Do eBay sellers need bookkeeping and accounting?
Bookkeeping and accounting are the foundation of every business, and that includes yours. Bookkeeping helps you stay on top of your expenses, so you know how much money is flowing in and out of your business. Accounting tells you where your money is going, what operating costs are eating up your budget, and whether your products are selling at a loss. Or in more general terms, bookkeeping is what happens when you’re running your business, while accounting is what happens when it’s time to analyze the data.
If you're an eBay seller, whether it's a full-time gig or just a hobby, you probably have a lot on your plate. From inventory management to shipping and customer service, it can feel like a juggling act to keep all the plates spinning. One of the most important jobs of an eBay seller is keeping track of sales and expenses, but it's easy to let that slide when there are so many other tasks on your desk. That's where bookkeeping and accounting services come in!
So, yes! eBay sellers must have knowledge of bookkeeping and accounting as it will help them to implement more effective sales techniques and to boost earnings in multiple areas.
Importance of Bookkeeping and Account in eBay
Many eBay sellers don't realize this, but if you're selling on eBay, it's important to keep track of your expenses and sales properly. While eBay has its own platform that lets sellers track their earnings, it's not enough. You need a tax professional to make sure you're taking advantage of all the deductions you can find. If you don't do this, you'll be paying more in taxes than necessary.
Bookkeeping and accounting services can help you stay organized and set up systems that streamline the process of collecting invoices, paying bills, sending customers their purchases, and more. They can also help you stay on top of cash flow which is essential if you're dealing with hundreds of transactions each month, and make sure you don't miss any tax deductions.
The best part about bookkeeping is that it doesn't require any financial knowledge on your part, just a commitment to using the systems your bookkeeper sets up for you. You'll get to focus on what you do best: buying products for resale or selling items from around the house!
Common Issues faced by eBay sellers in Accounting
Ebay account management is not an easy task. Even if you've been selling on eBay for years, there's always the chance that an error will pop up in your accounting. Here's a list of the problems that occur most frequently:
- You're unable to keep up with your finances as they change rapidly.
- Your financial records are incomplete and inaccurate, leading to confusion and mistakes when you handle them manually.
- You don't know how much revenue you've generated or how much profit you've seen from your sales. This can lead to missing out on tax deductions for expenses you were entitled to take and not having enough money saved for potential tax bills at the end of the year.
- You're spending too much time on tedious tasks related to your finances (like categorizing expenses). This takes away from other parts of growing your business, including generating more sales.
- You've got no idea what you owe or don't owe.
- Your bookkeeping is a hot mess.
- You haven't got a clue about the tax implications of what you're doing.
How do eBay sellers deal with accounting problems?
Use of Spreadsheet
If you're new to selling on eBay or if you only sell a few items each year, however, you might be able to handle your accounting with nothing more than a spreadsheet and a calculator.
In fact, eBay has a ready-to-use spreadsheet template that makes it easy for small-time sellers to keep track of their sales and expenses, as well as their profits. You can import sales data into the spreadsheet, which helps make your bookkeeping work easier.
Take help from a full-service agency
Apart from providing you ebay listing service, a full-service agency will provide you with an accountant as well. It means paying someone else to take care of your finances, and hiring an expert to deal with your accounting every time you need anything done is expensive. It's also not very helpful if you want to know what's going on in your business and understand how you can improve it for yourself.
Use Accounting Softwares
You could manage everything yourself. But that means sacrificing a lot of time and effort, and we both know that as an online merchant, you've got better things to do with your time than shuffling around receipts and calculating numbers by hand. It can also mean missing out on opportunities to increase your profits because you're too busy doing the books.
There is one thing you can do that doesn't require sacrificing your bank account or your sanity. It will help you get a better handle on your business and its finances at the same time: use accounting software!
Many eBay sellers use accounting software to manage their books, especially if they sell a lot of merchandise.
FreshBooks excels in letting you create custom invoices that are branded to your business and in connecting with other platforms (like Stripe or PayPal) for integration. This helps streamline your processes so that everything from accepting payments to paying your own bills can happen within the same system.
Quickbooks also integrates with other systems and allows more customization of reports than FreshBooks does. It lets you manage your income and expenses in one easily-accessible online place. It can send invoices and accept payments through credit cards or PayPal.
Blackbaud Financial Edge NXT
ebay uses the accounting software Blackbaud Financial Edge NXT, which is a cloud-based solution for non-profit organizations. This software helps eBay to manage its financial resources and track funds. The software enables it to track revenue and expenses and keep track of donor relationship management.
Another software used by eBay is Netsuite. Netsuite is an ERP(enterprise resource planning) system that offers functionality for managing business operations such as financials, supply chain, customer relations management, inventory, and order management. It also provides a platform for users to integrate apps and extensions from third parties, allowing them to extend the platform's functionality beyond what comes with the core product.
As you can see, selling on eBay can be a lucrative profession for anyone who is willing to put in the time and effort. If you're going to sell on eBay like a business, make sure you save yourself some time and money by thinking of your accountancy from the start. Conduct thorough research into which accounting service would suit you best, or better yet, start learning how to do it yourself. You'll be glad that you did.