How to hire and vet an ecommerce accountant

If you are like most eCommerce business owners, you don’t know what you don’t know when it comes to finding and vetting a new eCommerce accountant.

Is the accounting firm qualified? And, how do you even check this if you don’t have a finance background?

What services do they offer? Do they match up with what your business actually needs right now?

Have they worked with businesses like yours? Not just revenue-level, but also the channels you sell through?

Does their personality and communication style mesh with you and your team?

Can you actually trust them with intimate company and personal finance details?

Then, there’s the topic of budget. Do they charge by the hour, a fixed fee, and can you actually afford it?

These are all questions you need to be thinking about when you are hiring an accountant, especially since the dollars and times of having to replace your accountant if it doesn’t work out are painful and potentially VERY expensive.

In this guide, we’re sharing everything you need to know when hiring an eCommerce accountant.

What does an eCommerce accountant do?

An eCommerce accountant specializes in helping businesses that sell products online stay compliant, understand their business financials and impact their businesses future outcomes. From helping handle bookkeeping to accounting and tax help, your eCommerce accountant should create and maintain reliable financial systems and processes.

These processes might include the following:

• Tax preparation. This can include everything from sales tax compliance in any state where you have “nexus” to your annual business and personal tax returns.
  
• Inventory and cash flow forecasting: The process of inventory and cash flow forecasting takes into account various factors, like inventory spend, inventory adjustments, market conditions, profit margins, and previous sales cycles, and then helps you predict future inventory levels and cash inflow and outflow in your e-commerce business. 
  
• Prepare financial reports. From your P&L to your balance sheet and cash flow statement, an accountant can help you not only prepare these reports but also analyze them.
  
• Bookkeeping. Make sure your chart of accounts is up to date on a weekly or monthly basis. This is essential for accurate financial reporting as well as making tax time less stressful. 

eCommerce CPA vs. eCommerce accountant: What’s the difference anyway? 

The main difference between an eCommerce CPA (Certified Public Accountant) and an accountant is the level of certification and expertise. A CPA is a licensed professional who has passed a rigorous examination and met specific educational and experience requirements set by the state. They have a broader understanding of accounting principles, tax laws, and financial regulations. A CPA can also provide additional services like auditing, financial planning, and strategic advice to help the eCommerce business grow and succeed.

On the other hand, an accountant may or may not have a CPA designation. They may have a bachelor’s degree in accounting or a related field, but they typically have less extensive knowledge and experience compared to a CPA. Accountants often handle day-to-day bookkeeping, recording transactions, preparing financial statements, and assisting in basic tax preparation. 

When should I hire an accountant for my eCommerce business?

In an ideal world, the first person you work with should be a freelance accountant or third party firm. That’s because they can help you get set up with a solid financial foundation—be it business setup, tax prep, and general financial processes.

Hiring someone to handle your finances the right way from the start of business ensures that you won’t need to worry about tax law, payroll processes, or updating systems on your own.

It is particularly important to have a great one early on if you plan to sell your business someday. That’s because you need a minimum of 18 months of detailed seller financials leading up to a potential sale.

In fact, at Bean Ninjas, our recommendation is to avoid hiring a generalist and bring in an eCommerce specialist accounting partner.

How much does it cost to hire an eCommerce accountant?

It depends. However, the two most common pricing models for eCommerce accountants and accounting firms are:

• Fixed-fee: This means you pay based on agreed-upon deliverables instead of paying your accountant or accounting firm based on the hours they spend.
• Hourly: Initial pricing can range from $30 and $350 per hour depending on their skill set, experience, niche, etc. 

Another factor to consider is if you are looking to hire a freelance accountant, a third-party full-service accounting firm like Bean Ninjas, or an in-house accountant.

When to hire a general accountant vs. a niche eCommerce accountant

When you are first starting out, a general accountant in your hometown can work well. They likely serve a hodgepodge of businesses in your town, from the local diner to the personal injury law firm to your eCommerce business. That’s totally fine if all you need help with is tax prep at the end of the year.

However, as your business scales to 6 and 7 figures and beyond, you are likely going to outgrow your local accountant. That’s where a niche accountant firm that only works with eCommerce businesses, like Bean Ninjas, can come in handy. Because they do so much work with eCommerce businesses, they have deep expertise that is particularly useful when it comes to cash flow forecasting, inventory management, and financial strategy and reporting.

