If you're a business owner selling products through Walmart.com, you’ll know that managing your finances can be challenging. Walmart accounting involves many factors that differentiate it from regular retail store accounting, such as Walmart’s marketplace fees, delayed deposits, and navigating the difficulty of sales tax.
With all of this in mind, there’s no doubt that accounting for e-commerce sales channels can be a daunting task. In fact, it can be tempting to do the bare minimum to stay compliant rather than spending time on being 100% accurate. However, the short-term gains from doing just enough to get by will ultimately do your business a disservice long-term.
Read on as we explain the six benefits accurate Walmart accounting will bring to your business, including improved profitability, performance visibility, and increased attractiveness to potential buyers or investors.
1. Meeting and exceeding compliance
Ensuring tax compliance is crucial for businesses selling on the Walmart marketplace, and it’s one of the most significant benefits of having accurate books. Tax laws and regulations are complex and can be challenging for any business owner, particularly e-commerce business owners. In 2018, the Wayfair decision ruled that online sellers may be required to pay sales tax in any state where sales exceed a particular threshold—that’s in addition to paying sales tax in their home state.
With so many variables to consider, it can be challenging for e-commerce businesses to feel certain they have met all their tax obligations. However, maintaining precise and up-to-date records of all financial transactions through monthly bookkeeping can later help you submit tax returns with confidence, knowing you’ve complied with all relevant tax laws and regulations. This helps avoid penalties, fines, and legal repercussions and establishes a solid foundation for your business's financial health, paving the way for other benefits.
2. Enhanced profitability
Well-managed financial data helps you make well-informed business choices. With accurate and reliable insights into a company's financial performance, business owners can pinpoint areas where they can reduce costs, increase revenue and overall profitability can be enhanced. A comprehensive understanding of your business eliminates impulsive or emotion-driven decisions and lets you make data-driven choices.
Moreover, having precise Walmart accounting enables you to track and analyze key performance indicators (KPIs), which is essential when monitoring the effectiveness of advertising campaigns and marketing efforts. By evaluating these KPIs, you can identify trends, measure progress, and adjust strategies, so they'll remain on course to accomplish their objectives. By having stringent practices, you'll optimize profitability by staying proactive and responsive to changing market conditions.
3. Not over or underpaying tax
Accurate Walmart accounting is crucial to avoid over or underpaying taxes, both of which can have severe financial consequences. Overpayment could mean wrongly spending valuable capital that could otherwise be invested in the business, while underpayment could result in fines, penalties, and damage to the company's reputation.
Having error-free e-commerce accounting enables that selling on the Walmart marketplace to strike the right balance and avoid unnecessary financial burdens by ensuring they pay the appropriate amount of taxes. This protects the company's bottom line and contributes to maintaining a healthy cash flow, which is critical for growth and sustainability. Accurate financials also help you avoid nasty tax surprises months or years down the road, keeping you on the right track.
4. Appealing to potential buyers or investors
Maintaining well-organized and transparent financial records is good practice for any successful business and is particularly useful for potential buyers or investors. Being able to hand over your books quickly can bolster your business's credibility, making it more attractive as an acquisition or investment.
By presenting a clear and precise overview of your company's financial well-being, you showcase your dedication to effective financial management and responsibility. This instills confidence in potential buyers and investors, highlighting your commitment to maintaining a healthy financial position. On the flip side, disorganized financial records are an immediate signal that remedial work is needed and could lead to concerns about whether other business areas are similarly neglected. If you rush to tidy up your records at the last minute, you're delaying a potential buyer, giving them time (and reason) to reconsider their offer.
Accurate financial records let potential investors conduct thorough due diligence and evaluate the company's financial stability and growth prospects. This information holds immense value when seeking funding or purchase as the investors have all the necessary data to make informed decisions about investing in or acquiring your business. By adopting accurate Walmart accounting practices, you increase your business's appeal to any possible buyers or ability to secure funding.
5. Reduce Risk
Reliable accounting for your Walmart business will significantly diminish the risk of financial inaccuracies and inconsistencies that can wreak havoc on an ecommerce business. The risks offset by precise work include fraud, embezzlement, or other financial misconduct. Additionally, solid finances can act as an early warning system for financial struggles, so you can proactively address concerns before they worsen.
Accounting software like A2X helps reduce the risk of errors by automating labour-intensive and mistake-prone aspects of bookkeeping. A2X bridges the gap between your sales platform and cloud accounting software. It extracts the necessary data from your sales channel, organizes it into concise summaries that align with your payments, and then transfers it to Xero or QuickBooks for effortless reconciliation.
Moreover, robust accounting methods can help Walmart sellers identify and manage various risks, including currency volatility, supply chain interruptions, and changes in consumer demand. By scrutinizing financial data, you can make well-informed decisions that accommodate these risks, keeping the business stable and resilient.
6. Better performance visibility
Accurate e-commerce accounting gives you greater visibility into your company's financial performance. This clarity allows you to closely monitor crucial financial metrics, including cash flow, profit margins, and inventory turnover. With this information, you can proactively alter your business strategies, boosting performance and keeping an edge over competitors.
Furthermore, this enhanced visibility into performance enables businesses to compare their progress against industry benchmarks and competitors. This comparative data can spotlight areas where your business might be lagging and reveal potential avenues for improvement. By constantly tracking and scrutinizing financial information, you can drive growth and ensure your business remains relevant even as the ecommerce landscape changes.
To recap, good ecommerce accounting is essential for any ecommerce business striving to stay compliant and can also increase profitability, secure investments, and mitigate risk. Spending time to get meticulous financial records allows you to leverage them for monetary gains, to make sound decisions, to build investor or buyer confidence, and for overall sustained growth.
Investment in accounting as a Walmart seller isn’t just a compulsory part of running a thriving business; it's also a tactical step that can significantly bolster the long-term prosperity of your business. This commitment might involve investing in tools like cloud accounting software and A2X or hiring an e-commerce bookkeeper or accountant to manage everything on your behalf.
As the e-commerce landscape continues to shift and grow, businesses prioritizing good financial management will be better equipped to adapt to challenges and exploit opportunities. By adopting strong financial management practices, Walmart marketplace sellers will ensure their financial well-being and stability, laying a solid foundation for enduring success in an ever-competitive digital marketplace.
Start a free trial of A2X today and start automating your accounting.
Sellcord team consists of industry professionals covering all aspects of e-commerce. The company leadership has an extensive background in selling and marketing products on Walmart along with other major online retailers and marketplaces.