Roseville Accountant (CPA) for eCommerce Companies
Cook CPA Group
Although it can be rewarding, operating an e-commerce business can require a lot of mental energy. Sales platforms are constantly evolving, customers have demands that must be met, and understanding the taxes involved with different types of sales can be complicated. However, it’s important to be certain that you are managing your finances and paying your taxes properly. You can do so with the help of a Roseville accountant for e-commerce companies from Cook CPA Group.
With the help of Cook CPA Group, e-commerce companies can develop a tax strategy that suits their individual needs. The accountants from Roseville Cook CPA Group can help you stay up-to-date on new regulations and can address any questions regarding taxes and finances that you may have. Get in touch with a qualified accountant as soon as possible by calling (916) 432-2218.
Tax Tips for eCommerce Companies in Roseville, CA
As the owner of an e-commerce company, you are responsible for the financial health of your business. The Roseville accountants at Cook CPA Group understand that it can be stressful to try to manage all of the financial decisions involved in an e-commerce company. The following are tips that e-commerce owners can follow to make their financial lives easier.
Use a Good Inventory Accounting Method
When you are an e-commerce business selling various types of products, you will need to have a clear method of keeping track of inventory. There are a few ways to manage and account for your business’s inventory:
- FIFO – “FIFO” stands for First In, First Out. This is the most commonly used method of inventory management. According to this method, the inventory that has been around for the longest period of time is the first to be sold. This method prevents any item from remaining in your inventory for too long, which is especially advantageous if the inventory is prone to becoming expired, irrelevant, or obsolete.
- LIFO – Meaning Last In, Last Out, this inventory management method is used for items that are subject to inflation or trends; selling the most recently acquired items is advantageous at times like these. This method is used much less frequently than FIFO, but it is applicable in specific situations.
- AVCO – “AVCO” means Average or Weighted Cost method. It entails taking inventory based on the average cost of goods and is ideal in situations where the inventory is not perishable and can be easily rotated.
- Specific Identification – When this inventory method is used, costs are attached to individual items. It is usually applied to inventory that is specific and high-cost, such as automobiles.
There are also different ways of accounting for inventory. The first is periodic inventory management, which entails auditing inventory once or twice per year, then reconciling it against sales and purchases; any discrepancies between the two are considered to be losses. The other type of inventory management is dynamic inventory management, which entails accounting for the cost of goods sold and then removing that money from the account when a transaction is made.
Claim Tax Deductions
It is wise for e-commerce companies to claim tax deductions. There are many costs that e-commerce businesses are able to deduct from their taxes. For instance, businesses are able to deduct the cost of packaging and shipping items, as well as the costs associated with maintaining a workspace, paying for utilities, improving or repairing a home office, and renting coworking spaces.
E-commerce businesses are also able to claim tax deductions for certain services connected to their business, including bookkeeping and legal fees; they may deduct bank fees, business internet, and business insurance as well. The costs of marketing (including advertising, marketing tools, and services), website hosting, and business-related travel can also be deducted.
Pay Employment Taxes
As small businesses, e-commerce companies must pay employment taxes. These are the taxes that are withheld from employees’ paychecks and are paid by employers once per year. The employment taxes that must be paid by small businesses, including e-commerce companies, include federal income taxes, Social Security and Medicare taxes, Federal Unemployment (FUTA) taxes, and self-employment taxes. E-commerce companies should also pay estimated taxes over the course of a year.
Understand State Sales Tax
Sales taxes for e-commerce businesses are different from sales taxes for brick-and-mortar businesses. Sales tax must be paid by businesses when they have established “nexus” in a place; nexus is established when a business has substantial activity within a state. Substantial activity may be based on:
- Physical location – The location of an office, warehouse, store, or other physical place of business
- Personnel – This includes employees, contractors, salespersons, and technicians
- Inventory – Even if it is only being stored temporarily, keeping inventory in a place may be enough to establish nexus
- Sales – Businesses that make above a certain threshold in sales may be considered to have nexus in a place; this may apply even if you sell things temporarily in a state, such as at a tradeshow
- Affiliates – If other businesses advertise your products in exchange for a cut of your profits, then you may have nexus in the state where they are located
CPAs Available for eCommerce Companies in Roseville
If you are seeking help with taxes and finances for your e-commerce company, you should get in touch with the Roseville accountants at the Cook CPA Group. The CPAs at Cook can put their decades of accounting experience to use to help you take control of taxes related to your e-commerce business. Call (916) 432-2218 today to learn more about how you can benefit from the accounting services from Cook CPA Group.