Lifehacks, the shortcuts that make a once difficult process so much easier it feels like you’re cheating the system. You can find lifehacks for everything and accounting is no exception. Here are the top 10 Lifehacks you should know to make your e-commerce accounting more efficient.
- Use accounting automation software
- Connect multiple sales channels to your accounting platform
- Calculate tax rates automatically
- Use one-click payment links
- Set tax reminders
- Record returns and chargebacks separately
- Automate multicurrency management
- Categorize payment data with Smart Rules
- Reconcile in auto-mode
- Use one software for everything
1. Accounting automation software
The first and most important lifehack for e-commerce accounting is to use accounting software and integrate it to your online store. If you try to record your sales data manually it will soon become overwhelming, time-consuming, and can lead to errors. Accounting automation software, such as Synder, takes care of this by connecting your Quickbooks or Xero to your e-commerce store and also makes the rest of these lifehacks possible!
2. Connect multiple sales channels to your accounting platform
If your e-commerce business is growing well, chances are you probably sell across many different sales channels, such as Shopify, eBay, Etsy, or Amazon. As well as that, you most likely deal with several different payment processors. Selling across multiple channels is definitely an advantage, but it makes accurate accounting more difficult. The best hack to solve this is to connect all your sales channels to one accounting software and manage them within a single infrastructure. Synder lets you connect and consolidate an unlimited number of platforms. Having that kind of flexibility is a lifesaver for e-commerce accounting.
3. Calculate tax rates automatically
When selling online one of the common accounting hurdles you might face is applying the right tax rates for different customers in different states or countries. Instead of adding the sales tax manually, accounting software can help you implement this automatically. The adjustments in the books will be made based on the shipping information for example. Having the tax rates added automatically is an easy way to increase your efficiency and you’ll have one less thing to worry about.
4. Use one-click payment links
Here’s a lifehack for how to have customers pay you on time: one-click invoices. Using Synder’s invoicing feature, you can create and send invoices (both one-time and recurring) with a direct payment link. It will allow customers to pay the invoice right away. All of the created invoices are automatically synchronized, and as soon as the payment is received, Synder applies it to the corresponding invoice and closes it in accounting. Another huge bonus to payment links is that you can paste them directly onto your website, Instagram, or any other social media.
5. Set tax reminders
A big part of accounting for your e-commerce store is being prepared for filing your taxes and having things ready for deadlines. It can be stressful leaving your taxes to the last minute. A simple lifehack to help you keep on top of those deadlines is to set up reminders. There are many ways to file your taxes online. Choose software that notifies you about approaching deadlines and helps you prepare so that you have all your taxes ready. These helpful settings can help you to avoid late filing fees.
6. Record returns and chargebacks separately
Recording returns and chargebacks (forced reversals of credit card transactions) in accounting can be challenging for e-commerce companies. A chargeback is not the same as a return/refund, so make sure you distinguish them, otherwise it will make your financial reporting inaccurate. Document any chargebacks and refunds separately in order to prevent a double refund and extra losses. Record chargebacks as a “bad debt” expense and categorize the chargeback fee as a business expense. Record full refunds under “returns and allowances” and subtract them directly from your revenue.
7. Manage multi-currencies automatically
With this lifehack you will never struggle with accounting for foreign currencies again. You guessed it ‒ smart automation is a simple solution that will prevent potential errors and easily allow you to accept payments in different currencies. One of the best functionalities software can provide is taking care of processing foreign currencies. Synder, for example, has exceptional multi-currency management capabilities. Synder automatically calculates the conversion using official bank exchange rates and correctly records the payments in your books.
8. Categorize payment data with Smart Rules
Categorizing your sales information with Smart Rules is the next e-commerce accounting lifehack. Categorizing your data, for example by product, customer, or location, is always valuable, and this way will make the categorization automatic and hassle-free. Smart Rules can help apply necessary categories to any details of your sales, allowing you to understand the most high-demand products, profitable locations, and loyal customers. It also helps prepare your financial reports and improve your cash-flow management.
9. Reconcile in auto-mode
Reconciliation is an integral part of accounting and a key way to protect your business from any discrepancies and potential fraud. By reconciling regularly you can deal with any discrepancies as they arise. If you use accounting software, the actual reconciliation process becomes much easier. For many businesses, it simplifies the process of record-keeping, saves hours of time and hundreds of dollars they would otherwise pay someone to carry it out manually. With accounting software, you can be confident in overseeing the reconciliation process yourself with just a couple of clicks.
10. Use one software for everything
All of the accounting hacks mentioned in this list involve technology in some way. This final lifehack is to streamline the software you are using instead of using multiple different solutions. You can find all the functionality you need in one software program. It will not only cut your costs but also give you the clearest picture of your data and cash flows. For this, we highly recommend Synder. You can try it for free, no credit card information required.
Hopefully you found something useful in these 10 lifehacks for e-commerce accounting and it will help your e-commerce business flourish!
Gemma Picket is a FinTech writer with sound experience in automation solutions. She researches and provides guidance for businesses on their path towards automating mundane and recurring parts of their workflow, works with professional accountants, and frequently interviews industry experts to create relevant and forward-looking content.