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A Comprehensive Guide to Cloud Accounting for eCommerce Companies

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cloud-accounting-ecommerce

By now, chances are that you’ve heard about cloud technology. There’s a good chance you’re currently using it in some capacity. And it’s only right, cloud technology has significantly transformed how we do business. 

From eCommerce to Education, the ability to nullify geographical limitations on information access has revolutionized the way we live and work. Accounting is no different. As an information-rich sector that requires the transmission of data between people and institutions, efficient information transfer is in high demand.

Here’s a complete guide for eCommerce companies looking to implement or improve their Cloud Accounting solution.

Cloud accounting

First off, what is it? Cloud Accounting is the application of cloud technology to the accounting space. Simply put, cloud technology is another name for the internet. Instead of storing accounting information on your desktop and accessing it there, you keep the same information on a database that anyone with legitimate sign-in credentials can access with an internet connection.

Whenever you need access, you simply sign in online (or open an app) and search for the form, day, or transaction you want to see. Cloud accounting means everyone on your team can simultaneously see and modify financial information from anywhere around the world 24/7. It’s both bookkeeping (tracking, recording, categorizing, and filing every transaction) and accounting–data analysis, presentation, and projection.

Cloud Accounting is like an online filing cabinet and workspace accessible to those with valid sign-in information. It removes the necessity to be in a physical location to access data. So long as you have your phone or laptop, you’re in the “virtual” office.

What are the alternatives?

Before cloud technology, accountants and business owners stored information in physical filing cabinets or digitally on specific databases. Sharing data would have to be done via email, fax, delivery of a thumb drive, or even mailing physical documents. An accountant would have to travel to his client’s office to pick up documents or wait for the mail to gather information. Things used to move slowly!

This is why cloud-based accounting solutions like QuickBooks Online and Xero have experienced such rapid growth over the last decade. You can only imagine the massive simplification of gathering data from clients. Information arrives in digital format and is instantaneously visible to all team members in real time. When you work on a new report, everyone has immediate access, both client and accountant

Cloud accounting for eCommerce

The advent of Cloud Accounting has particular implications for eCommerce. As an industry that eliminates physical limitations on commerce, eCommerce should welcome the removal of physical limitations on financial information.

Cloud Accounting automates the bookkeeping process enabling accurate recording of cash inflows and outflows for your business on a real-time basis. With cloud accounting receipts and invoices are immediately categorized and filed so that you can search specifics and view any transaction from any device in real time.

Once you’ve received a Business Tax ID Number and opened your business banking account, it’s time to implement a cloud-based bookkeeping service. Cloud-based bookkeeping will automate your records and work in the background as you focus on growth. When you need to access financial information, it can be viewed in real-time. And not only that; your cloud bookkeeping service also refines your data into useful and digestible metrics for you and your team.

Size and Scale

ECommerce businesses come in all sizes, from small-time drop shippers to large brands and private-label companies. Cloud accounting scales seamlessly. Programs like Xero and Quickbooks Online don’t get bogged down by volume. Since processes can be automated and are immediate, these tech accounting solutions don’t have to pile more work on someone’s desk because your volume increased 20% around Black Friday.

When you need expanded services, you will have access to them. When you scale down, it also happens almost effortlessly.

There are some differences in the ways smaller and bigger businesses approach accounting. For example, a part-time drop shipping operation might use cash-based accounting, and a large brand might use the accrual method. Smaller operations don’t need the same access to credit that becomes a piece of a big firm’s day-to-day operations. Since access to credit requires the presentation of detailed financial information, it would entail more complex accounting services.

In general, small eCommerce companies only need detailed bookkeeping and tax filing–something that a service like QuickBooks Online would provide.  As you get started, you need to ensure you have an accurate and accessible record of your financials.

Benefits

The benefits of cloud accounting are many. Broadly speaking, Cloud accounting equals efficiency, but let’s break down the benefits further.

  • Automated Bookkeeping–first is the bookkeeping function. Since eCommerce runs using digitally processed transactions, your cloud accounting service can link to your retail site and automatically categorize and file transactions. For offline transactions, you can usually snap a photo, scan a barcode, or manually enter information and upload them to a cloud bookkeeping software
  • Remote Access–with cloud accounting, you can access your financial information from any device with an internet connection from anywhere. If your accountant needs access, you can log in and send them whatever they need. If a global pandemic strikes and eCommerce spikes but your team is stuck at home, you can hand out sign-in information and transition to a remote working environment. Wherever you go, your financial records move with you in your pocket.
  • Legibility–logging raw data and making it available remotely is only half of the accounting battle. Data has to be legible if it is to be usable. Someone or something has to take the raw data, process it and turn it into reports and insights that mean something. A cloud-based bookkeeping service is a helpful solution to enable you to do this.

cloud accounting legibility

Costs

The most obvious cost is the price tag. Most services are designed to integrate with existing systems. Regardless, Vertical CPA’s services include setup and implementation, meaning that adopting a cloud accounting system is relatively seamless. Hence the main cost consideration is not the hassle of implementation; it’s easily visible in the dollar amount on the price tag.

Cloud accounting services range broadly in price and function. Generally speaking, cloud services and an accountant will range from $600+ monthly.

The market for accounting services is highly competitive, especially since the introduction of multiple cloud accounting providers and the automation of some accounting functions. So shopping around would help you find the best price and service for your current situation.

Considering the costs, It’s also important to say that most cloud accounting users see a fast turnaround on their cloud accounting investments. After implementation, the savings in time, organization, and ability to visualize financials begin to stack pretty fast.

Vertical CPA offers free consultations to ensure you get the right package of services at the right price. We work with you to help you establish the optimal bundle of tech and human service and simplify the integration process. Talking with an expert in the field can help resolve outstanding questions about cloud accounting.

 Conclusion

Cloud technology has revolutionized accounting. When the cloud meets accounting, you get cloud accounting.

Cloud accounting means that all your business’s financial data is stored remotely and is accessible from any device with an internet connection. Remote access is useful because you can easily access and share accounting data.

eCommerce and cloud accounting go well together. Since you can link your website or partner platform with your cloud bookkeeping service, eCommerce lends itself to cloud accounting more than other industries.

Business owners have a range of options for cloud accounting. Service providers range from basic cloud bookkeeping providers like QuickBooks Online and Xero to personalized cloud accounting services offered by  VerticalCPA.

eCommerce businesses have different bookkeeping and accounting needs based on size and sector. At the outset, it’s a good idea to meet with an industry professional who knows both accounting and emerging cloud technology to find the right combination of software for their particular situation.

Why not book a free consultation with Vertical CPA and discover how to get all the benefits of cloud accounting services?

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