Importance of Bookkeeping for Ecommerce

"importance of bookkeeping"

Article by Navneet

I think it’s time we talked about the importance of bookkeeping. Your bookkeeping.

Why bookkeeping?

I know, I know, who has time for that… right? But trust me, you’re going to want to spare a few minutes here — you might avoid some BIG mistakes. You know, the kind of mistakes that put you out of business… or gives your competitors a major edge.

First, the Basics: What is Bookkeeping?

When you hear the word bookkeeping you probably think of accounting, but that’s a mistake. Bookkeeping is even more basic than that: It’s the tracking of all the money that comes in and out of your business every day. 

Hopefully, you’re starting to ask ‘what is the importance of bookkeeping?’

Without proper bookkeeping, your accountant won’t have anything to work with. 

Without orderly bookkeeping, you won’t know who needs to be paid and who has already been paid.

A bookkeeper keeps track of every little financial transaction that your business has made and needs to make. Think of it as your financial records. 

Be it payment for a project, paying a supplier or paying a salary. A bookkeeper is on top of it all and it’s their job to make sure the cash flow in your business is going smoothly without interruption. 

Why Is Bookkeeping Important for E-Commerce Companies?

We live in the age of data. Big data, data is power, data is the new oil of the new century: a commodity that will power everything around us. To most of all, data is important. 

You know what else data is? Abundant. In our quest for ever-growing amounts of data over everything, we are practically drowning in it. Don’t think this doesn’t apply to e-commerce businesses too. 

Everyday your business is working, it’s adding data.

Who bought what? 


At what times? 

Is there a specific category that is driving business? 

What are the demographics? 

All of this is data that’s running through your business every single day and its data that can help you optimize your business to run even better. 

Importance of Bookkeeping to Decision Making

Sales are only part of the equation. In fact, a business owner has a whole lot of decision making to do. Should you expand, should you invest in new software? Is it worth it?

Well good bookkeeping can make questions like those a whole lot easier. A good bookkeeper is someone who can easily track the trends in your business’s finances. If cash flow is strong, if it’s weak, and if so, why?

In a business cash flow is your lifeblood. When it stops, so does the heart of your business. So you definitely don’t want to make any mistakes that could cause cash to dry up. 

Before you sift through all your data to make those big decisions, your data needs to be ordered and accessible first. 

That is what good bookkeeping gives your business. Order. Accessibility. A history. A future.

Importance of Bookkeeping to Accounting

Like we said before – an accountant is just a cheap suit and tie without bookkeeping. In fact, an accountant needs good bookkeeping. But good bookkeeping certainly doesn’t need an accountant. 

Think of it like the house of your dreams, with all the bells and whistles. That’s the accounting: it provides you all the detailed reports, the tax savings, the analysis of the future of your business. 

But what if an earthquake hits right where your dream house is sitting?

Well that’s where bookkeeping comes in. 

Bookkeeping is the foundation on which an accountant builds that big, beautiful house of graphs and reports. If the foundation sucks, all of it will be practically worthless. 

But if your books are great, then so is the foundation and all the data that comes with it. 

A house is only as good as its foundation because sooner or later that foundation is going to get tested. You don’t want to be the business owner on a shoddy foundation. 

Importance of a Bookkeeping Process: 

Why E-commerce Companies Overlook Bookkeeping

If we keep banging on and on about how important bookkeeping is, how come business owners don’t already pay attention to it? 

Every business owner knows the importance of marketing, a good sales funnel, product fit – what gives with bookkeeping importance?

It’s exactly that – every founder recognises the importance of all of those other areas to the point that bookkeeping becomes an afterthought. Growth is the priority.

With Google and Facebook ads, high-powered scaleable marketing was available to everyone. Freelance sites made outsourcing work a breeze, CRM programs made sales automatic, and high quality Amazon Fee Calculators helped companies calculate expected returns.

