Accounting Software for Ecommerce: Types, Benefits, and More

Accounting software is pivotal to a company's operations, as it assists with every component of its finances. Accounting software aids accountants, bookkeepers, and entrepreneurs like ecommerce store owners to document and report financial transactions. And, of course, there is a host of software that will go beyond that, from tax compliance to financial projections.

There is a variety of accounting software with different features, capabilities, and pricing, suited for large or small businesses. In this post, we'll look at the different options and help you find the best accounting software to manage the finances of your ecommerce store.

Types of Accounting Software

Here is a look at the most common types of accounting technology in the open market today.

DIY Accounting Software

Many ecommerce store owners manage their own books on Quickbooks and Xero, which are the most popular accounting software. Godaddy Bookkeeping software was also quite popular among Etsy, eBay, and Amazon sellers, but it was recently shut down and sellers had to migrate their accounting data to alternative software.

While QuickBooks and Xero provide an option for SMBs to manage their own books, it exposes you to risks if you do not have the necessary professional background since all bookkeeping is managed by you. These types of accounting software can cover all your needs, from producing graphs and reports on the state of the company's finances to proffering the necessary tax forms, but they do not eliminate the need for an accounting professional. Therefore, if you're a Shopify, Amazon, or Etsy seller without proper accounting training you'll be better off outsourcing your accounting needs.

There are some enterprise companies that develop their own proprietary accounting software, tailored to their specific needs if they require unique accounting features that QuickBooks, Xero, and Sage don't provide. This option is only done by very large organizations since it is very expensive and complicated. QuickBooks and Xero provide all the features that Shopify, WooCommerce, and Amazon sellers need and are therefore more common choices.

Alternatives to Accounting Software

Many store owners, bookkeepers, and accountants use Microsoft Excel and Google Sheets as an alternative to accounting software. With spreadsheets, you can do all of the basic accounting tasks, from producing charts for a quarterly budget to listing annual sales.

In some cases, spreadsheets are used as a complementary tool to carry out accounting tasks that QuickBooks, Xero, and other accounting software don't support.

Although spreadsheets are very versatile and are a cheaper alternative to accounting software, they are not automated, and using them can easily lead to mistakes that QuickBooks, Xero, or Sage can easily prevent.

Accounting Software as a Service

Many DTC brands want the benefits and pricing of using accounting technology but the expertise and quality of using a professional.

Some may hire a bookkeeper or accountant that works with accounting software like Quickbooks or Xero but this will cost a lot more money. The optimal way to get the best of both worlds is using a bookkeeping SaaS company.

It allows you the benefits, efficiency, and lower costs of accounting software with the expertise of using a professional team of bookkeepers.

Benefits of Accounting Software

In addition to accounting tricks and tactics, there are many benefits to employing the instruments of accounting technology to ensure that companies are keeping track of their dollars and cents.

1. Time-Saving

Time is money and accounting takes a lot of time. QuickBooks and Xero offer many different types of automations to reduce the time spent on repetitive manual tasks.

2. Across-The-Board Synchronization

Keeping all your data in sync is probably one of the most annoying challenges of managing your books.

Accounting software enables you to routinely synchronize financial data through the cloud to simplify data collection and provide reports that are up-to-date and easy to access.

3. Data Accuracy

For years, the chief problem with accounting had been the many inaccuracies by accountants and entrepreneurs. When accounting is automated, data accuracy is improved immensely, creating confidence in the numbers that are regularly published and reported.

4. Payroll Systems

Accounting software is terrific when handling payroll systems, whether you run a large ecommerce operation with hundreds of employees or a small store with 3 staff members. By using accounting software, your accountant can automate payments, receive genuine payroll tax information, and calculate contributions (401k, health care, insurance, and others)—all of which can reduce payroll mistakes and even fraud.

5. Inventory Management

Many accounting software have inventory management tools that offer real-time updates on what products are in stock, what has been sold to customers, when items will need to be restocked, and costs per unit.

DIY Accounting vs. Using a Provider

Utilizing accounting software such as QuickBooks and Xero can provide ecommerce retailers with a more accurate and complete picture of their business's financial well-being. Like many technologies, leveraging the full potential depends on the user's proficiency.

Small business owners are often not familiar with accounting best practices such as integrating systems and services, or obscure tax regulations. Finding the answers to these questions can be daunting without background knowledge or a support system. Endeavoring to DIY your accounting can be comparable to learning another career.

Engaging an accounting provider can take the stress out of managing your finances since they understand the complexities of your accounting systems and the relevant tax laws—allowing you to focus on growing your ecommerce business.

With the help of an accounting provider, you can rest assured that your day-to-day bookkeeping tasks are completed, financial statements will be precise, and your tax filing will be completed accurately and on time.

Nowadays you can use an accounting service that moves as fast as your ecommerce business, so you don't lose your QuickBooks data.