Christian Rivera is the face of The Ecommerce Accountants. Apparently, if you gross over $40,000 per month, he guarantees his ecom accounting firm can save you money. A lot of Shopify dropshippers, in particular, could benefit from this type of specialized service. Many simply don’t understand all of the write-offs available to them, and so they end up overpaying the government. If that’s you, I mean, yeah, you’re probably writing off advertising and COGS, right?
But what about merchant fees? Chargebacks? Refunds? And all the other little things that are specific to running your own ecom store? “So yeah, it’s a huge problem for dropshippers, specifically,” Chris says, “just ’cause the barrier to entry’s so low that, you know, I have clients that literally have crossed $1 million in sales before turning the age of 18. So imagine dealing with that type of client. Not only do they not have income tax experience, but they’re still in high school.”
Even if you have an accountant and you’re happy with them and you think they’re doing a good job, chances are, if they’re just a traditional accountant, well, they just don’t know what they don’t know. Unless you specialize in this space, you’re not gonna understand how it all works and you’re definitely gonna miss some stuff. Doesn’t make ’em a bad person; it just is what it is. The world has changed. The way a lot of us make money has changed. But these old school accountants don’t get it.
“What happens a lot of times with entrepreneurs in general is you have a bookkeeper and you have a tax accountant,” Chris explains. “If the bookkeeper doesn’t understand your business, they’ll assume certain things are personal expenses and not related to your business. This causes you to miss out on your expenses, so your expenses go down and your profit goes up. And, spoiler alert: now you have a high net income, so you’re gonna pay more taxes. So you need someone who really truly understands your business.”
“The biggest thing with dropshippers,” Chris continues, “is you might have a lot of sales, but your margins are really slim. For example, if your Facebook ROAS isn’t that great, then your profit won’t be that great. So even though you’re doing $2 million in sales, you don’t know if that’s $1 million in profit, $2,000 in profit, et cetera. So step one is making sure your bookkeeping is in order. And if you’re not someone with tax or accounting experience, I highly recommend you outsource that work.”
And if you’re not willing to do that, for God’s sake, don’t forget to include merchant fees, refunds, and chargebacks in your ecom expense report. And then technically, since you’re working from home, you can deem a portion of your crib as your office space, right? So that means you can allocate a percentage of your home-related expenses towards your business. Oh, and don’t forget sales tax. That’s a tricky one. Ya got the state you’re in, obviously, but also any state you ship a lot of product to; you have some risk there as well.
So say you live in Cali, right? But in 2022 you did $100,000 in revenue, just on items shipped to people living in Texas. That’s a pretty big number, so don’t be surprised if someone wearing a cowboy hat calls you up like, “You musta fell off the turnip truck if you think you’re not gonna pay us on those sales, partner.” (Which is how I imagine everyone in Texas talks.) It’s a lot to think about, isn’t it? Maybe you’re better off getting a quote from The Ecom Accountant, Chris Rivera. Probably wouldn’t hurt, huh?