Useful Accounting Tips to Grow an Online Business

Starting an online business is a lucrative venture in Singapore. The country hosts a dynamic e-commerce industry that leads Southeast Asia in terms of online sales. Revenue is expected to reach a little over $5 billion this year, up by 11.2% from last year’s figure of $3.3 billion.

Like any other industry, there are certain steps that need to be taken to increase the success rate of an e-commerce store. This includes using the most reliable accounting services Singapore has to offer. Accuracy in accounting can help online business owners maximize profits and bring growth.

This article highlights seven accounting tips that will help aspiring entrepreneurs run a successful online business.

Invest in an Accounting Software

In this day and age, using a calculator is not a good way to crunch numbers. It is time-consuming, prone to errors, and highly impractical. It is best to use accounting software.

There are many choices available today, some of which are designed specifically for online businesses. They can help you do everything, from tracking sales to monitoring costs to keeping inventories.

Always Track Your Cash Flows

It is important to keep track of your cash flows when running an online business. Doing this will tell you if you are making money or not and help you make good business decisions. It will also help you keep track of due payments, like bills or employee salaries.

Create an Efficient Bookkeeping System

Bookkeeping is sometimes mistaken for accounting, but the two terms are not interchangeable. Bookkeeping involves processing daily transactions and reconciling bank statements. On the other hand, accounting dives deeper. It looks into your business progress using the information gathered from bookkeeping.

It is important to have an efficient bookkeeping system in place. It is the only way to ensure that the accounting is accurate and reliable. You can do it yourself using software or even excel files. Accounting outsourcing is another good option, where you use the services of a licensed professional.

Create a Contingency Plan

In business, something is always bound to happen, and the only question is when. Prepare yourself by identifying your weakest point and creating a contingency plan for it.

For instance, one of the biggest threats in today’s digital business landscape is cyberattacks. Aside from increasing your security measures, you need to create a plan in case of a successful hack.

Account Your Inventory

If you are selling a product, it is important to track your inventory. It includes the items that you sell, the materials used to make them, and the packaging in which they are shipped.

Keeping track of your inventory is important in many ways. It tells you how much money you spent on buying the materials or how much money you are not making back while the product is not yet sold.

Look at your sales history and decide the optimal level of inventory you need to keep on hand. This will tell you when you need to reorder. Make sure that your inventory does not run out, so you do not miss out on any opportunity to sell.

Factor in Cost of Goods Sold

The cost of goods sold is the amount of money you spent creating the products that you have sold. This includes the cost of all materials, the labour costs during the creation, and the packaging costs.

Knowing the cost of goods sold will help you get a more accurate gross margin, which tells you if your sales are enough to cover your costs.

Conclusion

Accounting is one of the more “boring” components of an online business. However, using the right accounting services is essential to keep track of your performance and determine the best course of action to achieve growth.