While Opening an e-commerce store is an impressive venture for any entrepreneur. With an online shop, your products are accessible day and night, year-round, to a world array of consumers. The World Wide Web authorize you to cast a good net for a distinct segment audience, drop-ship orders, and roll in the hay, all while maintaining a small physical footprint.
Once your new store has been found out and goes survive the web, you’ll get to make sure that your stock levels are sufficient for tracked expenses, among other concerns. Online accounting software offers integrable solutions to help with all of these things.
What is bookkeeping?
Bookkeeping is the process of recording and managing all financial transactions for your business; including sales, purchases, and payments. Online Bookkeepers track all costs and income to assist a corporation make informed financial decisions. The goal of bookkeeping is to show you your business’s bigger financial picture, balance your accounts, and improve cash flow management more strategically. As a retailer, your inventory is the base of your business, and almost everything you do depends on it. Because many of your financial documents and reports focus completely on your inventory.
What Makes Retail Bookkeeping Unique?
Given this nature of the business, accounting processes within the retail sector to differ from other industries. While accounting basics are universal across the board to all or any companies, bookkeeping intrinsically will be different for various areas. Hence, accounting for the retail store will not be the same for restaurants or hospitals as these businesses’ fundamentals vary with each other. Thus, owners within the retail sector need to be especially conscious of the principles of accounting relevant to their establishment.
The Basics of E-commerce Bookkeeping:
You must take several necessary steps when you are setting up a bookkeeping workflow for an online e-commerce store. A clarify version of this process might look something like this:
- Get yourself accounting software
- Track your cash flows
- Determine how to count inventory
- Understand your cost of goods sold
- Calculate all other expenses
- Figure out your break-even sales requirement
- Track your sales and profits before tax
- Set up the proper tax rates for customers
- Plan for your tax payments
- Understand your balance sheet
Before you start doing the math to calculate your revenue and costs, it’s a best idea to make sure you understand the basics principals. The good place to start is with financial statements.
Financial Statements You Need to Know About Online bookkeeping services:
As a business owner, you need to maintain an up to date view of your finances at all times. When you have a transparent picture of what your money is doing, you’ll get a far good handle on your business pay out. This allows you to develop and frequently improve your profit. Financial statements offer a structured view of this information.
Here are three main types of financial statements that are used in almost every business model, regardless of size or industry:
- Balance sheet
- Income statement
- Cash flow statement
Let’s check out each of the primary three financial statements in additional detail.
A record provides detailed information about a few company’s assets, liabilities, and shareholders’ equity.
Assets are things that a corporation owns that have value. This typically means they will either be sold or employed by the corporate to form products or provide services that will be sold. Assets include property, like equipment and inventory.
Liabilities are something that a person or company owes, generally a sum of money. Liabilities are set over time through the transfer of economic benefits including money, goods, or services. Most companies will have these two line items on their balance sheet, as they are part of ongoing current and long-term operations. Liabilities also include obligations to supply goods or services to customers within the future.
- Shareholders’ equity
Shareholders equity is usually called capital or net worth. It’s the money that might be left if a corporation sold all of its assets and paid off its liabilities. This extra money belongs to the shareholders, or the owners, of the corporate.
An earnings report may be a report that shows what proportion of revenue a corporation earned over a selected period (usually for a year or some portion of a year). Your income statement includes the entire money deliver in over a given period (month, quarter, or year). This statement show both operating and non-operating income. Using income is any money made through regular business activities; if you own an e-commerce clothing retail business, your primary operating income is from inventory sales.
Non-operating income reflects money made through means indirectly linked to your business activities. Your non-operating payment might include property sales, equipment sales, or investment returns to use the above example of a clothing retail store. If you primarily operated out of a warehouse, then sold that space and moved into a smaller one, take advantage of the sale would be considered non-operating income. The same could be true if you made take advantage of reselling equipment sort of a home appliance or if your company received dividends from an investment of its funds.
Cash Flow Statement:
Cash flow statement report a company’s inflows and outflows of money. This is important because a company need to have sufficient money to pay its expenses and purchase assets. While an earnings report can tell you whether a corporation made a profit, an income statement can tell you whether the corporate generated cash.
