The e-commerce industry is predicted to touch $35.2 billion by 2021, and the sector will continue to expand its reach in Australia. The upcoming and trending domain is becoming the newfound love of budding entrepreneurs in Melbourne who want to become their own boss.
If you are among those who are planning to set up their online shop or already have one, then you will need the support of an efficient bookkeeper to sustain the business and make it grow with each passing quarter.
As an e-commerce business owner, you should also have the basic knowledge of accounting and bookkeeping to understand the financial reports, forecast the sales, file tax returns and make sound investments.
If you are unable to hire a bookkeeping company in Melbourne, then you must adhere to the tips mentioned here to run a successful e-commerce business.
1. UTILISING ACCOUNTING SOFTWARE FOR RECORDKEEPING
Most bookkeepers utilise accounting software to conduct the recordkeeping work which tracks all the transactions taking place every day. It can be customised to serve the needs of an e-commerce business and is highly effective in saving time and reducing manual errors.
However, you should not just get any software that generates financial reports. You must opt for the one that comes with a plethora of features, including payroll management, automated invoicing, real-time updates, etc.
It can be synced with the e-commerce website and supports in the preparation of Business Activity Statement and tax records. The entrepreneur can implement the time saved through this automation in running the business without any hassles.
2. MONITORING THE CASH FLOW
The most basic technique of evaluating the financial health of a business in Melbourne is to calculate how much money it is making. If the amount of capital coming into the business is higher than what is going out, then you are doing a good job.
However, it is not easy to achieve this milestone. A bookkeeper can help you in boosting the cash flow in a variety of ways through cash flow forecasting. It aids in cutting down on the excessive expenditure and making on-time payments to avoid the penalty levied on delayed payments.
Another significant way of improving the cash flow is to send out invoices as soon as the client gets the delivery and follow-up after every few days to maintain the flow of the incomings.
3. CARRYING OUT A BREAK-EVEN ANALYSIS
An e-commerce venture must be aware of the point when the expenses of the business become equal to the income as whatever money comes in after this period is calculated as profit.
It is imperative for the entrepreneur to understand how soon they can achieve the objective by conducting a break-even analysis of the business. A bookkeeper can help you in this regard and assist in pricing the products accordingly.
The analysis is essential for setting monthly goals and envisaging the future course of investments and business expansion in Melbourne. Your bookkeeper will offer his advice on reducing the variable costs so that you can start making profits as soon as possible.
4. MAINTAINING INVENTORY VOLUMES
Bookkeepers are highly valuable in maintaining the ideal volumes of stock at all times. An e-commerce business needs to have optimum inventory in the Melbourne warehouse to fulfil the committed orders and make sure that it does not lose out on sales because of lack of raw materials, packaging or goods.
Also, the warehouse should not be overstocked with inventory accumulated for the entire year as it gets affected by price fluctuations. If the cost of the raw material increases, then you are in a profitable position.
However, if it decreases, then you will be in a loss as you bought it at a higher price. Thus make sure that you are neither short nor in excess of the stock.
5. MINIMISING SUPERFLUOUS EXPENSES
A bookkeeper plays an influential role in cutting down unnecessary expenditure that can affect the profit and loss statements.
E-commerce businesses in Melbourne have several fixed costs, which include hosting and maintenance of the website, regular software updates, product inclusions, technical costs, warehouse lease, office lease and utilities, salaries and wages etc.
Besides these, there are some variable costs which are dependent on the percentage of sales, such as the marketing and advertising budget, raw materials, packaging, etc. The bookkeeper can help in reducing these costs by finding a warehouse with lower rent and easier access, getting a loan at a lower interest rate, etc.
6. KEEPING TRACK OF SALES
Sales are the most important part of any business in Melbourne as any entity cannot survive without selling its products. It is vital to know the number of goods sold at any point as it helps in understanding if you have been able to achieve your monthly goals or not.
The goals are, in turn, dependent on meeting the break-even point. Thus, if you have set a goal of selling 500 products every month and by the second week you have been able to sell only 100 products, then you need to create an aggressive marketing plan that helps in accomplishing the target.
However, you need to make sure that the ad spent is not higher than the income earned from the sales. Your bookkeeper can track the sales effortlessly. You can also link the Google Analytics tool to your e-commerce site to get the data every day without any errors.
7. INCOME TAX AND GST
Your e-commerce business in Melbourne should be registered for Goods and Services Tax (GST) which will be collected by adding 10% tax to the sales price. You can claim the GST charged by other businesses on the purchases made by you.
Your bookkeeper can be instrumental in guiding you about claiming GST and applying it on products since GST is not applicable to all goods that are sold and purchased. For instance, exports do not have GST obligations.
The GST is paid to the ATO every quarter during tax return known as the Business Activity Statement (BAS). The amount of GST is dependent on the tax collected on the sales minus the GST paid on purchases during a defined period.
Income tax is calculated as the taxable income multiplied by tax rate applicable to the business in Melbourne for the financial year. A bookkeeper proves useful in these calculations and assists in creating accurate reports.
E-commerce businesses are growing at an exponential rate, and most of these ventures are in need of efficient and professional bookkeeping in Melbourne. So keep the points mentioned above in mind to turn your venture into a thriving entity quickly and affordably.