Buying products and services online is quite convenient and simple: just a few clicks and you acquire what you wanted to without even leaving your house. Hence, this convenience in shopping online and the increase in electronic purchases that have long existed but catapulted to new heights resulting from the covid-19 lockdowns – where physical stores had to be closed and social distance rules applied – opened the opportunity to an increase in demand for e-commerce, becoming an even greater business. With this, there has been an increase in demand for e-commerce accounting for e-commerce businesses.
Besides, an e-commerce business allows you to sell beyond your location, even internationally, and at any time of the day as no business hour, timing restrictions apply like physical stores.
The online sales for your e-commerce business – both for domestic and overseas customers – are part of the taxable turnover. In addition, GST must be accounted for sales to Australian customers. On the other hand, exporting a product is GST-free unless the item stays more than 60 days inside Australia after receiving the payment for the goods or issuing the invoice for them. In addition, if your GST turnover is $75,000 or more you need to register for GST. Your e-commerce accounting in this situation will be a mix of GST free sales as well as GST sales.
Some of our clients are already in the e-commerce business and we have experience with e-commerce accounting. Our clients use a diverse range of online e-commerce platforms – for product’s advertising and payment -, including Shopify, eBay, Amazon, PayPal, Amex, Stripe, etc., and consolidating and accounting for all these different platforms can look a bit difficult, but we are here to help you with this by consolidating and reconciling together the accounting for all these platforms. Furthermore, as mentioned before, e-commerce allows you to sell your products internationally, which will lead to receiving payment in multiple currencies. When preparing the accounting for your business, you need to supply us with the statements for all the platforms you use, instead of the bank statements.
We can devise an e-commerce accounting system for you, that can record all of your e-commerce transactions and record revenue and expenses. And then, we will work out the multiple currencies, convert them to Australian dollars to calculate the appropriate GST and meet the taxation obligations.
It is also important to understand taxes and meeting your taxation obligations and paying the right amount of tax, avoiding late payment penalties. Besides, there are some tax obligations to be reported throughout the year: GST, BAS (Business Activities Statement), PAYG.
To keep track of your business, manage your finances and avoid tax issues, it is fundamental to do your accounting for e-commerce business bookkeeping properly. By maintaining a record of your transactions, including incomes and expenses, you can have, at any time, information from your business that allows you to plan and make decisions.
When preparing your business tax return, some deductions that can be claimed:
- Shipping and packing costs that are part of the delivery process;
- Home office if you run your business from home with a dedicated home office space;
- Operating costs – which include your website expenses, such as building or maintenance, and platform fees.
- Costs with advertising and marketing
- Professional services as accountants, lawyers, etc.
Here at A One Accountants, our team has experience with accounting for e-commerce business. You can contact us to setup a system of accounting by calling us on 0386091889 or you can send an email at email@example.com or you can visit one of our offices.