Accountants For eCommerce

We provide specialist accountants for ecommerce business owners, people who know something about the unique challenges faced by those selling goods online.

While we handle everything that traditional accounting does, we are aware of these extra challenges. We understand all of the key components of running e-commerce companies, such as the changes to the VAT rules for ecommerce businesses in 2021, the benefits and drawbacks of operating on multiple sales platforms, and the intricacies of dealing with payment service providers or different inventory apps.

Our ecommerce clients can benefit from this, along with the following services:

Bookkeeping

Day-to-day bookkeeping can be a chore, particularly when you have multiple sales channels and you're juggling these with other responsibilities. Maybe you have a partner or a family. Maybe you are struggling to find a good work-life balance. Maybe you're overrun with orders - which is great, but it doesn't leave you much time for sorting out your daily ecommerce accounting responsibilities.

So, it's easy to let things slide, but then you face the unenviable task of catching up.

With a dedicated Auditox ecommerce accountant, you'll get unlimited support and advice, along with our simple-to-use software that lets you take control of your bookkeeping and keep on top of things. You'll be equipped to process your ecommerce accounting correctly and efficiently, leaving you with more time to spend on other tasks.

Tax Planning

We'll perform a tax audit to make sure everything is as it should be and that you are paying the correct amount. Where possible, we'll explore legal tax efficiency methods to reduce the amount you pay.

The UK tax system is often unnecessarily complicated - more so than most tax systems worldwide - and it's easy to tie yourself in knots trying to keep up with any changes, let alone ensuring that you are paying the right amount. This is where our tax planning comes in.

Sales Tax Compliance

This can be a major headache for ecommerce business owners selling a significant amount of goods in the US. And it's all down to something known as a nexus.

In simple terms, a nexus (in relation to trade and commerce) is the relationship between a seller and the state. Most states in the US levy a sales tax for various goods and services, and each state sets its own rates. Prior to 2018, sales tax only applied to stores with a physical presence (or nexus) in the state.

Following a Supreme Court ruling against Wayfair in favour of South Dakota state, each state can now charge sales tax without the store having a physical presence there. And as each state has different nexus laws, sales tax compliance has become an issue. If you sell in multiple states, you need to ensure that you comply with the threshold for each state.

Compliance Is Essential

Once you exceed the threshold, you have established a legal nexus and must collect and file the appropriate sales tax. While it might sound fairly straightforward, there are around 12,000 different sales jurisdictions within the 50 states!

Negotiating this system - as well as the sales tax systems in the UK and elsewhere - can be a nightmare. If you get it wrong, you could face financial penalties and further recriminations.

As well as making sure that you comply with sales tax rules in the UK, we will guide you through the pitfalls of the US system to ensure that you don't get tangled up in the rules and regulations.

This is one of the main differences between us and traditional accountants or other chartered accountants.

Accounting Software

Most, if not all, ecommerce sellers will be fairly tech-savvy and will be comfortable using laptops, PCs or smartphones - after all, they conduct their business online and will encounter many different sales platforms.

Even so, we provide safe, secure, cloud-based accounting software that's simple to use, and we'll even train you how to use it. Our software eliminates the need for manual entry by integrating platforms like Amazon and Shopify, so your sales data is transferred directly into a trusted accounting system, such as Xero. Such a system reduces the risk of human error and streamlines the whole process.

This will allow you convenient access to your financial records and information from various devices whenever you need it. You can check your balance sheet, real-time cash flow, profit and loss, etc., from anywhere and at any time.

Tax Returns

This is never anyone's favourite job! However, regardless of how you feel about it, all businesses have to submit a tax return, whether they're a sole trader or small business. One persistent myth that circulates is that online sellers don't have to pay taxes, but this is not the case.

As of 2017, the limit was set at £1000, so you will have to pay tax on anything over this once you have deducted allowable expenses.

Therefore, the actual amount of tax you pay will depend on your profit margin, so it's important to know all about the tax laws and thresholds and to get your tax return filed on time.

Sole traders will need to submit a self-assessment tax return, while a limited company will have to send their figures to Companies House as well in the form of an annual report. Many of the questions and fields on the self-assessment form are difficult to negotiate - it's often difficult to determine whether a particular question relates to your business or is at all relevant. While HMRC does its best to provide an explanation, this is no help whatsoever if you don't know what they're talking about in the first place!

