Before you look for an accountant, you need to know what kind of need you’re trying to fill, and you’re going to have different needs at different stages of your business.
So let’s get started with stage number one. All right, stage number one is what I would consider kind of a startup phase. You’re making somewhere between nothing and maybe $20,000 a month in revenue, and you’re usually selling on maybe one channel like Amazon FBA. Usually, people in this stage are selling the kind of on the side. Maybe they have a full-time job, and they want to fire their boss, so they want this other business to replace their income.
In this stage of the game, you’re really trying to figure out what kind of legal formation you should have, whether you should be an LLC or maybe an S corporation. Something like that. You want to know what business expenses that are deductible are. You really want to know the logistics of knowing how much you made overall and how that’s going to impact you financially. So at this stage of the game, you want to get a tax Certified Public Accountant.
You want a CPA who focuses on taxes who can tell you all the ins and outs of starting a business and what you need to know. If you cannot afford a bookkeeper at this stage, I wouldn’t panic. That’s okay. You can check out our courses, Accounting for Amazon and Accounting for Shopify. I’ve got links below about those. If you can afford a bookkeeper, all the better.
I would check one out, and I would follow all the tips that we have on stage two of your business. Alright, stage number two is when you are making somewhere between $20,000 and $50,000 a month. When you move on to stage 2, you are probably in a position where you’ve quit your job. This is your full-time gig. All of your attention is on this.
You might even have a few people who are working for you, so you’ve got employees, and you’re really concerned about cash flow because you are all-in, baby. Like this is your deal. You’ve got to make this work, so you’re really concerned about cash flow. You might have been doing your own books and now you’re starting to feel like you’re kind of losing grip on it. Maybe you’re too busy doing other things and it’s gone by the wayside, and you really need to get control over your financials.
Another problem is because you’re so tight on cash flow, you might need to take out a loan or something from the bank, and the bank is requiring you to get financials, so you need a real bookkeeper at this point to help you out. The good news is that there are a lot of of accountants who are starting to specialize in e-commerce. The bad news is there are a lot of accountants who are starting to specialize in e-commerce. A lot of them don’t quite know all the ins and outs.
If you are finding that your accounting is being done where you’re pulling in all of your sales transaction by the transaction that should be a red flag to you that you are not doing things the right way. I would be really careful about that. You might want to check out the courses that I talked about before, the links are down below in the description, or have your accountants check them out just to make sure that you’re on the right path, because you don’t want to get too much further down the road and then have to unravel the huge mess that’s being created by having individual transactions pulling into your system.
Another thing I would keep in mind is that a lot of the accountants who are serving this particular size business – they only focus on Amazon and Shopify. They probably don’t go much beyond that, and if you ask them to do more, it may be really challenging for them. You can easily outgrow somebody who is working at this level, so just keep that in mind. If you see packages that they’re offering packages that are kind of small, and they give you three-tiered solutions, they’re probably doing very specific service where they’re giving you some kind of cleanup at the end of each month but you’re really doing all the heavy lifting throughout the month.