A 2018 US Bank study found that poor cash flow management and an inept understanding of finance and accounting are two major roadblocks to success for businesses.
Do you feel like you could be part of this statistic too? This article will help you to increase your knowledge and provide actionable solutions to understand your business accounting.
WooCommerce gives business owners a great platform to sell products. Its customizability makes it easy to automate and support your business processes. Accounting is one of the most critical of these processes.
Bookkeeping management is essential for any eCommerce startup. Accounting platforms are not just for income tax purposes. They also help track sales, customer records, and expenses. It monitors your margins, sales to whom you sell, and purchases from who you are.
An accounting platform tracks money coming in and out and helps you make better decisions. For example, which products are the most profitable, and how many were sold?
It is important to keep track of sales tax filings and collections for your store. It’s becoming more common for sales tax nexus to become more widespread. It’s important to keep track of sales tax collections and filings for your store each month.
An accounting platform can also help you keep track of inventory so you know what’s available and when it’s time for reordering. This will help you run a more profitable and efficient business by knowing your numbers.
Are you tired of managing Excel spreadsheets and fragmented data? Are you ready to take charge of your accounting business? Read on if you are.
An accounting platform to manage your WooCommerce store
Accounting platforms offer many benefits. You can use business data to give you reporting and management capabilities.
- Get a better picture of the health of your business
- You can make better decisions
- Scale your business with tools that don’t require any extra effort
Each one is equally valuable. You’ll see how they all impact the accounting-reliant areas in your business.
Price of Goods Sold
An important metric in an eCommerce store is the price for goods sold (COGS). Inventory is most likely the largest expense in your product-based business.
But, without an accurate COGS knowing that 10 widgets were sold for $500 each, — it is impossible to make any actionable decisions. Knowing that your COGS was $20 per widget, you can plan how many you will order, what your net profit will be, and how it contributes to your overall margin.
Effective business planning requires you to know your expenses. This allows you to forecast, plan and budget appropriately. You can’t know your margins without knowing your costs. This will determine your profitability.
This is done automatically by an accounting platform. The accounting platform tracks how many products have been purchased and at what price. It also shows how much stock is available. This information will be displayed in your inventory so you can determine the real profit after taking out product-related costs.
Knowing your COGS can have many benefits, including the potential for profit analysis and business planning. There are also tax benefits. Gross profit is the difference between revenue and costs. Taxes are calculated on this basis. The end taxable income can be accurately calculated by monitoring all costs.
Accurate Profit/Loss Reporting
Two key indicators of business health are profit and loss. You have many options to keep track of your expenses and general income. This data can be used in accounting platforms to make decisions, view patterns, and see the history which is not possible in manual spreadsheets.
How does your marketing strategy correspond with the sales of your highest- and lowest-margin products in the last six months? Are your labor and resources being used to promote a product with low margins but high revenue? Is the COGS increasing over time? Could they be decreased by buying different amounts at different times?
You can track income and expenses through your accounting platform to create accurate reports. To accurately record sales and expenses, you need to enter the data correctly. Many accounting platforms can connect to your bank account or credit card to automatically retrieve this data.
Learn how to automate this type of data recording.
Margin Tracking
WooCommerce allows you to track inventory natively for sales purposes. This makes it possible to offer a certain amount of product to customers without overselling or underselling.
Accounting platforms provide different inventory-tracking advantages. It’s much easier — than it is —, to adjust, update, and enter stock quantities. This also updates accounting areas such as your Inventory Asset accounts or COGS.
An example of this is: You could open QuickBooks and enter 50 invoices for your vendor. Then, hit the save button. The vendor will be paid and the cost of products will be recorded. You can enter one bill to correctly increase your inventory by 50.
Reconciliation and Bank Statements
An accounting platform offers many benefits. It combines your income and expenses. This is an important last step to verify that your data matches real-world transactions. This is “reconciling.”
Reckoning is a great way to uncover unrecorded income and expenses. It also helps you discover unusual transactions, particularly in areas like theft or unauthorized expenses.
Reconciliation is typically done on a quarterly or monthly basis.
Use QuickBooks to manage your WooCommerce store
WooCommerce users love QuickBooks online (cloud based) and on their desktops.
You can easily track WooCommerce sales, expenses and customers, vendors, profits, losses, cost-of-goods sold, inventory, and other information without having to be an accountant.
You can monitor your company’s financial health by integrating it into your daily and weekly workflows, and not having to enter all data at the end.
It doesn’t take a lot of time to use an accounting platform such as QuickBooks. Integrations like QuickBooks sync for WooCommerce by MyWorks are easy to set up and you don’t have to manually enter any new data.
After you create an active QuickBooks account, there are some initial steps like entering the company start date and connecting to your bank accounts. After that, you can start tracking your accounting data. This can be done either manually or automatically.
Manual setup
First, create your products in QuickBooks. Next, enter COGS and inventory information. Finally, assign income and expense accounts.
Next, enter your WooCommerce store order numbers. These can include any sales from the past or start on a date you choose. Ideally, you should pick a starting place and keep all sales for the fiscal years together. You can enter orders as invoices (which are great if customers don’t pay immediately) or sales receipts which are ideal if you accept payments at the point of purchase.
Once you have entered your WooCommerce orders, your accounting reports will be available to help evaluate your store’s financial condition. You can also continue to use QuickBooks to track vendors as well as ongoing expenses.
Are there too many WooCommerce products or orders to manually enter? Are you too busy?
It’s great news! WooCommerce can be integrated with QuickBooks to sync all your data, both past and ongoing, in real-time.
Automated setup
You may choose to integrate based on your business needs, budget, and personal priorities. This will automate the process and help you save time.
Manually managing data may seem low-cost, but the time required to do so could lead to greater opportunity costs. You’ll need to assess the options available and choose which one best suits your needs.
As a WooCommerce store owner, you already have a lot of daily tasks. Manual accounting tasks such as adding customers and sales manually, managing product lists, accurately recording and filing sales taxes and adding bank deposits, reconciling accounts, and maintaining inventory levels are time-consuming.
Accounting doesn’t have to consume more time. Integrators can automatically keep inventory and accounting data current.