Your personal Auditox ecommerce accountant will be there to explain everything and tell you which fields must be completed and which can be skipped.

They will be on hand to ensure that all your tax returns are completed accurately and submitted in advance of the deadlines.

Cash Flow Management & Forecasting

Cash flow is a major factor for businesses of all kinds, but it is especially important for small to medium-sized businesses. You probably already know the alarming statistics about most small businesses failing within the first year (around one in five!), and one of the key factors in this figure is the term financial issues. It's a safe bet that many of these businesses fell victim to cash flow problems.

The trouble is that with ecommerce companies, you can't simply check the bank deposits and class them as revenue. By their very nature, the figures for online selling don't give an accurate picture of your financial position, as the timings of the transactional data are inaccurate.

However, the decision whether to use the accrual method or the cash-basis method usually depends on the size and nature of the business. You can use one or the other, but not both at once.

Your Auditox ecommerce accounting specialist will perform a 'health check' on your finances and cash flow situation. They will then recommend a course of action to improve the flow of cash into your bank account and reduce outgoings as far as possible.

VAT Returns & VAT Advice

If you're fortunate enough to have a 12-month turnover exceeding £85,000, you will then be faced with the task of dealing with VAT.

The rules surrounding VAT are complex, and it's easy to become confused as to what you should be applying to which items. VAT can be applied to goods, services and delivery charges, but it's not as simple as it sounds!

Your VAT taxable turnover equals the amount of gross revenue over a rolling twelve-month period that isn't exempt from VAT. In plain English, if the taxable turnover of your ecommerce business looks likely to go over the £85k threshold within a month or so, or has done so over the last twelve months, you are legally obliged to register for VAT.

Learn more: How to avoid paying VAT as a business

Learn more: Being VAT registered is killing my business

Registration

Bear in mind, though, that registration can take as long as ten weeks! If you don't register and file your VAT return in time, you are liable to late fees and penalties that could have serious implications for your online business. Aside from this, you may be removed from any OMPs (online marketplaces) that you are selling on. It pays, then, to be ready to register when you are almost up to the limit and to do so as soon as possible.

For those trading in the EU, the fallout from Brexit means that you'll need to register for VAT in each country in which you trade.

Auditox will guide you through all of the traps and pitfalls of VAT returns and registration as and when necessary, regardless of where your main trading base is. We will calculate and file for VAT according to the country you are selling in at the time.

Business Set-Up

Are you in the planning stages of setting up your ecommerce business? We can smooth the way and get you off to the best possible start.

We can provide expert support and advice on everything from accounting software to pricing structure. We'll show you how to manage inventory processes effectively as well as how to operate across different ecommerce platforms. We will also assist you in calculating COGS* (cost of goods sold) correctly.

*COGS basically evaluates the total cost of making a product in terms of labour and raw materials. It doesn't include overheads such as payroll, marketing or office space.

Our accountants for ecommerce will help you register your online business where necessary and will be available when needed as your business grows. They'll help you to overcome the common mistakes made by most people establishing an online selling platform, immediately handing you an advantage.

It's unlikely that a traditional accountant would offer the same level of dedication and service!

Business Planning

Every business needs a solid business plan for stability, growth and continued success. Without a coherent plan, things will just tick over, opportunities will be missed, and it's likely that sales will stagnate.

Your dedicated ecommerce accountant will analyse your financial information and offer advice on improving and growing your business. They will study your sales figures to see where your strengths and weaknesses are in the market, and advise you on a sound business strategy to improve your chances of success.

With a working knowledge of sales channels like Amazon, eBay, Etsy and Shopify, they can offer advice to all kinds of clients and ecommerce business types, such as dropshipping, third-party logistics, wholesale, and print-on-demand.

All this means that you can rely on your Auditox accountant to provide a workable, sustainable solution that will steer you in the right direction.

Business Structure

Online businesses come in all sizes, and it can be difficult to define the overall structure when there are several people involved.

This is an important aspect of any ecommerce business; you need to consider what kind of business you want to run.

Much will depend on the number of individuals involved in the enterprise. The simplest type is a sole trader, followed by a limited company, a partnership, and then a limited liability partnership.

On balance, the best option is the last one, but we will discuss this with you and help you to decide the right one. And if you want to expand your business, we will help you to transition to a structure that better suits your needs.