Accounting is not a skill that is taught in schools. But it is essential to every business, which can be intimidating and challenging to learn. More so if you are running an online business and are hoping to grow it further.
You could gather all your receipts, sort them out accordingly, and hand them to an accounting services provider in Singapore, which would mean giving them financial control over your business. You may find that worrying, so here are five essential accounting tips for growing your online store to minimise that risk.
- Track your cash flow
- Factor in your cost of goods sold
- Keep your bank accounts separate
- Effectively manage your inventory
- Develop a bookkeeping system
Accounting Tips To Keep Your Online Store On Track
1. Track your cash flow
It is essential to keep track of your cash flows when you run an online business. This will provide you with a broad view of your business’s financial situation because maintaining records of your expenses and revenues is not enough. You will need to know every detail to ensure that your business’s financials are good.
Besides, it is also essential to track your cash flow to learn about your liquidity levels. This will allow you to understand your payment cycles better and plan for your online store’s growth. To get a better outlook on your business, consider outsourced accounting services in Singapore for accurate and factual cash flow statements.
2. Factor in your cost of goods sold (COGS)
A good accounting practice to maintain is to factor in the cost of goods sold (COGS), as these expenses generally take up most of the operational cost of your online business to earn revenues. You will need to consider all your expenses, starting from the raw materials to the final product.
Don’t forget to factor in the cost of labour and rent, as these are also part of your business’ operational cost. You must understand what goes into the COGS line item, how to control them, and how to reduce costs and increase their profit margin.
3. Keep your bank accounts separate
Most online business owners started small, and they tend to use their own personal bank accounts for business purposes. This is generally not good practice if you want to grow your online business. Instead, it would be best to keep your bank accounts separate to prevent any mix-up.
Keeping your bank accounts separate will also help to differentiate between business revenues and tax liabilities from personal income and the resulting obligations. This will come in handy if you intend to grow your business and seek funding from investors and creditors. Be sure to do your research before opening a business account.
4. Effectively manage your inventory
Managing your inventory is an integral part of accounting. It is about keeping track of your online store’s stocked goods and monitoring their weight, amounts, dimensions, and location. This will help reduce the cost of holding stock and indicate when to stock up on your products.
After all, overstocking and understocking your inventory can be detrimental to your online business. The ideal inventory management will focus on the goods turnover rate to maintain the right amount of stock. You also get to manage the stock-flow during peak seasons, such as the holiday season.
5. Develop a bookkeeping system
Bookkeeping and accounting may seem similar and are often used interchangeably, but they are two separate matters. The former involves tracking daily transactions, categorising them, and reconciling bank statements, while the latter is more in-depth and scrutinises your business progress and the data from bookkeeping.
There are several ways for you to do this:
- Using software or tracking daily transactions in an Excel sheet
- Hire an in-house accountant for bookkeeping
- Outsource accounting services in Singapore
So there you have it; five essential accounting tips for growing your online store. If you wonder what other essential accounting services you need for your business, here are the Top 5 Essential Accounting Services Every SME in Singapore Needs.
Looking to outsource accounting services in Singapore?
Our team of chartered accountants and corporate advisors are committed to supporting your business growth by developing your business processes, providing strategic advice, and building your corporate governance apparatus. Contact us today for accounting services! Call: (65) 6904 5955 Email: firstname.lastname@example.org