E-commerce/retail beauty company accounting can be a time-consuming job for in-house staff workers, many of whom would prefer to concentrate on marketing and selling instead of financial record-keeping. But if you do opt to take on at least some of the accounting jobs by yourself, it's imperative to recognize the unique characteristics of e-commerce accounting compared to brick-and-mortar ways of doing business. And when it comes to things like tracking inventory, accounting for state sales taxes, and deducting various office expenses, an e-commerce/retail beauty company CFO advisory service can explain all the special rules that e-commerce companies should know.
E-Commerce Retail Beauty Company Accounting
If you sell beauty products via an e-commerce business, there are several unique aspects of accounting, when it comes to activities like international selling, deducting office expenses, reporting state sales taxes, and calculating inventory expenses. The following list offers a brief overview of these important topics:
- Office expenses: Because so many e-commerce beauty retailers work from home, they often lose out on major line-item deductions for rental expense. Plus, the IRS always seems to be changing the rules for this deduction, and doing so on short notice. If you don't report the office-at-home expense exactly right, you risk alerting IRS audit bots that will flag your return.
- Inventory: If you store your inventory at an off-site location and pay a monthly or annual fee to do so, consider yourself lucky. Many e-commerce sellers of retail beauty products store some items at home, some in rented lockers, and yet more in shared storage space. Accounting for this otherwise simple expense can quickly become a numerical nightmare. Inventory handling and management is one of the things that e-commerce retailers really need to keep close tabs on.
- State sales taxation: Fortunately, there are several software products out there to help you wade through the confusion of dealing with 50 different state sales tax structures. Not all the tech solutions do a thorough job, and some can be quite pricey. Additionally, even the best of them can take a month or two to learn. To top it all off, state legislatures are constantly rewriting sales tax regulations.
- International sales: If you have international customers, get ready to learn about value-added tax laws, customs regulations, state sales tax exemptions, special IRS reporting requirements, and much more. It's good to have a wide customer base, and a global reach usually means higher profits, but you'll pay a price for being a "worldwide seller" in terms of red tape, paperwork, and arcane laws.
Being Prepared for Success
At Atlanta-based Fusion CPA, our team brings solid experience and a high level of strategic knowledge to the table for each one of our valued clients. If you want an e-commerce/retail beauty company accountant who can walk you through tasks like dealing with sales taxes in dozens of different states, deciding how to report warehousing or inventory costs, filing timely tax returns, or locating the most suitable software for e-commerce/retail beauty company tax planning, we can get assist you.
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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