Like any other business, online businesses are required to keep track of their income and expenses and prepare a financial statement for tax purposes. This is called bookkeeping.
Most businesses have a bookkeeper, accountant, or someone knowledgeable and experienced in recording financial information, on staff. This person(s) tracks and records by category all monies coming in and going out of the business and prepares the statements required for tax returns. This may work well for an established brick and mortar organization but not so well for a new business or especially one that operates online. Outsourcing to an accounting agency, freelance accountant or bookkeeper, or to one of the many bookkeeping service companies that have sprung up over recent years, is an option. It has become very popular lately for all areas of business, and can be very efficient, as well as a great time and money saver.
When considering outsourcing your bookkeeping it is very important that you choose carefully. Keep in mind that whoever you hire to do your bookkeeping must be trustworthy, knowledgeable, and accurate in recording the transactions, as well as familiar with your local tax laws and reporting requirements. While basic bookkeeping principles are pretty much the same around the world, each state/province/territory/country, etc. have their own set of rules and obligations for the business when it comes to taxes. It is best to concentrate your search in your own region.
Whether you will be outsourcing your bookkeeping to another online business or to one that has a physical location, be sure to do your homework to make sure the company is reputable, professional and experienced.