COMMON ACCOUNTING CHALLENGES ASSOCIATED WITH E-COMMERCE BUSINESSES
Ecommerce business and its operations are exciting but not all businesses will be able reach the success due to various challenges. At the same time some businesses in this particular space has made a remarkable record like Amazon, Zomato and many others. E-commerce firm, Zomato had been a loss-making company for duration of about 15-20 years and has lately made a comeback with its IPO being launched in India. With an electrifying valuation of about 9375 crores, this IPO is a type of dream come real for various E-commerce players due to the fact it is the first-ever IPO in India in such a segment.
Zomato, alongside side different E-commerce giants like Swiggy and Dunzo, had commenced on a little scale and have taken their businesses to new heights. But, if this is often the scenario, then why do E-commerce Businesses fail? More than 90% of all Internet business start-ups end in failure within the first 120 days. One of the principal reasons is the bag of accounting and taxation challenges that comes in with the establishment of the business. As a promoter or an entrepreneur who is attempting to digitalize their enterprise and amplify to new horizons, few top choices need to be taken at the first stage regarding accounting and taxation which will make or smash the longer time growth possibilities of the business.
Some of the major challenges faced by the businesses are:
Inventory Management: Managing stock can also be a cumbersome assignment as a commercial enterprise grows. So, the businesses need to integrate the stock administration software with the accounting software for keeping a track of the inventory at all times. It turns into an essential phase of the seller’s job to trace the stock straight from producing to selling, failure of which may lead to excess stock in the inventory and ultimately, cash flow challenges.
Huge Transaction Volume: Retail groups need to stay an eye fixed on the accounting of all the transactions they have. E-commerce platforms like Amazon don’t let the agencies working thereunder capture patron contact facts for direct promoting to the consumer so that they’re not pressured with an enormous quantity of transactions and information which may additionally make accounting even more difficult.
Sales Returns: Another burden for E-commerce is the mission of monitoring returns. Most E-commerce websites supply the power of sales return to their customers. Managing returns as an e-commerce vendor regularly is exhausting mainly if it is offered by way of platforms like Amazon where clients can return products without justifying their return. It is the seller’s selection on the way to write off the stock such they don’t get expensed twice and make the books of bills worthless
Manual Data Entry: Business proprietors who are getting into the planet of E-commerce after having run a well-known retail enterprise ought to be used to managing their books manually. Making smart choice about which accounting software to use whilst beginning the commercial enterprise can remove the inconvenience and rate associated with trying to migrate to a substitute platform.
Lack of Automation: Since it’s not practical for a business to have staff managing the E-commerce store around the clock, every E-commerce business requires some level of E-commerce automation. It is the use of technology to help businesses grow sales and increase staff productivity. But, not all of the e-commerce business owners are aware of this, and if they are, they don’t wish to invest their money in buying such software’s.
GST Complication: In accordance to section 52 inserted under the GST law, all E-commerce aggregators are accountable for deducting and depositing tax at the charge of 1% from every transactions. All merchants and sellers promoting items and offerings online will have to get themselves registered under the GST regulation in each and every state they function in for claiming TCS even if their turnover is less than the threshold restriction notified for GST registration. (know about the recent GST updates)
Timely Compliances: Ensuring of all regulatory and required compliances are achieved on time is another challenge for any business, as the delay in filing and payments will lead to penalty for the company. We, at Dev Mantra ensure all the compliances are done on time and there is no delay in any of the tax, legal and other matters. Our dedicated accounting and legal team takes care of all your accounting, tax and law compliances. Keep yourself updated with our Monthly Newsletter
We maintain all the essential compliances through our web based secured Compliance Dashboard for easy understanding and convenience for our clients which covers Income Tax, GST and Corporate law matters with the date, remarks and supported documents.
We, right here also offer CFO services along with our accounting services to companies that cannot afford a full-time CFO. This will help them cut down their costs at the very initial stage and also take advantage of a crucial service.
We specialise in Financial Advisory Services, Transaction Advisory and Secretarial services. In the past we have done number of due diligence process and helped our clients to close the deal successfully. Feel free to contact us any time, charteredaccountants@devmantra.com Visit our website at www.devmantra.com
Recent Comments