eCommerce Archives

eCommerce Trend Report: 2020 Recap & 2021 Forecasts

April 6, 2021/by Team

Editor’s Note: This post was originally published in March 2020 and has been updated for accuracy and comprehensiveness.

For all the challenges the economy faced in 2020, it may come as something of a surprise that overall domestic retail sales saw their highest rate of growth in over two decades during 2020. What probably isn’t much of a surprise to anyone who has been paying attention is that that strong growth was driven entirely by eCommerce trends in 2020, with online sales accounting for 101% of that growth.

The COVID-19 pandemic drove more and more shoppers to online retailers in lieu of brick-and-mortar stores, and the good news is that that movement shows no sign of slowing down in the eCommerce trends for 2021. The bad news is that sales tax compliance continues to be a thorny issue for online retailers as they struggle to keep up with state regulations. Figures represent US domestic sales unless specifically noted as global figures.

Consumer Migration to E-commerce

Overall retail sales in 2020 topped $4.04 trillion, representing a 6.9% increase over 2019 sales of $3.78 trillion. That was driven by a massive 44% increase in online shopping, nearly three times the previous record eCommerce year-over-year growth 2019 of 15.1%. A significant portion of that increase was also due to first-time online shoppers. E-commerce market penetration leaped from 15.8% in 2019 to 21.3%, representing a sharp increase from its previous trend of 1-2% growth per year. In 2020, eCommerce transformed from being a convenient alternative to brick-and-mortar stores for some consumers to an essential part of daily life in an age of pandemic.

Holiday Shopping

Following the overall trend toward online shopping, domestic holiday shopping showed similar rates of year-over-year growth. Out of $861 billion spent online in 2020, over $200 billion of sales occurred during the holiday shopping months of November and December.

Thanksgiving Day online sales rose 21.5% to $5.1 billion
Black Friday online sales rose 21.5% to $9 billion
Cyber Monday online sales rose 15% to $10.8 billion
Total Cyber-week domestic online sales reached $60 billion

Hottest E-commerce Segments in 2021

Fashion and online apparel remained the largest segment of online shopping globally in 2020, followed by toys and electronics.

Online apparel sales rose 15% to $760 billion globally, projected to reach $1 trillion by 2025
Toys rose 12% to $590 billion in global online sales, projected to reach $766 billion by 2025
Consumer electronics saw $542 billion in global online sales, a 28% increase over 2019.
Food and personal care items came in fourth at $468 billion
Furniture and household appliances totaled $362 billion globally.

Largest Retailers

Unsurprisingly, Amazon retained its throne as the undisputed king of online retailers, with a whopping 38% of all domestic sales, down slightly from its 2019 share of 43.8% share in 2019. Other online retailers like Walmart and Target managed to chip away at Amazon’s lead, but are still behind by a wide margin.

Amazon – 38%
Walmart – 5.3%
eBay – 4.7%
Apple – 3.7%
Home Depot – 1.7%

Smartphone Sales

Smartphones continued to increase in popularity as a platform for online shopping, representing 54% of online sales in 2020 and projected to reach 73% in 2021. 79% of smartphone owners have made at least one online purchase with the device, and 80% of smartphone owners have used a smartphone to look up product information or reviews while shopping in a traditional brick-and-mortar store. It’s clear that the prevalence of smartphones will continue to be a driving force in eCommerce for the foreseeable future.

Trends to Watch

Whether you have something like a Shopify store or sell through your own website, it’s imperative to stay on top of technology and predict online consumer product trends so that you can stay one step ahead of the competition. To that end, we’ve identified some eCommerce future trends that are definitely worth keeping an eye on in 2021.

BOPIS (Buy Online, Pick-Up In-Store) and Curbside Pickup

This trend dominated much of 2020 because it combined the convenience of online shopping with the immediacy of in-store shopping. While some shoppers will revert to in-store shopping, this trend is here to stay.

Augmented Reality (AR)

Augmented reality emerged as a player in eCommerce in 2020, with, for example, some furniture retailers allowing consumers to upload a photo of their living room and see how a particular piece would look in it.

Digital Wallets & One-Touch Purchase

Many consumers have been hesitant to make the move to online shopping due to concerns about fraud, while others were put off by the inconvenience of having to enter a credit card number. Digital wallets like ApplePay and GooglePay have alleviated many of those concerns by making secure one-touch purchases from smartphones. However, most security concerns are pushed to the wayside for convenience, and this eCommerce trend is probably here to stay.

Cryptocurrencies

Although controversial and not widely adopted currently, cryptocurrencies are poised to become a force in eCommerce in the not-too-distant future. Because Bitcoin is both a currency and a payment processor, it can facilitate secure transactions across borders at transaction fees of 1%, as opposed to the typical 2-3% merchant fees charged by credit card processors. Some large online retailers like Overstock.com already accept Bitcoin.

More Sales Tax Headaches

In response to declining state sales tax revenues from the move to online shopping, the US Supreme Court ruled in South Dakota v. Wayfair (2018) that each state could tax online retailers to create a replacement revenue stream individually. Online retailers must now monitor and comply with 50 different sales tax laws, creating enormous accounting overhead.

This is yet one more reason to outsource your bookkeeping service and accounting to a professional firm like Xendoo as a cost-effective solution to this regulatory nightmare. Sales tax processing is just one of the many affordable services available in Xendoo’s small business offerings. Xendoo can also ensure you are getting all the eCommerce tax deductions you are entitled to as an online retailer.

It’s clear that eCommerce will only continue to grow by leaps and bounds in the future. Consumers were already growing accustomed to the convenience of online shopping, and the COVID-19 pandemic was the impetus that pushed many holdouts to take the plunge. Many retailers struggle to understand emerging technologies and keep pace. The retailers that don’t will be left behind in the wake of those who do. Staying on top of technology and eCommerce trends is critical to success in retail in 2021.

Experience the Xendoo difference with a one-month free trial.

Ready to Sell Your Shopify Store? Here’s How to Get Started

March 11, 2020/in eCommerce /by Team

There are many reasons why people decide to sell their Shopify or other eCommerce stores — personal or professional. What they all have in common, though, are the worries that come with that decision:

What if I can’t get a fair price?
What if I can’t find a buyer?

These tips will help steer you through the valuation and marketing process of transitioning your business to a new owner and how to make sure the bookkeeping for your e-commerce business are ready for sale.

Put a Price on Your Business

There’s no point in starting negotiations unless you have a definite number that shows how much your business is worth — one that will pass muster with bankers, accountants, and financial consultants, not just something you pulled out of the air.

There are three valuation methods used for eCommerce websites:

Discounted cash flow analysis – make a projection based on future cash flows
Asset value – subtract your liabilities (such as debts) from your assets (such as inventory)
Multiple of revenue – multiply net profit times a specific number of years

The third way is the most common, so we’ll discuss that in a bit more detail.

Determine Multiple of Revenue

First, you must figure out your net profit for the year. If your accountant provides you with a profit and loss statement, just look at that. If not, you’ll have to fill one out; free P&L templates are available on the internet.

Next, figure out the multiple — number of years the business can expect the same or similar net profit. This multiple is generally considered the amount of time it will take the new owner to make back their initial investment.
The multiple is dependent on a variety of factors which assign more or less risk to a business. So, the less risky your business, the higher your multiple. These factors include:

Growth in net profits year-over-year shows less risk, therefore, gives you a higher multiple
Growth opportunities, though not guaranteed, should be considered part of the value of your business
Type of business model — some are riskier than others

Doing the math, you can see that a higher multiple will result in a higher price for your business.

$100,000 net profit x2 multiple = $200,000 value of business
$100,000 net profit x3 multiple = $300,000 value of business

Analyze Your Business and Market for Ways to Add Value

Your Shopify business should also be evaluated for its strength, sustainability, and growth potential. It’s a good idea to get concrete numbers to support the following factors:

Overview – age of business, business model, performance over the last 12 months
Financials – current and projected growth rate, whether growth is trending up or down
Customers – major traffic sources (such as Shopify), lifetime value of customers, customer engagement
Operations – number of employees, the value of inventory, list of suppliers
Vertical – how the business performance compares to competitors, and how saturated is its niche
Market — what price similar e-commerce businesses have sold for in the past and what’s currently on the market (check flippa.com for these sales records)

Clean Up Your Act to Impress Potential Buyers

Here are some steps you can take to present the most favorable picture of your business.

Because buyers are most interested in recent sales, wait — if you can — until sales are at their yearly peak. Or make extra efforts to increase sales for a few months.
Organize and update your financial accounts, including receipts, categorized expenses, Shopify refunds or other adjustments, bank reconciliations, and taxes. Buyers want to see accurate, summarized statements, not a big mess. Make sure you use a catch up bookkeeping service so your financials are updated when you’re ready for sale.

List Your Business for Sale

Here are some of your options.

Exchange Marketplace is especially for selling Shopify businesses. You do have to meet some eligibility requirements, such as your account is in good standing and you don’t have active financing from Shopify Capital. Transferring the business and receiving payment is super simple.
Flippa is widely regarded as the best platform for buying and selling online businesses. This is an auction format, so you’ll have to set a reserve price, auction time, and so on. Verify that the buyer has placed their payment in the escrow account or sent it via Paypal before you transfer ownership.
Website broker: If you’re not sure you’ve evaluated your business correctly, consult with a professional website broker. Brokers do charge a fee, but they can be a big help in maximizing your price and avoiding mistakes.

Get Help with Your Financials

Whether you’ve got a bookkeeping backlog to clean up fast or need reliable P&L statements every month, Xendoo’s got you covered. Our eCommerce experts use Xero, the world-leading professional accounting software, to help get your business ready for a successful sale.

Xendoo’s flat-rate packages are easily affordable by small businesses. Find out for yourself with a one-month free trial.

Pass-Through Deductions: What It Is and Who Qualifies

January 18, 2020/in eCommerce /by Team

One of the best small business-friendly aspects of the Tax Cuts and Jobs Act (TCJA) is the 20% deduction you can take on your income tax if your business is a pass-through entity. Here’s what you need to know about it.

What Is the Deduction

The TCJA was passed in 2017 and first applied to 2018 tax returns. Provision 199A of that law states that you can deduct 20% of your “qualified business income” which was earned from a “qualified trade or business.”

What Is a Pass-Through Entity

Any business structure that allows you to receive income as an “owner’s draw” rather than as a regular employee is a pass-through business. The money is “passed through” from the company account to your personal account. You only pay income tax on it with your personal return; you don’t have to file a separate return for the business.

Pass-through entities include:
• Sole proprietorship
• Partnership
• LLC (limited liability corporation)
• S-Corporation

However, there are some restrictions.

Taxable Income Restriction

• Less than $157,500 (single, married filing separately, head of household) or $315,000 (married filing jointly): you qualify for the full 20% deduction.
• $157,500 – $207,500 or $315,000 – $415,000, respectively: your deduction may be less.
• More than $207,500 or $415,000, respectively: you are not eligible for the deduction.

Specified Service or Trade Restrictions

What your business does may disqualify it from the deduction. Here’s the list of excluded fields, as issued by the Treasury Department in August 2018:

• Health
• Law
• Accounting
• Actuarial science
• Performing arts
• Consulting
• Athletics
• Financial services
• Brokerage services
• Any business where the principal asset is the reputation or skill of one or more of the employees or owners
• Any business that consists of investing and investment management, trading or dealing in securities, partnership interests or commodities

But don’t give up if you see your business in one of these categories, because there are numerous exceptions. For example, in the Health category, healthcare providers who provide services directly to patients — such as doctors and dentists — are not eligible. On the other hand, health clubs, spas, medical research companies, and those who sell pharmaceuticals or medical devices may qualify for the deduction.

In the case of businesses who both provide services and sell products, eligibility is determined by sales:
• Less than $25 million in gross receipts and less than 10% of your business comes from disqualified services; or
• More than $25 million in gross receipts and less than 5% of your business comes from disqualified services

Employee and Property Restrictions

There are two further conditions that could affect how much of a deduction you can take. They are:
• Business that pay W-2 wages
• Business that owns “qualified property” such as real estate or other tangible assets that can be depreciated

If your business fits either of these descriptions, your deduction will be the lesser of:
• 20% of qualified business income (or the “tentative deduction”); or
• The greater of:
o W-2 wages paid x 50%; or
o W-2 wages paid x 25% + the unadjusted basis (cost) of your qualified property x 2.5%

Still confused about the pass-through deduction? Your Xendoo small business expert can clear things up, answer your questions, and help you get every tax break you deserve.

How to Choose the Best eCommerce Accounting Software

July 18, 2019/in eCommerce, Taxes /by Team

Online businesses can acquire customers from all over the world. However, running an eCommerce business also comes with unique challenges and solutions. Once your online store is ready to launch, it’s time to choose an eCommerce accounting software that will keep your books up to date. With an online accounting software, you can keep detailed records of invoices, capital and overhead expenditures, employee wages, tax returns, and more.

A strong eCommerce bookkeeping and accounting solution will also make it easy for you to track profit margins, cash flow, and other vital metrics that make the difference between business success and failure.

How do you know which eCommerce accounting software is right for you? We’ve covered some of the most important considerations and options for eCommerce businesses.

Top Considerations for Choosing eCommerce Accounting Software

Most businesses are online these days, even if they have an in-person store. It’s important to have a robust accounting software system.

The best systems for eCommerce can integrate with the payment platforms you use as well as other eCommerce tools. Ecommerce accounting software should help you track sales transactions, run quarterly reports, generate invoices, code expenses, and more.

When you’re selecting software for your online business, consider the following.

1. Is your eCommerce accounting software compatible with top eCommerce platforms?

You want your software to pull in data from Amazon, eBay, Shopify, and any of the other marketplaces where you may end up selling your products. This makes accurate inventory management and revenue tracking much easier. Integrations can be tricky, so we’ve also created a guide on the most important integrations for top eCommerce platforms.

2. Will it help you run payroll faster?

If you’re a small online business, you probably don’t have a payroll department yet. If you do, look for accounting software that will help you pay your staff efficiently. For instance, Gusto is a popular payroll option. If you use Xendoo for your bookkeeping and accounting, you can set up integration with Gusto.

3. What financial reporting features does it have?

When your business is online, you can literally move inventory while you sleep. A good software program for ecommerce businesses is able to pull on-demand financial reports so you can see real-time updates on your sales, returns, and more.

4. Will it facilitate bank reconciliations?

Many software programs can pull data right from your banking website and reconcile those transactions with your internal records. Do the balances match? Running an online business on a tight margin means catching errors quickly so you can find out where the missing money went.

What is the best eCommerce accounting software?

How can you know which software accounting solution is right for you? It’s wise to compare your available options.

Keep in mind that Xendoo can integrate with any of the accounting tools below when we take care of your bookkeeping needs. We’ve listed here some popular software choices for you to consider.

Quickbooks

Probably the most well-known software for small businesses, QuickBooks offers you a choice of accounting in the cloud or your internal network. It integrates with most of the top eCommerce platforms, such as Amazon, eBay, Shopify, and Etsy. You pay a monthly subscription fee (after the free trial month), which varies according to the package of capabilities you choose for your business.

Wave

A great option for new businesses on a tight budget, Wave offers free basic services such as accounting and invoicing. Additional capabilities such as payments and payroll are available for modest fees. Data from PayPal, Excel, and many other sources can be automatically imported into Wave books.

Kashoo

Exceptionally user-friendly for the non-accountant, Kashoo takes just one day to set up and learn. In addition to basic bookkeeping tasks and bank syncing, it provides one-click financial reports, so you can make smart business decisions and breeze through tax time. If you do have any questions, there’s free unlimited support plus a video tutorial library.

Xero

An international leader in cloud accounting, Xero gives business owners unprecedented access, speed, and reliability. Its superior functionality and security have made it popular with accounting and bookkeeping firms — including us here at Xendoo. Solutions include invoicing, payments, payroll, tax coding, and bank reconciliations. Best of all, you can get a real-time view of your cash flow from any mobile device or desktop computer at any time.

Xendoo

Programs like these make it as easy as possible for financial rookies to keep their businesses on track. But if you still don’t feel comfortable or don’t have the time to do the bookkeeping yourself, consider hiring a professional accounting firm. If possible, choose one that specializes in eCommerce — like Xendoo.

With Xendoo, you get the accounting software and the expertise, with a team of bookkeepers and accountants.

Xendoo’s eCommerce accountants know where to find financial data across multiple platforms. We know how to set up accounting systems with third-party eCommerce tools, and how to navigate tricky tax issues when selling to people out of state or out of the country.

From bookkeeping to income and sales tax filings to financial reports, we take eCommerce accounting hassles off your shoulders, leaving you with the time and peace of mind to grow your business. We know you’re on a budget, so our flat monthly fee is less than half what you’d pay a bookkeeper who charges by the hour. If you’d like to know more, feel free to schedule a call today.

Editor’s Note: This post was updated on March 21, 2022, for accuracy and comprehensiveness.

Calculate Your Capital Gains Tax in 5 Easy Steps

May 21, 2019/in eCommerce /by Team

If you’ve sold stock, real estate, or other assets at a profit, you will have to pay income tax on that profit — known as capital gains tax. The amount you pay depends on your income bracket.

Here’s how to figure how much tax you owe. Bear in mind, this calculation is for long-term capital gains — on assets you owned for more than one year. (Short-term capital gains on assets held for one year or less are taxed as ordinary income.)

1. Figure the basis.

The basis is usually the purchase price plus fees or commissions you paid to make the purchase. You may also need to add reinvested dividends on stocks and other factors.

2. Figure the realized amount.

Start with the amount you sold the asset for and subtract any commissions or fees you paid to make the sale.

3. Subtract basis from the realized amount.

The result is your capital gain. (If the result was less than 0, you have a capital loss. Capital losses can be used to offset capital gains on your income tax return.)

4. Determine your tax rate.

For 2018 taxes, the rates are:
• 0% if your income for the same tax year is below $38,700 and you are filing as single, or below $ 7,400 if married filing jointly
• 15% if income is between $38,701 and $500,000 and you are filing as single, or between $77,401 and $600,000 if married filing jointly
• 20% if income is over $500,000 and you are filing as single; or over $600,000 if married filing jointly

Calculate your tax. Apply the tax rate percentage from step 4 to the capital gain amount from step 3. For example, if your tax rate is 15% and your capital gain is $3,000, your tax will be $450 (3000 x 0.15 = 450).

In most cases, capital gains and losses are reported on IRS Form 8949 and Schedule D of your income tax return.

If you have any questions about your capital gains tax liability, or any income tax questions, please feel free to contact your Xendoo tax professional. It’s all part of our service, which sets your mind at rest so you can stay focused on growing your business.

Getting started with A2X for Shopify

May 15, 2019/in eCommerce /by Team

About A2X for Shopify

A2X for Shopify imports your Shopify payouts and sales and posts them to your accounting system in a way that makes it easy to reconcile the sales, refunds, discounts taxes and shipping against the cash receipts.

A2X for Shopify has several benefits for accounting:

Reconciles Shopify Payments perfectly, including all fees
Accurate Shopify data imported automatically
Scales to support 1000’s of daily orders without sending 1000’s of individual invoices to the accounting system.
Supports multiple Shopify stores connecting to a single accounting system for multi-channel sellers.
Supports multi-currency sellers and multiple tax rates

Supported Payment Gateways

Shopify Payments – payouts will reconcile directly to bank deposits
PayPal – transactions posted to the accounting system with a clearing account
Amazon Pay – transactions posted to the accounting system with a clearing account
Authorize – transactions posted to the accounting system with a clearing account
Afterpay – transactions posted to the accounting system with a clearing account
Other gateways – posted to an accounting system with a clearing account, please contact support for specific gateway information.

Creating an A2X for Shopify account

Create a new A2X for Shopify account from the Shopify sign-up page.

If you already have an existing A2X for Amazon account, you will be asked to confirm you wish to create a new account.

Once your account is created it should look like this:

Now you are ready to set up your new A2X for Shopify account.

Connecting an A2X for Shopify account to your Shopify store

Click the green ‘Connect to Shopify’ button and input your Shopify shop in the form below and click ‘Connect’:

You will be redirected to your Shopify store and asked to log in and grant A2X permission to connect to your Shopify store. You must grant this permission in order to use A2X for Shopify.

Once the permission is granted you’ll be redirected back to A2X and your first payouts will begin to import into A2X – this process usually takes 10-20 minutes to begin populating in your account and for larger Shopify stores can take several hours to complete.

Once imported you should see the payouts like this:

Note: If you are not seeing any payouts after an hour, please check that your Shopify store uses the Shopify Payments gateway – if not you will need to enable the other payment gateways on the Settings > Connections page first.

Connecting to your accounting system

Click the Connect button for your accounting system and proceed with the connection process. You will be redirected to your accounting system to grant A2X permission.

If you are connecting A2X for Shopify to the same accounting system that you are already connected to with a different A2X account (either with Amazon or a different Shopify store), you should choose to use the existing connection, rather than create a new connection.

Configure the accounts and taxes for your Shopify sales

You need to configure A2X for Shopify to map your Shopify transactions into your accounting system.

A2X will offer to create several generic default accounts, or you can select your own individual mappings. We recommend working with your accountant on this initial setup as it will impact how the Shopify transactions appear in your financial reporting.

You can also customize how the A2X transactions are created, such as grouping the sales by country or province in the Settings > Invoice settings section of A2X. This can help if you have specific tax handling requirements for some countries.

Shopify Payments Gateway

The sales, refunds, and other transactions that are paid via Shopify Payments will be imported to A2X in their own payouts, these will be posted as a single batch of transactions and will always match perfectly to the corresponding deposits from Shopify.

Other Payment Gateways

If you use other gateways or payment methods on your Shopify store, these will be imported separately into A2X for Shopify. Typically you will need to define a clearing account for each one and post the corresponding payment proceeds to the same clearing account. The exact configuration for these accounts will differ depending on the payment methods.

You can enable, configure, and preview these settlements in Settings > Connections.

For more information about these mappings or if you have specific requirements that are not handled by the current mapping, please contact the A2X support team.

Post your Shopify payouts and reconcile them in your accounting system

Once you have connected and configured your account, you can send your payouts to your accounting system. To do that, click the Send link.

You will see the payout in your accounting system and be able to match or reconcile it to the corresponding deposit. For example here is Xero’s bank reconciliation screen showing the matching payouts.

10 Steps to Get Started Selling on Amazon

October 10, 2018/in eCommerce /by Team

Thinking of expanding your retail business into the biggest market platform in the U.S.? Amazon makes it easy for sellers of all sizes to get in on the action, even offering warehousing and fulfillment services.

Here’s how to become an Amazon seller.

1. Create an account.

Don’t use your personal Amazon account. Setting up a separate account for your business will make it easier to analyze and manage financials. You’ll be required to provide a credit card number, which will be used for charging any subscription fees and covering a negative account balance.

2. Figure your costs.

Amazon charges $39.99 per month for a professional account, which allows you to list an unlimited number of items. On top of that, there will be selling charges and other fees, which can total 15% or more of the sale price for some types of merchandise.

3. Figure your prices.

Your selling price must be high enough to make a profit, yet not so high that it will drive customers to your competition. Factor in your overhead such as Amazon fees and shipping costs. Also, research the prices being offered by competitors. Accounting software can make quick work of analyzing each price scenario so you can arrive at a price that’s both competitive and profitable.

4. Select a product listing category.

Make it easy for customers to find your merchandise … and for Amazon to display your item in search results.

5. Create an effective product page.

Remember, your customers are buying the item sight unseen. A product page that omits important information can cost you sales. (Would you buy a TV stand if you didn’t know whether it was big enough to hold your TV?)
• Use search keywords in the text to get a higher placement on Amazon’s search results page.
• Utilize the bullets section to communicate key features and benefits, in case viewers don’t scroll down to the full description
• Photograph(s) should be clear and informative. Showing the product from all sides and in use will help resolve customer questions or doubts.

6. Decide whether you will fill orders yourself or use Amazon.

Fulfillment by Amazon (FBA) handles the warehousing, shipping, and returns for you. This certainly saves a huge amount of work, but of course, they will charge you for this service. Another advantage of using FBA is that it gives you access to Amazon Prime customers who don’t want to pay for shipping.

7. Package your merchandise.

If you use FBA, Amazon will ship your products in its branded outer packaging. But the product’s packaging can display your own brand, a marketing opportunity that should not be overlooked.

If you’re doing your own fulfillment, you will need shipping supplies including:
• Scales for weighing the box and calculating shipping costs
• Strong packing materials
• Labels
• Laser printer

8. Test the market.

When you’re new to selling on Amazon, it’s smart to start with just a few products. This will give you time to become familiar with billing, payment processing, and customer service.

9. Adjust your sales strategy with metrics.

Offering reports on inventory, sales, and more, Amazon’s Seller Central Area can guide your decisions on inventory planning, promotions, and product presentation. Beyond that, measure and track everything you can so you’ll know for a fact what works and what doesn’t.

10. Follow through on customer feedback.

One of the biggest factors in a purchase decision on Amazon is the reviews of a product left by previous customers. Your goal is to have as many positive and few negative comments as possible.
• After purchase, send an email encouraging the customer to review the item.
• Include verbiage that asks them to contact you first before placing a negative review and give you a chance to resolve the problem.
• Respond to potential buyers in the questions section.
• Respond to misinformation in the reviews.

If you’ve completed these 10 steps, you should be well on your way to a successful career of selling on Amazon!

eCommerce Sales Tax: 5 Steps to Making It Worry-Free

July 12, 2018/in eCommerce /by Team

Selling online used to be a breeze. Get the order, collect the money, ship out the product. No hassles with sales tax like a brick-and-mortar retailer have to deal with. Nowadays, unfortunately, it’s up to 46 times more complicated for an eCommerce business. That’s because 45 U.S. states plus Washington, D.C., now require you to collect and submit sales tax — each with its own set of laws that you need to follow.

The process can be daunting — and time-consuming — for a small business. Here’s how to make it more manageable.

1. Determine which states you need to collect tax in.

As of June 21, 2018, that’s any state where you have customers. Before that date, each state had a set of criteria known as “sales tax nexus,” which determined whether you would have to collect tax in that state. The criteria included such things as the physical location within the state, distributor, or sales rep location and total sales value.

However, the old rules are now out the window. With the Supreme Court’s decision in favor of South Dakota (in the case of South Dakota v. Wayfair), physical presence in the state is no longer required.

Many questions on how this will play out remain unanswered. For example, the decision includes language that the state tax system should not discriminate against or place an “undue burden” on out-of-state businesses. It may take states a year or even longer work out their new rules.

In the meantime, learn more about sales tax nexus here.

2. Determine which products qualify as taxable.

Again, rules vary by state. Some of the most common non-taxable items are:

• Grocery food
• Clothing
• Certain types of books (textbooks, religious books)
• Prescription and non-prescription medicine
• Magazines and subscriptions
• Digital products (books, music, movies)

3. Register for state sales tax permits.

In each state where you’ve determined you need to collect sales tax, apply to the state’s department of revenue for a sales tax number. You need this number in order to legally collect tax from customers.

Make a note of each state’s tax due dates. You may have to file monthly, quarterly, or annually. This information will be included with the tax permit the state sends you.

In most states, your sales tax permit is also a resale certificate. That means you can buy items tax-free at retail, as long as you intend to resell the items.

4. Update your website’s shopping cart to collect sales tax.

For sales within the state where you’re physically located, check whether your state uses origin-based or destination-based taxation.
• Origin-based: You charge the state, county, and city rates that apply to the location you’re shipping from.
• Destination-based: You charge the rates that apply to the shipping address.

In some states, shipping charges are also taxable. Most shopping carts allow you to add this function.

If you use drop shipping, you’ll have to work with your dropshipping supplier to decide who will be responsible for collecting sales tax.

5. File your return.

File a return for every state and every due date, even if you had zero sales in that state or time period. If you don’t file, you could be slapped with a penalty, or even lose your tax permit.

Be prepared to fill in the tax return form by county, city, and other special taxing districts. This is where automated software can make your life a lot easier.

Save money by filing on time or early. Some states give a discount for filing on time. And some need a few days to process payments. So even if you file on the due date, the money won’t reach the state’s bank on that day and you will be charged a late fee (plus interest on the amount of tax due).

Xendoo makes processing sales tax easy for eCommerce businesses. By integrating with both your business software and your bank, transactions are entered automatically in your books. Plus, each entry is tax coded as it happens, so there’s no last-minute rush at filing time. With the hassles out of your way, your time and energy are free to focus on growing your business.

3 Great Cash Flow Ideas for Retailers

June 25, 2017/in eCommerce /by Team

What do a used book store, garden nursery, and boutique clothing shop all have in common?

No, this isn’t the set up to a joke. Unfortunately, all three types of businesses are at risk of failing if their cash flow isn’t in good shape. According to the Small Business Administration, “inadequate cash reserves” is a top reason small businesses close their doors for good.

So whether you sell novels, shovels, or dresses with ruffles — if you’re a retailer, cash flow is king.

What exactly is cash flow?

Think of it like a checking account. Cash flow looks at all the money coming in and out of your business each month. If there’s more coming in than going out, you’re in the green! If you’re spending more than comes in, read on. That means your cash flow is negative and your business could be in trouble

Here are three simple ways to get your cash flowing in the right direction.

1. Bundle products

If you sell several accessories apart from your core offering, try packaging them together with a small discount. This can also be an effective way of clearing out dead stock while creating goodwill with your customers, who feel like they’re walking away with a great deal.

2. Understand the risks of discounting

If you do decide to bundle products or offer another type of sale, make sure you know exactly how that will impact your bottom line. You should know the profit margins on every product you sell and your overall cost basis – it’s the only way to determine if you’ll break even with the sale or take a loss.

3. Encourage repeat business

Offering perks or freebies to returning customers helps create loyalty and makes it easier for them to choose you over other options. Go old school with a punch card, get creative with a contest, or print an offer on receipts that are good for a future purchase.

If you’re struggling to determine the state of your cash flow, it could be time to call in for some backup. With Xendoo’s suite of affordable bookkeeping and consulting services, you’ll be able to spend more time at the “cash-out” bringing the cash.