Getting your clients’ finances right in e-commerce

Image Source: Reuters/Bobby Yip

How can accounting professionals help small businesses enter the e-commerce market and ensure a smooth customer buying experience?

From gaining new clients to raising brand awareness, there are many benefits small businesses can reap by selling their products and services online. Here are some key steps to implementing a best-practice e-commerce platform.

Make an e-commerce plan

When starting an e-commerce platform, it’s important to have a financially robust model. Even large companies like video-streaming service Netflix have been caught out on the odd occasion – in May, a number of Australian and New Zealand Netflix users were overcharged on their subscription fees up to 11 times.

So how can these types of situations be avoided?

Firstly, work with your client on developing an e-commerce plan. This should cover everything from developing a strategy on how the platform will succeed to choosing a technology partner to support the business.

When helping your client choose an e-commerce platform, take into account the size of the business and whether it needs an enterprise-level system like Magento or is better suited to a platform such as Shopify, which caters to startups.

Accountants can also work with their clients on how they will deal with pricing and inventory, service and support, and payment and refund policies.

Preparing a report for your client on the cost of starting up and maintaining their e-commerce business will help them set a monthly budget to meet their bills. Your client’s costs will depend on the size of their inventory, but basic technology costs to consider include the price of an e-commerce platform, a domain name, a secure sockets layer (SSL) certificate and a business email. Clients may also want to hire a designer to customise their online store.

Tax obligations and costs

Accountants can help their clients understand their GST obligations when it comes to selling products online to both local and overseas customers. GST applies to all online transactions within Australia, but if an online store owner sells to someone outside Australia then GST is not applicable.

With clients likely to be frequently listing new products and descriptions in their online stores, accountants need to ensure store owners correctly list GST costs on all their items and clearly explain where the costs are applicable.

Shipping costs can also be a pain point for clients who haven’t factored them into their budgets. Advise your client on how they can account for shipping costs in their overall product price to ensure they don’t fall behind in revenue.

Online store owners can also face penalties for not keeping records of all store transactions for up to five years after they are processed. Accountants can assist here by managing and archiving their clients’ records.

Security and privacy

Another important area accountants can assist their clients with on their e-commerce platform is making sure they understand the rules and regulations around storing customer details.

In Australia, there are strict regulations around the use and storage of credit card information. Recommend to your client that they provide customers with clear and easily accessible information about how personal information is handled.

Clients also need to be aware of their legal obligations when it comes to marketing their online store. Accountants can see that their clients are compliant in this area by ensuring there is an ‘opt out’ option on all emails to customers and that they have their consent to receive messaging.

Lastly, suggest to your client they complete the federal government’s privacy checklist for small business to ensure their online business complies with the Privacy Act.

As a trusted accounting advisor, you can play a vital role in establishing and growing your clients’ e-commerce businesses.

About the Contributor

Heather Jennings

Heather Jennings is a Sydney-based freelance journalist and content producer with ten years’ experience writing about technology, finance, careers and workplace relations for a number of Australian news websites.

Heather has worked for publishers including AdNews magazine, Thomson Reuters, Yahoo7 and ninemsn.

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