Do you know what the challenges that E-Commerce accountants and business owners face?

The process of bookkeeping and accounting of e-commerce transactions is more complex in comparison to the service-based business and even to the traditional retail business. Let’s review and analyze the major challenges that are faced by the management and accountants of the E-Commerce business. 

1. Complicated Inventory Management Process – The market or the customer base is extensive in E-Commerce business. The E-Commerce business must be flexible to accommodate and adapt itself and its product with a change in consumer demand. As a result, the business and the accountants are under continuous pressure to forecast and manage these changes in the inventory.
2. The Complex structure of the Fees and Commissions of the Selling Channels – The selling channels like Amazon, Shopify, etc. charge different types of fees and commissions for different services it offers to the business. The accounts of E-Commerce businesses experience continuous pressure to account for and check the accuracy of such costs.
3. Continuous Forecasting and Projections – The accountants and the management are required to continuously forecast the change in demand, change in consumer preference, etc. This is possible only if the financial information is readily available on a real-time basis.
4. Larger Sales Volume – There is a large volume of data that is to be handled. The accounts for E-Commerce businesses need to account for the sales, returns, shipping, inventory, selling costs, damages, etc. 
5. Tax Compliance is Complex – The high sales volume that is generated by sales not only limited to a particular geographical area along with different kinds of costs, creates complexity and confusion concerning tax treatments and compliance with multiple States and on a federal level with IRS.
6. Other Issues – There are many issues such as recognition of revenue, reconciliation, accounting for discounts and schemes, etc.

Therefore, in order to tackle these unique challenges, your E-Commerce business needs an E-Commerce CPA Specialist who knows all the ins and outs of the industry, its challenges and solutions.