first e-commerce website

How to Manage Finances for Your First E-commerce Website

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By guest writer Kumarpal Shah

Ecommerce and online stores are the next big thing in the world of shopping. With a plethora of products just a click, more and more consumers are changing the way they shop and turning to the internet for all their needs, from books to clothes, electronics, home furnishing and so on. If you are looking to foray into the world of ecommerce, now is the best time to do it. You may want to use a platform such as Magento for your ecommerce website, for which you may want to have a look at some of best magento hosting providers. However, launching and managing an online store requires passion, perseverance and some smart planning. Of the many aspects – inventory, stocking, purchase, and delivery – you need to take care of in the process, finances are the most crucial. Here are a few smart tips that’ll help you master financial management for your first online venture.

Open a Separate Bank Account

Once you have started your online business, you can hope for income to start trickling in soon after. Having a dedicated account to stash away all your business earnings right from the start will stand you in good stead down the road of financial management. This step is particularly important as it helps you keep a handle on your earnings and plan your taxes in advance. In certain cases, since businesses run in partnerships or by corporations, it is mandatory to have a dedicated bank account for your business holding. While this may not be the case for sole proprietors, having a separate bank account is strongly recommended. You can begin by opening a standard business checking account and then branch out to a suitable savings account as your business grows. Before you settle for a bank, do your research and compare the fee structure of different banks in your area to find a business checking account plan that is easy on your pocket.

Have a Streamlined Process to Accept Payments

Having a streamlined payment process in place even before you throw your online store open to visitors/buyers is imperative for financial success. Nothing puts off a buyer more than a skewed payment process. If your buyers are not sure their details, both personal and financial, are secure with you, they may opt out at checkout. This kind of bounce rate is not good news for any business, especially one that is still in its infancy. Decide how you’d want to accept payments, shop around for a merchant account, invest in setting up the best payment gateway you can afford, and offer alternative payment methods such as cash on delivery or third party processors like PayPal. Having a full blown payment process adds to your credibility and keeps those all-important bucks trickling in.

Rely on a Bookkeeping System

Remember the time when local businesses had elaborate ledgers for keeping track of all monetary transactions? Your online business will definitely need a virtual extension of the good old ledgers, and therefore, it is advisable to rely on a concise bookkeeping system right from the start. It does not have to be anything elaborate or complex. At the beginning, just an excel sheet with a clear record of transactions divided in relevant categories will do. You can even explore certain bookkeeping software such as Wave or Quickbook to simplify the task for you. As your business grows, you can invest in an in-house accountant to not only maintain record but also analyse the data to give you tangible analysis of your financial statements. As an alternative, you may want to outsource your bookkeeping to a trusted accounting firm so that you can focus all of your time on managing your business.

Put a Payroll Method in Place

Right at the onset, you may not have enough funds to invest in a full-blown office or hire a staff. Even so, running an online store cannot be a one man show for you cannot possibly have the expertise to manage the different aspects of an ecommerce based business by SMAR7 Apps. For instance, you’ll need someone to design the website and its logo or help with streamlining the inventory or liaison with supplier and so on. Even if you hire people on a freelance, per assignment or contract basis, it is best to have a clearly defined payroll method in place to make sure you don’t end up paying more than what’s due. A payday schedule, taxes, invoices from freelance contributors are a few crucial things that need to be taken care of before you can even think of disbursing remuneration.

Putting a streamlined process in place to organise your money right at the start will not only save from unexpected financial setbacks but also make the process of growth and expansion more smooth and seamless.

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