and accountants work in tandem to give you a complete financial picture: Bookkeepers look to the past, while accountants look to your financial present and future. Together, they can provide you with the sound financial information and advice you need to make good decisions for your business.

In the end, the most important thing is that someone with experience and expertise in handling your finances–you can’t afford to just wing it! Unless you’re an accountant yourself (and most business owners aren’t), you shouldn’t try to handle your own books or accounting needs. Not only will it eat up your precious time, but without a sound accounting background, it’s easy to get lost amid a sea of paperwork and reports. Ultimately, your business will suffer (not to mention your stress level).

Top Financial Accounting Services From Fully Accountable

Understanding the differences between bookkeeping and accounting is essential for effectively managing your business’s finances. Bookkeeping lays the foundation by accurately recording daily transactions, while accounting builds on this foundation by analyzing and interpreting the data to provide valuable insights and strategic advice. Both roles are vital and complement each other to ensure the financial health of your business. As your business grows, having both skilled bookkeepers and experienced accountants on your team can make a significant difference in achieving long-term success.

Ready to take control of your finances and set your business up for success? Fully Accountable is here to help with comprehensive accounting and financial services. Contact us or schedule a call today to learn more about how we can support your business’s financial health and growth.

–––––––––––––––––

Chris Giorgio, President

Fully Accountable is a full-service accounting and bookkeeping solution that provides all the benefits of an in-house department with none of the overhead. With services like daily feedback, your own CFO, profit & loss analysis, and more, you’ll have the financial information you need to make informed, strategic decisions for your business. To learn more, visit https://fullyaccountable.huckleberrystaging.com/ or schedule a 30-minute strategy call.

The post Bookkeeping vs. Accounting: What’s the Difference? appeared first on Fully Accountable.