Do you find that bookkeeping always ends up on the back burner when running your Etsy shop? If you do, you’re not alone. Bookkeeping can be tedious and time-consuming without good processes and systems in place. Luckily, there are things you can do to make these tasks easier.
This guide will list our best bookkeeping tips and tricks to help you manage your finances more easily. We’ll cover:
- Bookkeeping tasks for Esty sellers
- Bookkeeping tips for Etsy sellers
- How the right accounting software makes bookkeeping a breeze
Bookkeeping tasks for Esty sellers
The most common bookkeeping tasks for Etsy sellers include:
- Cash flow management: monitoring how money flows in and out of your business (your cash flow) helps you maintain a healthy cash flow ratio.
- Accounts payable and receivable: keeping track of your accounts receivable (money owed to you) and accounts payable (money you owe others) is key to maintaining a healthy cash flow. You can learn more here.
- Inventory management: it’s vital to stay on top of how many products you have in stock to ensure you have enough items to meet the current demand.
- Sales: Etsy sellers also need to monitor how well different items sell to determine how well the shop is doing and which products are more popular. Sales are part of your cash inflow (money entering your business).
- Expenses: it’s also important to keep track of how much your business spends in a certain period and what those expenses are. Since you can claim lots of purchases as business expenses, staying on top of these can help you save money down the line. Your expenses also count towards your cash outflow (money leaving your business).
Bookkeeping tips for Etsy sellers
Implement these processes into your routine to make bookkeeping easier.
Make use of your Etsy reports
Etsy generates reports that you can access in your account that can help speed up your bookkeeping since you’ll have the numbers collected for you.
The main reports to look at are your:
- Etsy Payments Account: this report gives you the figures you need to record your sales and fees.
- Etsy Orders File: this gives you a breakdown of the total order amount and is particularly useful if you want to separate shipping charges from your orders.
- Etsy Order Items: this gives you the details of individual products within each order.
- Etsy Deposits: this report shows every deposit made by Etsy into your bank account and can help you check whether you’ve received all your accounts receivables.
Stay on top of taxes
Knowing how much you owe and when you owe it is key to running a healthy business. Staying on top of your taxes also enables you to plan ahead and give yourself plenty of time to prepare and file your Self Assessment tax return. Since late tax returns can lead to hefty penalties, it’s good to be prepared.
Tax management becomes easy with the Countingup accounting software. The system generates running tax estimates based on your financial activities so you know exactly how much to set aside. This way, you avoid surprises during tax season.
Separate your business and personal finances
Separating your business transactions from your personal ones is key to effective bookkeeping. Limited companies are legally required to open a separate account for their business finances, but sole traders would also be wise to do so.
Having a separate business account makes it easier to keep track of your income and expenses and also looks more professional. If you choose a business current account like Countingup, you also get access to its free built-in accounting software. This way, you can manage all your Etsy shop finances in one place that’s separate from your personal bank account.
Make bookkeeping part of your routine
The best way to stop bookkeeping from overwhelming you is to make it a part of your daily routine. Set aside some time every day or week to go through your receipts, sales, inventory, accounts receivable and payable, cash flow and so on.
Monitoring and updating your records regularly means you’ll have less paperwork to get done during tax season. You’ll also get a clearer picture of your business performance over time. Accounting software like Countingup has a bunch of features designed to help you stay organised with minimal effort. You can learn more at the end of this article.
Get on top of your inventory
As an Etsy seller, inventory is a major part of your business. Updating your records as soon as you sell something or add a product to your store helps you stay organised. Keeping track of your inventory levels helps you know exactly when to replenish your stock to meet customer demand. You’ll also know which items tend to fly off the shelves and which items barely sell at all.
Also, be sure to regularly go through your inventory and compare your Cost of Sales to how much you earn from each product. This way, you can determine if you need to scrap or reinvent any of your items to earn a larger profit.
Consider hiring a bookkeeper or accountant
You could hire an accountant to manage your bookkeeping for you if your budget allows it. In that case, a system like Countingup could be the perfect solution for you.
Countingup is a unique two-in-one business current account and accounting software that makes it easy for you to collaborate with your accountant. All you have to do is email them an invite to give them instant access to your bookkeeping data.
Make bookkeeping a breeze
Bookkeeping for Etsy sellers becomes significantly easier with the right accounting software. The key is to select a solution that suits your business needs. After all, your goal is to optimise your accounting and give yourself more time to focus on what you do best.
Countingup accounting software is tailored to the needs of one-person businesses. Having a business current account and accounting software rolled into one app means you can manage all your finances from your phone. Designed with the smallest businesses in mind, Countingup has all the features you need to run your Etsy shop effectively.
Save yourself hours of accounting admin so you can focus on growing your business.
Find out more here and start your three-month free trial today.