For example, if you sell on your site via Shopify or WooCommerce and also through third-party marketplaces like Walmart, Amazon, and Etsy, you are going to need to streamline your inventory and cash flow management as you scale. That’s when working with a niche eCommerce accounting firm can be a competitive advantage.

How to vet a new eCommerce accountant

When interviewing and vetting a new eCommerce accountant, consider the following criteria:

• Relevant experience and expertise. Look for experience in eCommerce accounting, familiarity with industry-specific challenges, and knowledge of eCommerce platforms.
  
• Qualifications and certifications. Ensure they have proper accounting qualifications (e.g., CPA, CMA) and certifications in relevant accounting software (e.g., QuickBooks, Xero).
  
• Understanding of sales tax. They should be knowledgeable about sales tax requirements for eCommerce sellers.
  
• Attention to detail. They should be able to analyze financial data, provide insights, and maintain meticulous attention to detail in financial reporting.
  
• Communication skills. Look for clear communication abilities and responsiveness.
  
• Proactive approach to financial management. They should offer strategic advice, proactive financial planning, and be capable of identifying and solving potential financial issues.
  
• Adaptability. The accountant should be adaptable to the changing needs of a growing business and experienced in scaling accounting processes.
  
• Data security and confidentiality. Ensure they understand data security best practices and are committed to maintaining the confidentiality of your business financials.
  
• References and reviews. Seek positive testimonials from previous or current eCommerce clients and verify their reputation through reviews or professional networks.
  
• Budget. The fee structure should be transparent, aligning with your business’s budget and accounting needs.
  
• Culture fit. Your accountant should align with the company’s culture, values, and show a genuine interest in understanding the specific nature and goals of your eCommerce business.

What your new eCommerce accountant can help with 

Here is how to think about hiring and building your dream accounting team.

Under $100k in annual revenue

While we recommend hiring an accountant as soon as you can afford it, you don’t need much when you are doing less than 6-figures in annual revenue. In fact, your best bet will be a general tax accountant to make sure you are starting your eCommerce business on the right foot.

Here is what a tax accountant can help you with at this point: 

• Help with business incorporation and setup
• Set you up with cloud accounting software like Xero
• Prepare and file your end of year tax returns

6-figure eCommerce businesses

At this time, you should have either a third-party full-service accounting firm or a freelance accountant and a bookkeeper.In addition to the accounting tasks outlined above, you should also be doing the following:

• Keeping your bookkeeping up to date in Xero / Quickbooks
• Sales tax filing and compliance
• Inventory management & reporting
• Financial reporting and light modeling
• Payroll processing for both employees and independent contractors 

One of the biggest mistakes that we see business owners make at this stage is delegating their bookkeeping to their virtual assistant to save money. If your virtual assistant isn’t a certified bookkeeper, this will often result in losing lots of time and costing you more money at tax time.

7-figure eCommerce businesses

Many eCommerce business owners think they need to upgrade to a full ERP and hire an in-house CFO when they are solidly in the 7-figure club. That’s often not required at this size of business.

For most eCommerce businesses, you are not going to run into serious limitations within Xero or Quickbooks until you are doing at least $25 million in annual revenue.

As for hiring a full-time CFO, this can run you upwards of $400,000 a year in annual salary and benefits.

A much more cost-friendly alternative at this stage is to work with a full-service accounting firm that has a virtual CFO on staff. This way, you can get the strategic financial advice you need on a part-time basis at a fraction of the cost of a full-time hire.

In addition, at this point, you should also be doing the following on a regular basis:

• Inventory forecasting
• Cash flow forecasting
• Setting financial goals & KPIs
• Financial dashboard setup & analysis

If you are still using a generalist accounting firm, this is when you will likely experience more pain by not switching to a niche eCommerce accounting firm. This will either manifest in “not knowing what you don’t know,” or your firm making mistakes.

8-figure eCommerce businesses

By the time you are doing $25 million, you should have at least one full-time financial employee in-house. This will most likely be a financial controller. The primary role of a controller is to oversee the financial strategy and activity of the company.This can include everything from establishing financial budgets to overseeing everyone on the accounting team—be it in-house accountants and bookkeepers or third-party accounting firms.

Ready to hire an eCommerce accountant?

You don’t need to go it alone. If you are looking for a new eCommerce accounting firm, our team at Bean Ninjas can help. We specialize in working with 7-figure eCommerce businesses in the US, UK, and Australia. Many of them sell in multiple currencies on both their website and through third-party marketplaces. Schedule a free call today.