4 Reasons Why Exact Accounting is Vital for Multichannel Sellers

This partner post is brought to you by A2X.

Running a multichannel business is a tough gig. In addition to dealing with everything that comes with selling via a traditional brick-and-mortar store, you must also navigate the ins and outs of ecommerce channels, including websites and marketplaces.

With so many moving parts, it’s understandable to take a ‘close enough is good enough’ approach just to ensure everything gets done. But, while this may be effective for various aspects of the business, when it comes to your business financials, not investing in a thorough and accurate approach will have costly repercussions. What makes it worse is that without accurate accounting, you may not even know the missed opportunities.

1. Staying tax compliant

Running a multichannel business is complex, and once your business reaches the million-dollar mark, the tax compliance landscape changes dramatically. For companies with over $1 million in revenue, tracking states with physical and/or economic nexus becomes a significant challenge. Many states have revenue or transaction thresholds that directly affect companies in this segment, making tax obligations more complex. Ensuring your in-house or external accountant uses automation and specialized tax tools will make tax compliance more accurate. It can save time and prevent costly, consequential mistakes for businesses in this revenue category.

Following the 2018 Supreme Court decision in South Dakota v. Wayfair, ecommerce businesses are now required to collect and remit sales tax not only for the states in which they have physical nexus (a physical presence like a store or warehouse) but also in states where they meet certain economic nexus thresholds (sales exceeding specified limits).

For example, say your brick-and-mortar store is in Florida, you have a warehouse in New Jersey, and your sales in North Carolina surpass 200 individual transactions. In this case, you have established physical nexus in Florida and New Jersey and economic nexus in North Carolina. As a result, you must collect and remit sales tax for all three states.

While tracking states with physical nexus is relatively simple, the number of states with economic nexus will increase based on sales. This makes it harder to have confidence that you’ve fulfilled all your obligations, especially once you’ve exceeded the seven or eight-figure mark. For those selling on marketplaces such as Amazon or Etsy, these sites will collect and remit sales tax on your behalf. However, it’s still your responsibility to check this is accurate. Meanwhile, you’re responsible for collecting and remitting sales tax if you’re selling via a platform like Shopify or BigCommerce.

Without reliable numbers and up-to-date records, you can see how easy it would be to neglect your tax responsibilities accidentally. And, even if this wasn’t intentional, you’ll still be obligated to pay outstanding tax and potential penalties or fees, even if it’s months or years later. This will mean digging into funds you had planned to use to grow your business in other ways.

2. Reduces chances of bad decision-making or risks

Accurate accounting has a crucial role in preventing bad decision-making and minimizing risks. As your business grows, the complexities multiply, and manual accounting processes become more prone to errors and oversights. Automating accounting is a strategic move that can mitigate many risks, allowing you to focus on scaling your business effectively.

Keeping detailed books with all transactions recorded and reconciled is critical for multichannel businesses as it helps lower the risk of fraud and embezzlement.  While not pleasant to think about, the chance of these occurring does increase as you scale, take on more staff, and hand over access to accounts.  Accurate books, aided by automation, will also help you spot any signs of financial distress so you can take preventative action.

For example, you can gain insights into customer behavior by analyzing historical financial data, such as identifying high and low seasons. By automating this analysis, you can more quickly choose when to make expensive purchases or expand into new markets, avoiding costly mistakes.

Automation also plays a pivotal role in ensuring the integrity of your inventory management system, minimizing the risks of overselling, stockouts, and dissatisfied customers. When integrated into your multichannel strategy, automated accounting helps to ensure all sales, expenses, and inventory adjustments are captured accurately across all channels, providing a reliable and real-time overview of your financial position.

Accounting software tools like A2X can help you streamline your bookkeeping and mitigate errors, giving you precise control over your business’s financial health and decision-making processes. A2X integrates with your ecommerce sales channels, taking raw and uncategorized data and automatically sorting it into neat summaries matching your payments. After that, it’s passed onto your cloud accounting software and ready for reconciliation. This removes the chance of mistakes, especially when your business generates seven or eight-figures, and even tiny mistakes can have major consequences.

3. Insight into financial performance

If you’ve been meticulous about your books, you’ll be rewarded beyond accurate tax returns and sound decision-making.

Well-kept books give visibility to your company’s financial performance. For businesses operating in the $1+ million revenue bracket, financial insights are crucial for survival and leveraging strategic growth opportunities. Monitoring metrics like profit margins across different sales channels, cash flow management, and inventory turnover becomes a routine task and a vital strategy at this stage.

For example, you can analyze the profit margins of a product sold in-store, on your Shopify website, and Amazon. This will help you assess whether to sell it at the same price across all channels or make adjustments to consider expenses such as rent, storage fees, payment processing fees, and more.

Using your data, you can benchmark your performance against industry competitors and peers. This data will help you optimize your multichannel strategy, find underperforming areas, and uncover growth opportunities. This will fuel further growth and prevent costly mistakes.

4. Looking attractive to buyers or investors

For businesses hoping to secure investment or entice new owners, an impressive brand and strong sales numbers might get investors in the door. However, the ultimate decision often hinges on the integrity of your financial records.

Multichannel businesses have the tricky task of accounting for various expenses, including rent, utilities, warehouse operations, shipping, etc. Given this complexity, any oversight can significantly affect the perception of the business’s health and value. If this happens to your business, you’re typically left with two courses of action:

  1. Maintain the status quo: Presenting your books without any changes is risky, especially for larger businesses. It means exposing disorganized finances that could deter buyers or lead them to undervalue the business. In reality, this scenario isn’t a strategic choice but a consequence of neglect or lack of attention to detail.
  2. Find a professional for a last-minute clean-up: While this might clear up the worst of your issues, doing a last-minute clean-up is far from ideal. It will take time, and you risk investors losing interest. If they find out what you’re doing, it could signal that there may be more to clean up in other areas of the company.

Ultimately, if you’re selling or looking for investment, using automation to keep accurate records is a game-changer. It helps simplify the complexities of a multichannel business, giving accuracy and clarity. Then, when the company is being sold or seeking investment, your financials will be robust and orderly, providing invaluable leverage. They will demonstrate the business’s viability and operational efficiency, making it all the more attractive to investors.


With the complexities of running a multichannel business, your books could quickly become an afterthought or nowhere near as in-depth and accurate as they should be. However, because of this complexity, having exact accounting will be your key to lasting success. 

Accurate books lead to greater insight into your business, total confidence in your tax compliance, and less risk—making your brand more attractive to investors. And, with the help of automation tools like A2X, making your books a priority doesn’t have to take hours of your time. Begin prioritizing your bookkeeping and experience these benefits with a free trial of A2X.

About the Author

Allanah Faherty is a Content Manager at A2X. A2X is an ecommerce accounting app that helps businesses, accountants, and bookkeepers automatically reconcile payouts from their sales channels in QuickBooks, Xero, or Sage.