An income statement shows changes over time instead of absolute dollar amounts to some extent in time. It uses and reorders the knowledge from a company’s record and earnings report.
Online accounting software such as online accounting services helps you keep track of this entire amount because it makes the data you need for cash flow statements readily available. This is most important because aside from being your most detailed financial report, an accurate cash flow statement can prevent overspending or run away of inventories.
Why Inventory Cash Flow is essential for Retailers:
Having an accounting department dedicated to your company internally is often extremely expensive. Maintaining an organized, cost-effective inventory is perhaps the most essential aspect of any retail e-commerce business model. Holding stock is more than just stockpiling items you intend to sell; it also means keeping track of your inventory cash flow.
Cash flow refers to the amount of money “flowing” in and out of business on a monthly, quarterly, or annual basis. When you know exactly how much money is passing through your business, it enables you to maintain a positive profit margin. If you suffer a loss, your income statement pinpoints where overspending occurred, so you’ll strategize to reverse the trend.
If you produce all the clothing you sell in-house, you would possibly add the value of raw materials and equipment acquisition/maintenance.
If you have bulk inventory that has to stay frozen, you’d include the cost of running and maintaining your freezer in the cash flow sheet. Calculating income specifically for your inventory is important. In a listing income document, for instance, costs listed should be exclusively inventory-related.
Keeping track of inventory cash flow means knowing your inventory’s overall cost and value, which tells you how much net profit you make from your stock sale. To estimate your inventory value, you need to know how many units you’ve purchased, the cost of manufacturing or purchasing each company, and how much you plan on marking up each unit when you sell it.
Inventory Costing Methods:
When businesses first start, they may arbitrarily choose a system for managing their inventory. Ineffective inventory choices can cost your business money and even cause you to pay more taxes than you need to.
The most common methods of inventory costing management are:
- (FIFO) First in first out
- (LIFO) Last in first out
- Weighted average
- The retail method
Inventory Tracking Methods:
Determining your inventory cost doesn’t need to be complex, it does require a consistent and detailed picture. Keeping track of your physical inventory stock is called inventory tracking, and there are two methods: periodic and perpetual.
Periodic Inventory System
Periodic inventory management allows a company to trace its beginning inventory and ending inventory within an accounting period, but it doesn’t track the inventory on a daily or per-sale basis. Under this technique, companies record all purchases to a purchases account. Once the physical inventory available has been counted, the balance within the purchases account is shifted into the inventory account, adjusted to match the top inventory cost.
Using periodic inventory tracking method, you must perform physical counts of your inventory at regularly scheduled meanwhile. A physical count involves calculating every individual unit you have in stock and recording each item’s cost and sale value. Each time you recount, you’ll update your inventory income sheet to reflect what proportion of money your company spent and gained on inventory therein period.
Depending upon the dimensions and complexity of your e-commerce business, you would possibly prefer to do periodic inventory annually, quarterly, or monthly. If your business is starting, you might benefit from doing it monthly because this will help you get a more accurate picture of your overall inventory during a period of time when there’s likely to be more fluctuation as your business gets off the bottom.
Perpetual Inventory Tracking
A perpetual inventory tracking method records adjustments to inventory balances after every transaction through point-of-sale inventory systems. This eliminates the store’s need to close down for physical inventory stock taking as perpetual inventory systems allow for continuous stock taking. Perpetual inventory system keeps a running account of the company’s inventory that updates after every item sale or return.
Perpetual inventory systems involve more record-keeping than periodic inventory systems, which use specialized, automated software. Every item is kept on a separate ledger.
When an item is scanned for packaging or enters your inventory storage, the software automatically updates your inventory count, purchase account, and overall cash flow figures to represent your inventory’s current value perpetually.
Online Accountant offer inventory tracking services to mechanize your inventory and cash in of the perpetual system. With this tracking method your total sales and inventory cost are instantly update every time when you add a new product to your inventory or sell an item. Also you can integrate your QuickBooks account with your favorite online store inventory app to make tracking a blow.
