5 things to look out for when embarking on an e-commerce project - NM Group News

5 things to look out for when embarking on an e-commerce project

Operating any business is challenging and moving to an online one, especially if you already own a traditional store certainly adds more to your plate. We’re here to lighten your load with the 5 most important things you need to look out for, from our experience working with a number of e-commerce businesses.

1. Link your e-commerce website to an Accounting Software

We see a number of e-commerce businesses, which get their systems done and come to us retrospectively, asking us to handle their accounts. Unfortunately, they may also at-times turn up with their bank-account information showing the numbers transacted. If we’re lucky we also get a report from their e-commerce platform showing total daily/weekly sales.

This means that that information has to be re-keyed into the accounting software, doubling up the required effort for us to generate the required reports. This data layout also makes it harder for us, or any accountant really, to be able to provide advice on how to further grow your e-commerce business, as everything is looked at in a lump sum.

For situations like this, we like to link the data into XERO, why? It gives us visibility on how your business is going at any point in time, depending on the number of products and your sales volume we may be also able to link up products allowing us to pull up reports that identify what sells best within your store.

2. Segregate your retail from your online

Keep in mind that if you are operating both a retail and an online store you are effectively running two separate businesses. This does not mean that you necessarily have to open another company or entity to operate your online business.

It simply means we want to be able to analyse your retail part of the businesses separately from your online store. If all your sales information is collected and placed together, would we be able to identify whether the retail business is making up for failures or misgivings on the online store, or vice-versa?

When linking up to your accounting system (see point 1) there are a couple of ways that this can be achieved. First by using a separate nominal code for the two, or secondly using what is known as a tracking category. Unless there is a significant difference in what you do online and in your retail store we recommend using the same nominal codes with different tracking categories.

It is important that it is not only the sales that are split but also human resources, in terms of payroll being attributed correctly across the two. This way we can underline the true profitability of the business.

3. True Analytics on your e-commerce store

This is a key component in growing any online business. Regardless of changes enacted following GDPR, adding good analytics on your e-commerce store is vital.

You will want to identify the following items:

  1. What percentage of people visiting my online store are purchasing?
  2. Do product views on my e-commerce store (without purchase) lead to increase product sales in store?
  3. Do visitors come back later to complete a purchase?
  4. What device(s) do most visitors visit/purchase from?
  5. Where do my leads/visitors come from?

All this information helps you within your online strategy; it could be that within your line of business, clients find that they need to try/feel the product hence your store is getting foot traffic from your e-commerce website.

Similarly, you may identify that having all the products listed and available, you are getting increased search visits from Google, and discover that SEO could be your winning strategy in growing your business further.

4. Selling abroad & Handling VAT

The one thing that online sales may make more complex is VAT reporting, particularly if you sell online. As per European directives issued a few years back, VAT charged may depends on where the service is being consumed.

So if you are selling goods to Italy vat charged needs to be 22%, if you’re selling to Ireland that’s up to 23% – and you can keep going with all the EU member states. Hence even when making digital sales it is incredibly important to obtain the country from where the goods are being purchased.

When do the localised VAT rates apply? In the case of digitally supplied services that fall under the MOSS directive, that’s pretty much with every sale. Otherwise, it may depend on specific country thresholds (generally over €35,000); and in this case VAT registration with different jurisdictions may be required. More changes in this field are expected to simplify the process within the coming years.

In instances where you are doing B2B sales, these sales will require validation of the VAT number of their respective country. Only when this is validated you are allowed to make the sale excluding VAT. In this instance, your invoice needs to show that the purchaser is responsible for VAT.

Given the above complexities, to ensure correct filing of paperwork your e-commerce solution needs to send/set the correct VAT codes with each sale, so they can be correctly categorised and reported at the respective reporting periods.

5. Assistance / Funds are available.

Before starting to build your e-commerce store, check-out the funding available. With the e-Commerce Grant Scheme, up to €5,000 of cash grants can be made available when starting up your e-commerce business. Funds are available on a first-come-first-serve basis and are generally approved in a timely fashion.

Our recommendation would be to first start with a business plan or feasibility study of your online business. Thanks to the SME Consultancy Services Grant Scheme, we would apply to obtain back 80% of your investment up to €4,000 euros. Once you decide to proceed and want to build your e-commerce website an additional 50% of your spend on the e-commerce website, where up to €5,000 is available.

In addition to these funds Website and Software development also qualify for Micro Invest; where you are able to obtain 45% back in tax credits. Micro invest, however, cannot be used on the same investments that the e-commerce grant supports.

Additional funds for growing and diversifying your business are available.

If you want to learn more about how to move into e-commerce or how to obtain funding for your venture. Get in touch, our expert team of advisors can help you make the next step in your business.

Jonathan is a XERO Developer Expert, alongside his teams he makes sure that businesses can operate seamlessly through cloud-integrated applications. To learn more about how they can integrate XERO with your business workflow contact our team at NM Group.