Bookkeeping is important for any business, but it is especially important in ecommerce due to the various complexities in accounting. The volume and frequency of transactions in ecommerce make accurate bookkeeping essential.

Noting this, accurate bookkeeping matters – and failure to do so could lead to a slew of problems including cash flow shortages, tax issues and more. Consider this your comprehensive guide on bookkeeping for ecommerce and CPG startups.

Why Accurate Bookkeeping is Crucial for eCommerce and CPG Startups

Good bookkeeping can improve financial transparency for any ecommerce or CPG startup, streamlining business growth and ensuring proper compliance. It also helps leadership make better, more informed decisions on financial operations and how to position the business in the future. 

Accurate bookkeeping can alleviate common pain points for startups by better categorizing transactions, managing accounts payables and receivables, and streamlining invoicing. It also helps reconcile bank accounts and assists with inventory management.

Common Bookkeeping Challenges for eCommerce and CPG Startups

Managing Multiple Sales Channels

Unlike a conventional business, ecommerce and CPG startups often have to manage multiple sales channels. Take an ecommerce startup that’s selling on various platforms (i.e., Amazon, Shopify, eBay, etc.) for example. The basic structure of bookkeeping is the same in that there are assets, liabilities, equity, income and expenses. Yet, breaking things down between each of these sales channel categories is something that many startups struggle with.

Inventory Management

Any ecommerce or CPG startup must manage its inventory costs and balances properly. It’s a major pain point among these types of startups, and when you do it right, it has a significant impact on production and order fulfillment. Good inventory management systems can also help properly balance overstocks and understocks to keep your startup’s bottom line better in check.

Poor inventory accounting can lead to incorrect inventory valuation and an overstatement of profit on certain products or product lines.

Handling Returns and Refunds

eCommerce isn’t just about selling goods, your business also needs a system for handling returns and refunds. That’s because the return process can incur costs, from processing the return to restocking the good or product to shipping costs. These costs can add up and eat into the profitability of any ecommerce or CPG startup.

Sales Tax Compliance

Sales tax is one of the biggest complexities for ecommerce startups, especially considering that you’re selling throughout the country and perhaps even the continent and the world. Many U.S. states have different sales taxes – and it’s important to ensure that you’re collecting the right amount from your customers so that you’re staying compliant. Unlike a brick-and-mortar store that operates in a single state, sales tax is not a one-size-fits-all proposition for ecommerce or CPG startups. This is why tax services are often sought after by newly emerging ecommerce businesses.

Best Practices for eCommerce and CPG Startups Bookkeeping

There are ways for startups to avoid some of the common pain points involved in bookkeeping, from the use of advanced accounting programs to best-in-class record-keeping. Here’s a closer look at what you need to know about taking your bookkeeping practices to the next level.

Use of Accounting Software

eCommerce and CPG startups that aren’t utilizing specialized accounting software in their bookkeeping operations are putting themselves at a disadvantage. Programs like QuickBooks, Xero, and Netsuite are designed to keep your books organized and easily accessible. They can help your startup stay compliant with tax law and even automate many practices to help streamline operations and reduce the risk of any errors.

Regular Reconciliation

Many ecommerce and CPG startups don’t regularly reconcile their accounts. Failure to do so can make it more difficult to spot any errors or issues in a timely manner. For this reason, it’s suggested that reconciliation be performed at least once a month.

Accurate Record-Keeping

Failure to accurately keep records is certain to doom any type of business, let alone an ecommerce or CPG startup. Some of the best ways to ensure accurate record-keeping includes:

• Using robust accounting software or working with a bookkeeping partner.
• Regularly reconciling bank statements.
• Maintaining consistent financial records.
• Keeping receipts and maintaining records.
• Accurately tracking financial data like all income and expenditures.

Monitor Cash Flow

Properly monitoring it and paying close attention to financial reports can help identify any shortcomings and help startups more quickly adjust to how they manage their revenue. Some of the best ways to monitor cash flow include:

• Cash flow forecasting and creating regular cash flow financial statements.
• A robust accounts receivable and accounts payable process.
• Creating cash conversion cycles, which identify how quickly a business is able to convert its sales back into cash.

How Graphite Financial Can Help

Startups, especially in the eCommerce and CPG sectors, prefer Graphite Financial to other bookkeeping and accounting firms for several reasons, including our industry-specific expertise, extensive experience with startups, and flexible pricing plans. Here’s a closer look at how Graphite Financial can help optimize your startup’s bookkeeping operations.

Industry-Specific Expertise

Good bookkeeping is essential for ecommerce and CPG startups – and often, the level of expertise and experience needed exceeds what the startup has available to them in-house. That’s where it makes sense to work with an external partner, like Graphite, for any and all bookkeeping needs. Quality accounting services are arguably just as important to a startup as the product or service that they’re offering. As experts in ecommerce and CPG bookkeeping, we’re well-positioned to serve as the ideal extension of your business.

Comprehensive Bookkeeping Services

At Graphite Financial, our bookkeeping services are “always on” to ensure your books are accurate and compliant. Our track record and talent speak for themselves – and we’ll cover all aspects of bookkeeping for your startup, from inventory management to sales tax compliance to robust financial reporting. Our services are also scalable and able to continue to support your startup as it grows.

Dedicated Team of Accountants

We make it a point to serve as a true extension of your business, so much so that it’ll feel like you have a true in-house team at your disposal. In fact, the team of accountants that we pair your startup with will only have a handful of other clients that they serve at a time, allowing them to better invest themselves in your business to serve all of its accounting and bookkeeping needs. Our experienced and dedicated accountants have worked with hundreds of startups just like yours – and we’re poised to help add your ecommerce or CPG business to the list of those that we’ve helped take to the next level.

Conclusion

You might think that bookkeeping is bookkeeping – but various complexities make bookkeeping for an ecommerce or CPG startup unique when compared to any conventional business. That’s why it’s important to have the right team or partner to ensure everything from proper management of multiple sales channels to inventory management to sales tax compliance.

Oftentimes, it’s cost-prohibitive to bring someone in-house to handle bookkeeping in the early days of your business. Even if you have this person in-house, the skill set and expertise aren’t often what’s required to successfully manage the business. That’s where a qualified partner like Graphite Financial can help. We’ll help pair your startup with a team of qualified accountants who have the experience and expertise in bookkeeping that you need at this stage of your business.

When you invest in our bookkeeping services, you’re also investing in your startup and ensuring that it’s able to successfully navigate the pain points that many emerging businesses experience. Such pain points are especially true for ecommerce or CPG startups.

Contact Graphite Financial today to learn more and to schedule a consultation today.

Partner with Graphite Financial for Your eCommerce and CPG Startups Bookkeeping Needs

At Graphite Financial, we’ve successfully partnered with hundreds of e-commerce/CPG startups just like yours in the early days of their business and have helped put them on the path to success. We’re standing by and ready to do the same with you. Contact our team at Graphite Financial today so we can learn more about your ecommerce or CPG startup’s unique needs and work to craft a custom proposal for you.

When you work with Graphite Financial, you can rest assured you’re getting more than just accounting expertise and expert bookkeeping that will ensure sales tax compliance, robust financial reporting and more, but a true extension of your business that can help it scale up as it grows. Contact us today to learn more about our special pricing and programs specific to early-stage ecommerce businesses.

You have bookkeeping needs. We have bookkeeping answers. Contact Graphite Financial today to discuss your ecommerce or CPG startup’s unique needs and get started today.