Digitization is gaining more and more ground, many companies are transferring their operations to the online space. Logical question: is there a difference between online bookkeeping and traditional bookkeeping? What should you pay attention to and what mistakes can be made? Here is our answer in a nutshell.
If you are thinking about starting an online store, it is advisable to get more detailed information regarding accounting and finance, as some elements differ from traditional accounting.
Web shops are the core of e-commerce, they count on a constantly changing and large number of customers, and the value of the purchases is always different. That's why it's advisable to think about everything before taking the plunge: that way you won't be surprised.
Starting an online store: what are the initial costs?
Before we explain what to pay attention to in bookkeeping, it is important to understand what starting a webshop entails. After all, the initial expenses can be high, and the maintenance costs also require continuous planning.
Web shop initial costs
1. web shop engine cost: this depends on whether it is a self-developed, rented or open source webshop engine;
2. domain purchase: it is also necessary to decide whether we aim at the Hungarian or international market (hu or com ending);
3. SSL certificate: for encrypted payment;
4. purchase of storage space: due to the speed, it does not matter what kind of storage space we buy, so it is not worth saving;
5. to start the web shop, you will also need a business to be able to pay bills;
6. financial and delivery partners: where and how will customers pay? Who should be the financial partners (payment by bank card, Simplepay, Barion, PayPal, etc.), which courier company to choose: GLS, MPL, etc.
Web shop operating costs
1. product purchase: in the case of purchase, the purchase cost and delivery fee must also be taken into account;
2. production: the cost also depends on whether we produce it ourselves, if so, with equipment costs, material costs, etc. must also be counted;
3. warehousing and logistics: the size of the product determines what costs will be incurred;
4. financial transaction fee: the product is purchased through a protected channel, which has a cost;
5. legal and administrative expenses: the legal cost is one-time, but the accounting fee is continuous;
6. development and maintenance: as the online store grows, it will need continuous development;
7. customer service: this also applies to customer service fees;
8. marketing: it is necessary to invest in the power of marketing not only at the start, but continuously.
Is the bookkeeping of the online store different from the traditional bookkeeping?
Two special rules that differ from traditional accounting come into effect in the accounting of the web shop.
• An invoice must be issued for every transaction (in any case, of course - but in the case of a web shop, before the goods are delivered): this can also be an electronic invoice, but when the product is delivered, a summary document is required. This can be the delivery note or a copy of the invoice, and in the case of a paper-based invoice, the original, but the package must contain one of them.
• The VAT rate of the delivery charge is the same as the VAT rate of the product: since there are several things to pay attention to in this case, we explain in detail what we mean by this below.
What should we pay attention to regarding delivery fees? It is important to know the difference between a shipping fee and a shipping cost.
The delivery cost: indicates the amount that the owner of the web shop will incur for the delivery, he pays this amount to the courier company or the post office; while the delivery fee: this is the amount that the customer pays to the online store, i.e. what the delivery will cost.
Since the two fees have nothing to do with each other from the point of view of VAT calculation, it is important to distinguish between them. In the case of the delivery fee, among the products included in the order, we take into account the one with the highest VAT rate. This is usually 27%.
However, it is important to know that the services provided by Magyar Posta are VAT-free, but the service fee still includes the VAT of the delivered product, as it is considered a linked service.
In addition, you should also know that VAT also works backwards: so a product with a 5% VAT rate (e.g. a book) can be invoiced with 5% VAT, unless there is a product with a higher VAT in the order.
What rules must the web shop comply with?
Below, we go through the rules that the owner of a web shop must pay attention to, one by one.
1. Accountability
In order to start the online store, you need to have an individual business or a corporate form. So you need a business form and a tax form in order to start a web shop.
The following should also be considered, as it must be reported to the authorities:
• the scope of activities;
• packaging;
• the data management activity.
In addition, the activity must be reported to the clerk of the municipality responsible for the seat.
2. Scope of activities
Web stores usually use the scope of activity belonging to TEÁOR number 4791, which runs under the name "Parcel delivery, internet retail".
3. Environmental protection product award
If we pack the products of the web shop ourselves, we have an obligation to declare and pay an environmental product fee, which must be reported to the NAV.
Furthermore, the environmental protection product fee also applies to flyers, advertising publications, office paper and POS materials. In addition, if we sell a product that has a negative impact on the environment, we will also be obliged to pay the product fee.
4. Data management
When does someone become a data controller? It is important to clarify this, because the owner of the online store will be required to report to NAV or NAIH if:
• we also use customer data for direct marketing and prize games;
• we send them a newsletter.