Sales Order, Invoices, and Sales Receipt:
You’ve likely heard of sales orders, invoices, and sales receipts and have probably dealt with one or all of the above.
A sale order is a written request that a customer make for one or more of your products. A sales order is essentially a request for a product or service, written on a form that will ultimately become a receipt. For example, if you are shopping for various paints, raw materials, and tools at a landscaping nursery, you will select the products and quantities while shopping.
You will then communicate the order request to the sales rep or write down your request directly on a form. The order is completed before you choose up the supplies and materials within the yard. You will use this order as a receipt to verify the acquisition at the loading point. The main takeaway here is that the customer makes the order and prepays the order before receiving the supplies or service. The declaration confirms that the customer has paid and is owed a specific product or service.
An invoice is an order that’s intended for the aim of requesting payment. It lists the activities performed or the value of individual materials or components and provides a complete cost for the finished product. Invoices are a touch less common in e-commerce business models, but you’ll use invoices if you produce customized products.
If your e-commerce business produces custom furniture pieces, for instance, customers may communicate directly with you rather than filling out a sales order. Over phone calls, emails, and/or text message exchanges, you would possibly work with the customer to work out the materials, dimensions and allow the piece of furniture you propose to create.
During this case, an invoice might break down how the individual material and labor costs contributed to the finished product’s entire cost. You can even be including shipping costs on the invoice. An invoice will function as proof of the customer’s requests and a receipt that lets the customer see the pricing break down for all products. It also is a useful record of how your inventory materials are getting used.
A receipt is a proof-of-purchase received after the goods are delivered, but it differs from an invoice or a sales order because it doesn’t serve as a request. Receipts list the item or services purchased and delivered, display how much the customers paid. In e-commerce, a sales order or invoice may form the idea of a receipt. You might even package your products with a copy of the original sales order or invoice to serve as the receipt when your customer takes delivery.
Online accounting services allow you to make sales receipts, sales orders, and invoices, which you’ll then link together with your other accounts to assist you in tracking inventory. When a sales order is fulfilled, Online accounting services allows you to quickly and perfectly update your inventory tracking on the cloud to reflect your current inventory level. You can even set up alert to let you know when a specific inventory type is getting low, so you will know when to restock.
If your business is small you can use online software to prepare work orders and invoices. If you’ve got many purchasers, consider investing in order management and invoicing software. This allows you to enter, manage, and track orders. It’s a good idea to read up on the basics of bookkeeping for online retail businesses so you will understand what to focus your observation on while you’re busy getting your business off the ground.
Deductions That Small Business Owners Face
In Australia, as the tax time approaches every year, small business owners start worrying about taxation. This is due to the additional tax they need to pay after lodging their Small Business Tax in Australia. Hopefully, as a taxpayer you certainly don’t wish to get affected by this hassle, right? Then, what’s the sole solution to this problem? The answer is simple, by considering the remunerative tax deductions offered by the ATO. Rest assured that you don’t have to face this issue from the subsequent taxing years.
Who can help?
So, the best professional who can help you competently is a tax agent Perth in Australia. Your tax accountant will assist you in filling your pertinent tax returns in an effective manner. So, is your small business requiring paying those unsolicited taxes during every taxing year? Do you feel that your small business’s bottom line is getting affected as a result of that? If yes, then here are some notable tax deductions which you should consider imperatively. These tax deductions are encountered by most of the small business owners while submitting tax returns all by themselves.
Tax deductions which you can claim
So, there are certain tax deductions that you can claim from the ATO while lodging your Small Business Tax Return effectively. Some of them can be considered below.
Maintenance and Repairs:
These are tax deductions that small business owners can claim on the repairing and maintenance costs of their organizations. A few of them include the following:
· Any type of machine servicing if there is any
· Maintenance of the various electrical components
· Maintenance of the pipes for the sake of plumbing
· Conditioning of the gutters and
· Painting of the office building
The number of these deductions will vary somewhat according to the size and type of your business.
Deductions on Car Expenses:
These include deductions that you can claim on the costs of running an owned or leased car. However, you should use this car merely for the sake of your business and not for anything else. It might be the case that your business operates on a partnership business. In that case, one of the partners can claim a portion of the deductions according to the pertinent substantiation protocol.
