Is it difficult for you to understand your business accounting?

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Rmelbourne Accountants

Is it difficult for you to understand your business accounting?

You are not sure if your drop shipping store is profitable enough because you have never worried about the accounts?

If you have an online store and you still keep paper and pencil accounting, you should update immediately. And it is that business accounting is one of the most important tasks of any online business, but it is difficult to carry it when you do not have a minimum financial base.

Therefore, in this post we are going to give you some basic notions about basic accounting so that you can start a profitable business and be able to financially manage your drop shipping store in the most professional way possible.

An introduction intended above all for you to learn basic accounting, with the idea of taking away your fear of numbers and thus making better decisions.

Do you want to learn accounting from scratch? Here you will find a first approach to understanding the key concepts of online accounting.

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Rmelbourne Accountants

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What is the accounting of a company for?

No matter how many sales you generate in your online store, if you don't keep an accounting control of your resale business, things may not go as well as you think.

You need to have a real picture at an economic level about the most important points of your business, since sales or cash inflows are not valid indicators to know the real situation of a company.

That is why you need to correctly keep your company's accounting.

Business accounting has the mission of creating a true picture of the economic status of a business. It is fundamentally based on recording all the operations carried out by the company, in accordance with the accounting standards in force.

All businesses must carry out accounting according to the same legal criteria. In this way, anyone with minimal accounting knowledge - Treasury, banks, commercial register or a person interested in acquiring your drop shipping store - can know the financial reality of your company , just by consulting to accounting firm the most important financial statements.

Accounting in a company is necessary for the following reasons: 

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So that you have a true picture of the finances of your business: knowing the economic reality of your online store, you will know if you are making money, if you have too many expenses or if your activity is not profitable enough. And also accounting will also give you an idea about how much money you can earn with an online store.

To comply with your tax obligations: The Treasury requires all SMEs to keep business accounts. And based on that accounting, the corresponding taxes are paid.

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Rmelbourne Accountants

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So that you have a reference on the value of your business: if you need to know how much your online store is worth, the best way to make an assessment is Through its accounting. If at any given time you want to sell your store - or you want to buy one that is already up and running - you will have to take a look at the book value of it. This is essential if you are going to buy or sell an online store in online stores.

How to keep a business accounting step by step All of these accounting terms are likely to cause you fear or rejection.

You may even think that writing down income and expenses in a notebook - as shopkeepers used to do - is enough to know if you are making money with your online store. But you have already seen that things are not so simple.

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Rmelbourne Accountants

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There are two reasons why you should know how to keep a small business accounting, at least at a basic level:

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Due to legal obligation: your company accounts must be submitted annually to the registry and they will also serve as a basis for calculating the taxes that you have to pay. In those cases, the rules established in the General Accounting Plan must be followed.

For financial reasons: in this article we are going to give you some basic notions of easy accounting, so that you can do a minimum financial analysis of your online store. Only with reliable accounting data can you make the appropriate strategic decisions. However, if you want to expand your basic knowledge, it is best to use a good accounting manual.

Tips for keeping business accounts It is recommended that you follow these tips so that the accounting control of your business does not take too long and to avoid making mistakes that are difficult to repair: 

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Keep all the documentation you may need: you must keep safe all invoices (purchase and sale), tickets , bank statements, receipts, proof of expenses ... This is something basic in accounting for an SME. Keep a periodic record of the income and expenses of your online store: you must keep track of the income and expenses to know if things are going well and you have sufficient liquidity. In addition, you should also make a forecast of future expenses and a bank reconciliation that helps you avoid unpaid bills.

Control the taxation of your online store: it is convenient that you anticipate the payments that you will have to make to pay your taxes. To do this, you must have the expiration dates of each tax obligation marked on your agenda.

Computerize your accounting: nowadays you have endless computer applications to carry out the accounting in your company. And if you don't want to pay the prices for these services, Excel or Google Sheets spreadsheets are perfect for your basic accounting.

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Rmelbourne Accountants

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Basic documents for your company's accounting In the event that you are self-employed, the law is less demanding than if the legal structure of your electronic commerce is that of a limited or anonymous company.

These are the books that you have to carry if you are self-employed:  

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Record book of issued invoices: in which the data of the invoices that you are issuing are recorded, following a consecutive numbering.

Sales and income book: this book is mandatory for those self-employed who pay by simplified direct estimation. It has to reflect the sales made by invoice, plus the rest of the money inflows, even those generated by your passive income.

Record book of invoices received: in this document you have to record all the invoices you have received for purchases related to your activity.

Investment property registry book: this must include the property that you have bought for the development of your activity for more than one year, for an amount without VAT of more than 3,000 Euros.

Record book of purchases and expenses: in this book you have to reflect all the purchases you have made for your business. And this item includes both purchases with an invoice, as well as expenses with a ticket.

In the case of an SME, business accounting becomes somewhat more complicated since the usual books for the self-employed must be added the following: Daily book: here all the daily operations of your company must be chronologically recorded.

Inventory book: you will have to reflect the value of the goods and stocks at the end of the year of your online store.

Annual accounts: the annual accounts must consist of a balance sheet, a profit and loss account, and a report for the year to explain the particularities of those accounts.

Are you going to start taking your drop shipping store accounting more seriously now?

www.rmelbourneaccountants.com.au