“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” - Eleanor Roosevelt

Running an e-commerce business is a challenging and rewarding experience. However, there are common mistakes that business owners make when it comes to bookkeeping. These mistakes can result in lost revenue, penalties, and even legal trouble. Here are the five most common mistakes when it comes to bookkeeping for your e-commerce business.

1. Not Keeping Accurate Records

It’s essential to keep track of all expenses and revenue, including inventory costs, shipping costs, marketing expenses, and employee wages. Failing to keep accurate records will make it difficult to prepare tax returns and manage cash flow. Without accurate records, it can be challenging to determine the profitability of the business.

2. Mixing Business and Personal Expenses

This can make it difficult to track business expenses and result in tax issues. This is also another mistake that will make it difficult to prepare tax returns and determine profit or loss. It’s essential to have a separate bank account and credit card for business expenses. This will make it easier to track expenses and ensure all business expenses are deducted from income.

3. Failing to Collect and Remit Sales Tax

Sales tax laws can be complex, and they vary by state and even municipalities. It’s essential to understand the sales tax laws in the states where the business operates and to collect and remit sales tax correctly. Failure to do so can result in penalties and legal trouble.

4. Not Reconciling Accounts Regularly

It’s essential to reconcile bank and credit card statements regularly to ensure that all transactions are recorded correctly. It will help identify errors or fraudulent transactions quickly. Failing to reconcile accounts regularly can result in inaccurate financial statements and tax returns.

5. Not Hiring a Professional Bookkeeper or Accountant

Many e-commerce business owners try to handle bookkeeping and accounting tasks themselves. While this may seem like a cost-effective solution, it can result in costly mistakes. Hiring a professional bookkeeper or accountant can ensure that all bookkeeping tasks are handled correctly, and it can help to prevent costly errors. Look for a professional that specializes in, and is familiar with, the challenges of e-commerce businesses.

In conclusion, e-commerce business owners must take bookkeeping seriously. By avoiding these common mistakes, business owners can ensure that their financial records are accurate, and they can make informed decisions about the future of their business.