Business Travel Expenses:
Certain business travels also come under the category of being considered as tax-deductible. These business travel deductions can be claimed according to the legal rules as imposed by the Australian Taxation Office. So, here are some business travel deductions which apply both to you as well as your employees.
· Any sort of costs related to food and the arranged accommodation in case you’re traveling all through the day.
· Costs related to taxi travel bills, bus, and that of train fares and airfares
In case, your employees are availing of these privileges, the pertinent fringe benefits would apply.
These include expenses related to the usage costs of satellite office phones and that of mobile phones etc. Again, these expenses should be solely related to your office and not anything else. As stated by the ATO, you can claim a substantial sum of deductions from the same. These tax deductions are furthermore divided into two separate aspects. These include the following:
· You need to have an adequate sum of records for substantiating your claims and
· You should have paid all the telephone bills to the pertinent operators to claim your deductions
These two aspects will be considered by the ATO related to your work-oriented costs only. If you have a home office, it might happen that you have used the phones for personal or familial purposes. In that case, you need to specify the office usage percentage to the Australian Taxation Office.
Wages and Salary:
Deductions that are directly related to the payment of salaries to your workers are also considered tax-deductible. These emoluments should however be paid against tasks and duties which solely pertain to your business. Sole traders however cannot claim these deductions in connection to the salaries they’re saying to themselves. They also cannot claim the said deductions against monies required for some private reasons. Again, if your business is a partnership, then you claim on your employees’ salaries partially and not fully.
So, do you also feel that you can claim any of the tax deductions stated above? Then, the best option would be to hire a registered tax agent in Perth to get the job done impeccably.
Deductions which you cannot claim
Some of the cost and expenses which are not considered tax-deductible include the following:
· Costs related to entertainment
· Private and domestic expenses
· GST credit deductions in case you carrying the same individuals on the activity statement of the Company
Tax issues are inevitable when you staying somewhere in Perth, Australia, and running a small business. A Tax Agent Perth is the only person who can help you lodge your small business tax returns faultlessly. Besides, your tax agent will also ensure that you’re able to claim your potential tax deductions in an effective manner.
Applying For Personal Loan Online? Here are Required Documents
Personal loan nowadays has become a lifesaver for individuals who need funds urgently. In a matter of a few hours, your loan is processed and disbursed into your account. However, both borrowers and lenders have to take care of a few important steps before loan processing.
The first step to get a loan is to look for the best lender offering loan terms based on your requirements. The next step is to apply for a personal loan. With a personal loan app, you can now fill the personal, professional details and banking details, and upload required documents on the go.
Documents Required for Personal Loan
There are various lenders available online. After choosing a lender based on your needs and other factors, you have to visit their website or download the personal loan app. Besides submitting your relevant details, you will have to upload some documents:
- Proof of Identity
The proof of identity has to be submitted with your application form. It can either be your birth certificate, passport, driving license, voter identity card, PAN card or Aadhaar card. Any of these can be used as your proof of identity.
- Proof of Address
The lenders also need to verify the place of residence for various future communications if required. You can submit your utility bills, passport, bank account statement or passbook and Aadhaar card for address proof.
- Proof of Employment
As the personal loan is unsecured, no collateral is required. To mitigate the risk of issuing a loan without security, lenders ask for proof of your employment. It ensures that you will be able to repay the loan amount easily and will not default. For Proof of employment, you can upload your previous 3-6 month salary slips.
An employment proof from a good MNC or Fortune 500 company also creates an impact. The procedure for a loan becomes smoother, and you can easily avail the loan. For self-employed individuals, lenders typically verify the income source proof to determine annual profit margins based on their industry/ line of business.
- Duration of Employment
If you have just passed out of college, then getting a personal loan might be difficult for you. The lenders ask for proof of the duration of employment of the applicant. Generally, lenders do not accept an application for such a short job duration. Most look for at least a year or more of employment.
- Work Experience
While employment details and employment duration are important, the work experience also plays a major role in personal loan. The lenders may ask for proof of work experience to be sure that the applicant is a steady employee and not switching jobs frequently.
