Accounting for eCommerce can be pretty complicated, with aspects that include, but are not limited to, tracking online sales from multiple channels, managing inventory, and accounting for expenses like platform fees and shipping costs, while also handling complex tax obligations like sales tax.
Another important aspect to consider is that accounting in eCommerce is important for three reasons: determining the business health, making financial predictions, and paying tax liabilities. For e-commerce businesses, this poses a unique challenge when considering outsourcing their accounting service. Finding an outsourcing partner who fulfils their unique requirements can be a challenge.
This blog is meant for CPA firms that specialize in accounting for e-commerce, so they can understand the importance of outsourcing e-commerce and how it can greatly help them increase productivity and streamline their operations.
How does outsourcing help CPA firms with E-commerce clients?
Streamlining the tax filing process
The borderless nature of these platforms increases the complexity of managing taxes, particularly given the compliance requirements across different states in the US.
An outsourcing ecommerce accounting partner can help CPA firms handle these compliances with ease. Bear in mind, there are multiple level of complexity that a firm might overlook. This could be in the form of changing thresholds, staying on top of marketplace facilitator obligations, understanding sales nexus requirements, and filing sales taxes separately in each state.
By handing over these responsibilities to an outsourcing partner, CPAs have a major weight off of their shoulders. This allows them to concentrate high-level tasks like reviews and advisory engagements, which in the long run offers that a much better return on their time.
Accurately Reconcile Multi-Channel Transactions
E-commerce businesses include sales on several platforms, including Amazon, Shopify, Walmart, Etsy, and eBay, among others, with reports and terms of settlement specific to each platform being reconciled in a manner much more complicated than a standard accounting reconciliation.
It is the outsourcing e-commerce partner’s expertise in combining these disparate sources of information, correlating transactions with settlements, applying fees correctly, synchronizing times of difference, and ensuring accuracy in tracking sales, refunds, and chargebacks that provides a fully reconciled multichannel set of books automatically delivered to the CPA firm.
Track Merchant Fees Across All Platforms
E-commerce entrepreneurs incur a wide range of fees relating to transacting business on other platforms such as marketplaces and online financial platforms. E-commerce is subject to a range of fees including those relating to transactions, international transactions, payouts, and refunds resulting from dispute resolution among others. Because these costs vary depending on the platform used, they can be automatically deducted from every transaction, making it difficult to reconcile and audit them entirely.
It is an outsourcing team with expertise in comprehensively tracking, categorizing, and reconciling a wide array of fees. This is crucial in ensuring these costs are indeed captured accurately and addressed for the CPA firm to produce an accurate G/N revenue analysis statement, with this process preventing wasted precious time researching the settlement statements and transactions for those costs.
Manage Foreign Exchange Gains and Losses
For online sellers who deal with international clients, Foreign Exchange (FX) risks must be appropriately addressed, as they can create inconsistencies between the amounts posted in the accounting system and those received in bank deposits.
The role of Outsourced Accounting Solutions is vital in closely monitoring currency conversion rates for each transaction, determining any gains or losses from exchange rate fluctuations, and ensuring the value of transactions is properly tied to the exchange rates available at the time of sale. Moreover, CPA firms can avoid the risk of misrepresentation due to currency fluctuations by closely tracking FX rates. This means businesses will receive transparent, properly structured financial statements that can be easily audited and used for compliance with financial standards.
Process Payments with Timing Difference
E-commerce businesses often face challenges in reconciling their financial records because of the complex timing of payments received from payment processors. These businesses typically receive payouts on schedules that do not align precisely with the actual sale dates, which can create discrepancies and complicate the reconciliation process. This process makes it difficult to directly link sales to bank activity, as the timing and amounts can vary significantly.
To address these issues, many businesses outsource to accounting providers that specialize in managing the entire reconciliation process. These providers carefully match each payout to its corresponding transactions, accounting for delays, partial payments, refunds, and chargebacks.
By doing so, they ensure that every payment is accurately recorded and reflected in the financial statements. This approach yields clean, timing-adjusted reconciliations that are precise and ready for review by CPA firms or financial auditors, thereby streamlining financial management and audit processes for e-commerce businesses.
Conclusion
Outsourced accounting services provide complete, finalized financial books, ensuring that the final product is ready for review. This allows CPA firms to focus on strategic, client-facing tasks and enhances overall efficiency. Especially in accounting for e-commerce, where transactions are high-volume and multi-channel with complexities, outsourcing becomes essential. By entrusting detailed, complex processes to specialized partners, CPA firms receive accurate, comprehensive financial reports without diverting internal resources. This enables firms to deliver higher-quality service, scale confidently, and focus on advisory work that strengthens client relationships and promotes long-term growth.
