During the past year, the percentage of retail sold through ecommerce platforms like Etsy rose from less than 20% to well over 35%. In the course of a single year that’s a phenomenal change, and it’s thanks to the entrepreneurial, open-minded makers and crafters who were able to take up that challenge and move their goods online during the toughest of conditions that we have been able to continue to send beautiful gifts and treat one another even in the hardest of times.
However, along with the creative side of doing business online comes an aspect that some of us are less keen on – accounting. It will do you no favours to simply stick your head in the sand when it comes to bookkeeping, so we take a look at the importance of bookkeeping for Etsy sellers, what support is available, and what you can expect from an Etsy accountant.
Why is bookkeeping for Etsy sellers so important?
Bookkeeping for any business, large or small, ecommerce or face-to-face, is important because it allows you to keep track of day-to-day financial transactions like sales and purchases. However, what sets apart the kind of business done over ecommerce platforms like Etsy is the speed at which these processes take place; goods are bought and shipped in a matter of hours in many cases, with purchases then immediately made to maintain stock levels. Below are just some of the reasons why bookkeeping is so important for Etsy sellers:
Keep track of income and outgoings
In order to understand what money you are making and spending and to keep a control on that expenditure day-to-day, you need to ensure that you are keeping track of those movements. Software such as Xero is designed specifically with bookkeeping for Etsy sellers and other ecommerce platforms in mind; it integrates directly with ecommerce stores so that the tracking of finances is smooth and automated, and you can access that information at any time and from anywhere via an app.
Manage cash flow
As a small business, cash flow is equally as important as – if not more important than – profit. Whilst one of the key reasons for being in business is profitability in the long-term, if your cash-flow doesn’t enable you to pay your suppliers or workers, you won’t stay in business very long. Bookkeeping allows you to keep control over your cash flow, make sure that you are receiving money when you expect to, purchase stock only as you need it and pay your suppliers at a time that gives you the best chance of success.
Analyse successes and capitalise on them
Bookkeeping, for Etsy sellers just like all other small businesses, helps to inform you of what is going right and where you could improve. If you track when you sell goods, how much profit you make and from which product lines into which market areas, you can start to track what works for your business and what you should do more of. If you choose to work with a management accountant, Etsy, combined with the information from your cloud accountancy package, will provide them with all the data they need to be able to analyse which areas to invest in, expand on and promote, as well as enable you to forward plan for the future.
If you are looking for an Etsy accountant who can support you in growing and managing your business, Kirkwood-Wilson Accountants are experienced in bookkeeping for Etsy sellers; we are Xero Gold Partners and can support you in the set-up and installation of a cloud accountancy tool as well as providing you with accountancy services to fit your needs longer term.
If you want to feel like you are in control of your business but with the support of an experienced Etsy accountant, get in touch with us for a chat about your business on 01704 546 000 or email [email protected].