- Credit History
Though there is no specific document for credit history, it is an important factor that matters while applying for a personal loan. If in the past you have defaulted, this does not reflect very good on your application. Your credit history is an indicator of your creditworthiness. The credit history is provided by an eminent credit bureau in the country, such as CIBIL or Experian. For example, many lenders expect a CIBIL score of 750 or above before issuing a loan. In a few cases, the applicant may also need to present your Form 16 of the current year and previous year.
Once the application with all the above documents has been submitted and verified, you will be granted the loan amount that the lender deems perfect based on your repaying capacity.
While the entire process for a personal loan is digital and hassle-free, the applicant must take care of the document submission carefully. The documents help the lenders in trusting you and helps to keep your credit history clean. With Insta loan apps, the e-KYC documentation process has become completely hassle-free. You can easily avail of a personal loan to meet a wide range of financial contingencies.
Why Will You Open Your Child A RRSP?
If your child in his/her teen with a job and an income in the previous tax year, it is possible to open a RRSP in his/her name.
Should you open a RRSP for your child? Find out why you should.
When parents consider saving for their children, they typically think of getting their money in a RESP (Registered Education Savings Plan) or a TFSA (Tax-Free Savings Account). The RESP helps to create an education fund for the child whereas the TFSA is a flexible and tax-sheltered way of saving money for the future.
While both are excellent options, what about RRSP (Registered Retirement Savings Plan)? A child RRSP is often ignored in financial discussions, but this plan can be an excellent way to save for the child’s future. Read on to know why you should open a RRSP for child.
Can I open a child RRSP?
Yes, you can.
A minor can open a RRSP by getting the consent of his/her parent or legal guardian. There is no minimum age for a child to open a RRSP, provided they have some legitimate income. Things like mowing lawns, lifeguarding, babysitting, etc. can add up to significant RRSP room over the years.
But then, if your child is still in his/her diapers, a RRSP is not the likely option.
Why open a RRSP for my kid?
There are plenty of good reasons:
1. To promote a healthy saving habit: If you want your kid to make a good saving habit, RRSP is an excellent choice.
2. To purchase a house: With home prices soaring, burying a house can be a hurdle for the next generation. Your child can get a head start by contributing the very minimal amount to RRSP and take advantage of the Home Buyer’s Plan at a later stage of his/her life.
3. Early investment and the magic of compound interest: Your child can take maximum advantage of the magic of compound interest by his/her early investment. For example, if your kid invests $100 from the age of 14, s/he will end up with a substantially large nest egg when s/he reaches 65 compared to someone starting with the same amount at 30.
The below chart throws more light on the matter.
|Age 14||Age 30|
|Per month investment amount||$100||$100|
|Total Interest Earned||$342,111||$100,471|
|Total Value of Investment at 65 years old||$403,311*||$142,471*|
**This calculation is based on an interest rate of 6% compounded monthly.
Can I use my RRSP money for my child’s education?
Certain plans allow you to withdraw up to $10,000/year tax-free. There is also a lifetime maximum of $20,000/person. You will have to repay the money over a period of 15 years. Any amount you cannot repay will be subjected to income tax.
This program is available only to you and your spouse – not your kids. So, if you want to use your RRSP to pay for your child’s education, you will have to withdraw the required amount and pay tax on it.
How can you open child RRSP?
If you have decided to open a RRSP for your child, here is what your child’s going to need:
Income: Your kid must have earned some income and have been issued a T4 by the employer in the previous year (unfortunately, an allowance does not count). Your child should have also filed an income tax return in the previous year.
Letter of consent: Your child must have a letter of consent from a parent of a legal guardian.
The rest of the process is more or less similar to opening a RRSP for yourself, including the process of deciding what you can do with the contributions.
Finally, we would like to say,
If your child in his/her teen with a job and an income in the previous tax year, it is possible to open a RRSP in his/her name. It can be a good option to establish a good saving habit. But then, if your child plans to use the money to pay for tuition, or debt, there are other appropriate investment options like RESP or TFSA. Talk to our financial advisors to know more about how to open an RRSP. The consultation is free with zero obligations!
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