All the while bookkeeping hasn’t had the same digital renaissance. (Even though it’s been a part of running a business for hundreds of years)

The Importance of Bookkeeping Systems: Ensuring the Work Gets Done

We get it. As a founder you want to get out there and start generating sales and start selling your product. It’s only natural: With every sale you get that endorphin shot that makes you feel alive. 

But there is a flip side to this. The more you’re out there selling, the less you’re supporting your business. The less you know about your business’ vital signs. 

It sounds crazy at first – surely sales is what supports a business?! Absolutely. But really, without that foundation we talked about, it could all come crumbling down regardless because you simply don’t have a clear understanding of where your business stands financially.

The easiest solution is to develop a system. Implement it into your routine. Actually, even easier is to outsource the entire business support function to a skilled ecommerce bookkeeping service

Don’t make bookkeeping an afterthought, instead make it a key component and start getting the most out of it for your business. 

We’ll get back to the importance of bookkeeping process in a moment. But first, more about those nasty consequences…

Importance of Bookkeeping for Small Business: Consequences of Neglecting Bookkeeping for Your Business

You might feel that we’re being a little over the top – what’s the importance of bookkeeping in a business, right? Let me ask you this: What is the one thing a small business can’t afford to do when it’s just getting started?

Pay money when it shouldn’t have to. 

Things like:

  • Missed payments and fines
  • Missed salaries
  • Extra payments, or double-paying
  • Tax errors and resulting audit

When you’re starting out, generating cash flow and business growth is crucial. The last thing you need to be doing is paying out money unnecessarily – that’s like setting off to sail with water coming into your boat. 

The importance of bookkeeping is that a founder with a handle on his books will never have to worry about any of those. In fact, they will be able to plan ahead and make more efficient business decisions. 

Often overlooked: Importance of Bookkeeping for Creating Competitive Advantages

Good bookkeeping let’s founders avoid stupid mistakes. Great bookkeeping gives founders an advantage over their competition. 

When you have detailed and well-organised books, making investment decisions becomes a breeze. You won’t have to scramble for all the relevant information or worse – guesstimate. Instead, you’ll be able to make fine tuned decisions based on accurate, plentiful data. 

Remember how we mentioned that data is power? This is why. 

The good news is that many small business owners have this outdated view of bookkeeping and still treat it as something that they’ll get around to “eventually.” By investing in your bookkeeping, you’ll already be head and shoulders above them. 

Importance of an Outsourced Bookkeeper: Ecommerce Founders Should Not Do their Own Bookkeeping

A founder only has 24 hours in a day and unfortunately part of that goes to sleeping. That means there is an opportunity cost to everything you decide to focus on. This is the great founder’s dilemma. 

You may be wondering how you’re expected to start managing immaculate books while also juggling marketing and sales which are two full time jobs already and are what ultimately grows your business. 

Remember how we mentioned developing a bookkeeping system and the improvements in outsourcing? That’s where we believe lies the importance of a bookkeeper. 

Etail Express looked at this specific pain point and found the best solution to help founders that is flexible, affordable and efficient: virtual bookkeeping. 

Founders don’t have the time to do proper bookkeeping and besides, their time would be better served elsewhere. When you’re just starting out, hiring a full time bookkeeper is probably far back on your list of priorities. But there is a ‘middle road’ – and that’s exactly what Etail Express provides with our virtual ecommerce bookkeeping service. 

Connecting founders with our network of experienced bookkeepers on a virtual, adhoc basis means you save money and never have to worry about your books again. Meanwhile our bookkeepers are specialised for the ecommerce industry and will know exactly what you need to be able to make well informed financial decisions. 

Trust me when I say this: small businesses must do bookkeeping and there is a better solution than founders grinding out the books themselves.

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Etail ExpressHeadquarters
High quality business services to help you focus on growing your business.
Our locationsWhere to find us?
LegalRead Our Legal Documents
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Copyright Net Net Hunter LLC, 2021.

Copyright Net Net Hunter LLC, 2021.