How to Dominate E-com Business with Accounting Software

Imagine being part of an industry that’s estimated to be valued at 350 Billion USD by 2030, with 500 to 600 million online shoppers. This is the e-commerce industry, the second-largest industry in the world, and it’s set to boom in India. In such a dynamic and competitive environment, the right tools can make all the difference. Whether you’re already in this business or planning to start one, the importance of accounting software cannot be overstated. It’s a golden opportunity to shine, and the right software can be your secret weapon. 

It would be best to manage your finances well to be the market leader in this business segment. To attain a pinnacle position in your segment, you should have powerful accounting software for ecommerce business. 

In this blog, we will discuss how accounting software for ecommerce businesses can help you manage your business operations, from finances to handling returns to data analysis. Keep reading! 

Making the Most Out of Accounting Software for E-com Store

An e-com business owner can leverage accounting software for its benefits in the following ways. 

Ensures Business Success 

Did you know that only two out of ten e-commerce businesses can survive? It’s a harsh truth, but most e-commerce businesses fail due to a high burn rate. However, with proper financial planning and cutting unnecessary expenses, you can lower the burn rate and ensure the longevity of your e-commerce business. This is where feature-rich accounting software comes in, acting as a shield against business risks and giving you the confidence to thrive. 

It would be best to have feature-rich accounting software for your e-commerce business to help with financial planning and reducing expenses. 

With the implementation of accounting tools in your business, you will know how much money you are making or losing in real time; with these data-backed insights, you can take corrective action immediately if something goes against your favour. 

Easier Inventory Tracking 

E-commerce involves a higher inventory turnover rate, making it one of the most challenging businesses. On top of that, there are product returns, fluctuating demand, changes in trends, and other issues. It even gets more complicated when you deal with multiple products, warehouses, and several different suppliers. All these factors collectively make inventory management in an e-commerce business difficult. 

Managing inventory in an e-commerce business can be a daunting task, especially with the high turnover rate, product returns, and fluctuating demand. But with the right accounting software, you can handle all these variables related to inventory management effectively and efficiently, giving you the power to stay on top of your inventory at all times. 

Holding more inventory than required curtails the risk of getting obsolete inventory and ultimately leads to dead investment. 

It is best to consider data from accounting software before making procurement decisions to maintain optimum inventory levels.

Simplified GST Compliance 

With an e-commerce business, GST becomes complicated because you can receive orders from all over the country. Interstate business involves calculating CGST and IGST, which makes tax calculation complicated. To automate tax calculations with 100% accuracy, you need accounting software specially designed for e-commerce stores. 

Accounting solutions for e-commerce stores can relieve you from calculating tax liability and enable you to generate e-invoice and e-way bills in seconds. 

Also, you can file a GST return directly from the software. 

Error Prevention 

Wherever calculation or computation is involved, there is a chance of error. Sometimes, these can get you in legal trouble or may attract penalties. Humans are more prone to mistakes than sophisticated algorithms. You need modern accounting software requiring minimum or no human intervention to prevent errors that attract hefty penalties. 

Boosts Investor Confidence 

No matter how strong your company is in finance, an investor will only entrust you with investment if you have well-maintained financial records. It’s a responsibility that every e-commerce business owner should take seriously. When you have strong, updated financial statements, it not only gives you more credibility but also shows your diligence and commitment to your business. 

Vital, updated financial statements give you more credibility. This boosts investor confidence and increases the chances of getting an investment. 

Fraud Detection 

As technology advances, new ways of financial fraud are coming up. Since e-commerce businesses are online, you must take extra precautions to prevent such things. 

Accounting software is not just about managing your finances; it’s also a powerful tool for preventing financial fraud. As technology advances, new ways of financial fraud are emerging. With the right software, you can stay one step ahead, detecting these frauds and gathering proof for authorities to take proper disciplinary action. It’s a crucial aspect of business security that should not be overlooked. 

Over To You 

This is how accounting software for e-commerce can help you with scaling, inventory management, and financial management online. After reading this blog, we hope you have realized the potential of accounting software for e-commerce businesses. 

If you are searching for accounting software that simplifies financial accounting, manages inventory, and takes care of compliance, Munim is the one for you. This financial accounting software assists in accounting and provides insights with data analytics tools. Take advantage of this opportunity and subscribe for free now. 

Frequently Asked Questions on E-Commerce Accounting Software 

• 1. How do you maintain accounts in an e-commerce business? 

Ans. Following are the steps that you should follow to maintain financial accounts of your e-commerce business: 

1. Have a separate bank account for your e-commerce business 
2. Subscribe to e-commerce accounting software 
3. Set up accounting software properly 
4. Track sales & returns 
5. Manage inventory 
6. Monitor cash flow closely 
7. Regularly study financial reports 

• 2. Can I do accounting in Shopify? 

Ans. Shopify does not provide any accounting tools. However, you can integrate accounting apps with your shopify store and maintain books of accounts for your e-commerce business. 

• 3. How do you calculate P&L in an e-commerce business? 

Ans. Following are the steps to calculate Profit & loss in your e-commerce business: 

Step #1: Calculate the revenue of your e-commerce store 

Step #2: Calculate the cost of the goods sold (COGS)

Step #3: Calculate the operating cost and add it 

Step #4: Calculate the net income by subtracting COGS and operating costs from the revenue