In this case, a registration number will also be required.
On the other hand, the owner is not liable if:
• we store data about customers;
• they register in the web shop with their personal data.
Data
In connection with the launch of the online store, the question may also arise as to what data the company must provide.
These are the following general data:
• name or company name; • indication of contact details – e-mail address, telephone number, address, etc.;
• entrepreneur ID number, tax number, or company registration number;
• Name of the contact person;
• Data Protection Information and General Terms and Conditions (GTC).
In addition, legal information concerning the customer must also be indicated:
• payment options;
• methods of delivery;
• the possibility of exercising the right of withdrawal;
• the details of the guarantee, warranty, guarantee;
• data protection information;
• the obligation to send a confirmation after the order;
• the information before sending the order must also be indicated.
Finally, product-related data must also be displayed, such as: product name, description, price.
5. Accounting for discounts and loyalty programs
A good online store occasionally treats its customers with discounts. And later, it creates a loyalty program and points, thereby increasing engagement.
In the case of discounts, it is very important that they are included in a transparent and understandable set of rules. It is easiest if the discounts also appear on the invoice. The point is that we pay the VAT after the full price, we must keep this in mind.
How we tax loyalty points is also important. If the loyalty points can be obtained by purchase, then when the points are redeemed, we calculate a discount applied afterwards, which must be shown as a negative item on the invoice. In this case, there is no extra tax payment obligation.
The situation is different if the customer can receive points without making a purchase, e.g. for registration, subscription, etc. When the customer redeems the points obtained in this way, he does not receive a discount valid after his previous purchase, but a gift, so he must to pay taxes.
6. How does the invoicing of web shops differ?
In the case of the online store, each sale is followed by the issuance of an invoice. It is advisable to issue the invoice in the form of an e-invoice and then deliver it to the customer. This can be an e-mail attachment, but it is also good if we make the e-invoice immediately available for download at the end of the purchase.
It is worth stating in the General Terms and Conditions that an e-invoice will be issued after the purchase, thus clarifying the process.
7. Why is electronic accounting good for web shops?
The purpose of accounting, and this does not only apply to online stores, is to help you follow developments and business processes.
The business plan includes conversions, cart value, number of customers, etc. it is based on variables that propel the business forward and enable continuous growth.
It is advisable to prepare the business plan and go over it with the accountant as well, so that we can already have financial insight during the planning process. In addition, it is worth digitizing the accounting wherever possible.
Why is online accounting good?
• automation: no typos, fewer accounting errors;
• administration: it reduces paper administration, there is no need to organize paper-based elements, everything can be searched more easily;
• the advantage of e-invoices: they are also available online at any time for the accountant;
• efficiency: e-invoices do not need to be recorded one by one, and if the amount of invoices increases, a pattern is created that shows that as the amount increases, the time required for the accounting of the online store increases to a lesser extent than that of a traditional business. This means that with higher traffic, the online store's accounting fee can be more favorable through automation.
What are the pitfalls in online accounting?
One of the biggest pitfalls and dilemmas of online accounting, which few people talk about, is the accounting of the financial part. Should we choose an invoicing program in which we ourselves record not only our individual invoice (customer) claims, but also their settlement (ie our customer current account)? Or we entrust the record of our claims against our customers only to the accountant. Or should we both keep a record and constantly reconcile? This should definitely be discussed with the accountant.
In the case of online stores, a significant number of accountants no longer deal with the continuous analytical recording and monitoring of customers, they can only handle so-called "general ledger posting". This is also why I mentioned above that the online store's accounting fee may be more favorable in this case. Not many people write about this, because not everyone perceives that this is a real problem or a burden, either for ourselves or for the accountant. But if we cannot record this ourselves, or because our IT systems do not allow it, or because we do not have the appropriate human resources at our disposal, then this task must be entrusted to the accountant, but care must be taken to ensure that it is properly elaborated and detailed let us provide you with bank lists, otherwise our accountant will not be able to keep our customers' files in order either. The accountant cannot know that e.g. the invoice issued to the customer is paid by another person, because e.g. He is the customer's partner, and they may have a joint bank account. Our accountant will look for the buyer's name in the bank lists, while you already know that someone else paid instead. The accountant will not know what to do with the amount transferred by another person, as well as with why the customer did not pay? This can be automated.
Turning to digitalization has its advantages, and in the case of online stores it is almost essential, but let's not forget the pitfalls. The point is that the bookkeeping of web shops is not much more complicated than that of traditional stores, but there can be pitfalls.