The e-commerce/retail electronics sector has grown in the past few years. Two reasons for this growth are a steadily improving economy and online shopping. Many e-commerce electronic retailers are finding it challenging to keep up with inventory, maintain accounting books, and keep stock up-to-date. E-commerce/retail electronics company accounting can be challenging, but it impacts a company's bottom line.
E-Commerce/Retail Electronics Company Tax Planning Challenges Businesses Face and How to Avoid Them
As an e-commerce electronics retailer, you want to streamline the checkout process in your online store for your customers. However, calculating tax adds a new level of complexity. In the United States alone, there are over 10,000 tax jurisdictions. Part of your e-commerce/retail electronics company tax planning must include complying with these regulations, avoiding automated IRS audits.
With so many tax jurisdictions and rapidly fluctuating tax laws, your e-commerce/retail electronics accountant needs to track sales carefully, making sure that your business complies with all regulations at all times. This challenge takes on a new level of complexity for your e-commerce/retail electronics company CPA if your business is leveraging third-party warehouses or fulfillment services. The problem is knowing where your brand presence is strong enough to require tax payments.
Tax laws change based on your warehouse's location or your customer's addresses. Successful e-commerce/retail electronics company accounting depends on you having precise data tracking every phase of each order's workflow. Many companies like yours have used back-end data systems. This makes it easier for their e-commerce/retail electronics company CPA to grasp the geographic complexities of each order and tailor tax strategies accordingly.
Successful Retail Accounting Requires Keeping Accurate Records
Your e-commerce retail electronics company's success rests in part on your e-commerce/retail electronics accountant's ability to keep your income statement, cash flow statement, and balance sheet up-to-date. These three reports give insight into the financial health of your online store.
This is where all of the money your business earns is recorded. For most retail businesses, this comes from customers buying goods. From revenue received, you need to subtract the cost of the goods you sold. The remaining money is what your business has left to cover overhead and other costs. Other expenses, like employee salary and rent, can be tracked on the statement.
This is where your e-commerce/retail electronics company CPA will keep track of your liabilities, equity, and assets. One side of the sheet will list your liabilities, such as business credit cards. The other side of the sheet will list your assets, such as equipment. Your assets minus liabilities is your equity or the value of your business.
Similar to your income statement, cash flow is where you are monitoring the money that enters and exits your business. Your cash flow statement has the actual date that money is received and the actual date that money is paid out. This is the most important financial statement you have if you want to keep your company afloat.
Navigating With Experts
Here at Fusion CPA, we pride ourselves on offering best-in-class e-commerce/retail electronics company CFO advisory services. We e-commerce retailers understand their company's financial health, navigate complicated taxation issues, and compile financial reports accurately. We are familiar with various platforms that are used to automate accounting, including QuickBooks Online. We are ready to help you implement new strategies and make the most of these powerful tools. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive