For small business owners, bookkeeping is an essential task that somehow often falls to the bottom of the to-do list. However, it’s even more stressful during the holiday season. As an Etsy store owner, you’ll have a lot to think about as the holidays approach, such as your product offerings, product sales, marketing campaigns, and the logistics of your items.
The holiday rush is quickly approaching, but there are things you can do now to prevent bookkeeping issues. Here’s how you can stay on top of your bookkeeping for the holiday rush.
Why It’s Crucial to Have Your Bookkeeping in Order Before the Holidays
With all of the responsibilities that come with managing an Etsy shop, you may accidentally overlook your bookkeeping duties. If you don’t get your bookkeeping in order now, you may have a hard time trying to catch up once the holiday rush hits.
Some of the most common and costly bookkeeping errors can leave you without sufficient time to categorize your expenses, reconcile bank accounts, and track your records. There are also severe errors that can result if you misclassify employees or independent contractors or underestimate sales tax.
Maintaining organized and thoughtful bookkeeping now will provide a foundation so you can enter the holiday season fully prepared. There are some bookkeeping strategies you’ll want to implement now to save time when you’ll need it most.
How to Prepare Your Etsy Shop’s Bookkeeping Before the Holidays
There are four ways you can prepare now to avoid bookkeeping before holidays arrive.
1. Utilize Bookkeeping Software to Stay Organized
One way you can prepare your Etsy shop’s bookkeeping before the holidays is to use bookkeeping software.
Although many bookkeeping software programs offer a chart of accounts, double-entry accounting, and general ledgers, the program you’ll use should serve all of your needs. You’ll want to consider:
- Accounts receivable
- Balance sheets
- Cash flow forecasting
- Inventory management
- Number of users for each bookkeeping software program
- Sales reports
- Software plan costs (annually or monthly)
If you use them throughout the year and remain organized with your entries, you’ll have the structure needed to prepare before the holiday influx of shoppers.
2. Do an Inventory Check
Next, you can prepare your Etsy shop’s bookkeeping before the holidays by doing an inventory check. An inventory check will give you a better idea of which items you’ll need to stock up on before the holiday season arrives.
If you do an inventory check before the holiday rush, you may find that it helps you avoid an inaccurate inventory amount. Not doing an inventory check can create major headaches because you risk selling out of your top items and losing valuable sales.
You have some options for how to do an inventory check. There are three options you can use for inventory checks to count your products:
- Cycle Count Program
- Physical Inventory
- Warehouse Management System (WMS)
The cycle count program involves taking stock of your inventory over the course of a given time period and will help you maintain your inventory check accuracy over time.
You can choose the frequency of how often you track your inventory. Depending on the number of products you offer in your Etsy store, you can cycle count daily, monthly, quarterly, or weekly.
Physical inventory is the act of counting out your inventory, and there are two ways to do so. You can choose from either floor-to-sheet or sheet-to-floor to count your inventory.
If you choose the floor-to-sheet method of counting your inventory, you’ll first count everything you have in your inventory. Then, you’ll compare the total number to what your bookkeeping software system has.
If you choose the sheet-to-floor method of counting your inventory, you’ll do the opposite. First, you’ll begin with the total number within your bookkeeping software. You’ll then compare the total number to the inventory you find.
Finally, whether you have a large or small Etsy shop, you can use a warehouse management system (WMS) to check your inventory. A WMS will help you organize your inventory, provide details (such as the location and quantity), and tell you how much of your inventory is waiting for you to receive.
3. Ensure Your Books Are Up-to-Date
Third, you’ll want to ensure your books are up-to-date. You’ll want to keep several things in mind while focusing on your books:
- Categorize your assets properly
- Keep all of your invoices and receipts
- Reconcile your books
- Remember your payroll records (if you have employees)
This step is crucial during the holiday rush because you’ll have more customers and more orders than usual to monitor. Ensuring your books are up-to-date will also help you catch errors or avoid them before it’s too late to fix them.
4. Consult a Professional Bookkeeper
Finally, one of the best things you can do for your Etsy shop is to consult with a professional bookkeeper. Getting up to date with your bookkeeping before the holidays is essential, but it’s even more important to avoid incorrect bookkeeping. Bookkeeping errors could cost you money and time during one of the busiest times of the year for your Etsy shop.
Receiving professional help for your Etsy shop’s bookkeeping will help you avoid many of the pitfalls that can arise from improper bookkeeping. A professional bookkeeper can ensure that you:
- Comply with IRS and state laws
- Decrease the likelihood of audits
- Keep your bookkeeping records organized
- Reduce stress during the holiday season
Let Us Help You With Your Bookkeeping Before The Holidays
Bookkeeping should be one of your priorities at any time in the year, but bookkeeping before holidays is even more critical. As an Etsy store owner, your priority shouldn’t involve worrying about your bookkeeping.
With the holidays arriving soon, now is the time to think about your bookkeeping needs. Work with experienced professionals at 1-800Accountant for your small business bookkeeping needs so you can focus on running your business.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.