E-commerce Accounting: the Ultimate Guide

by | Oct 5, 2022 | Bookkeeping & Accounting

Are you an e-commerce business owner who is looking for a bookkeeping or accounting solution? If so, you may be wondering if there is a specific accounting system for e-commerce companies.

The short answer is that there is no one-size-fits-all answer to this question. Depending on the size and complexity of your business, you may need a different bookkeeping or accounting solution than another e-commerce business owner.

However, there are some bookkeeping and accounting tips that can help make the process simpler and more efficient for e-commerce businesses. In this blog post, we will share some of our top bookkeeping and accounting tips for e-commerce businesses and answer some of the important questions that you have in mind.

What is e-commerce accounting?

Ecommerce accounting is the process of keeping track of and analyzing financial data from e-commerce transactions and assets. The data collected throughout these processes are critical building blocks for future business decisions.

There are a few different types of data that e-commerce accounting can cover, but the most important ones are financial transactions and customer data. Financial transactions include things like sales, refunds, taxes, and fees. Customer data includes things like customer names, addresses, contact information, and purchase history.

By preparing and analyzing monthly financial statements, accountants help businesses run smoothly on a day-to-day basis. The regular updates allow managers to make decisions with the most current information available, while also providing annual oversight of payroll and tax payments.

Do I need an accountant for my e-commerce business?

Taking your company online to an e-commerce platform is an excellent way to grow. To avoid any snags along the road, work with an accountant that understands e-commerce sales and international tax issues.

If you’re unsure if you need an accountant, the answer is probably yes. Owners who are less financially savvy are going to want someone experienced in this area to guide them, no matter what the accountant’s credentials may be.

While you can find many qualified accountants, it’s best to select one with experience in e-commerce. They’ll know the ins and outs of common issues that may come up, such as sales tax and international transactions.

What are the benefits of using an accountant for my e-commerce business?

There are several benefits of using an accountant for your e-commerce business, including:

– Help you save time and money by keeping track of your finances and ensuring that all financial deadlines are met.

– Provide valuable insights into your company’s financial health and performance.

– Help you make informed decisions about your business by providing advice on financial planning and strategy.

– Help you reduce your risk of financial fraud and identity theft by keeping your financial information safe and secure.

How do you manage e-commerce in accounting?

E-commerce managing is the process of handling and organizing the finances for your online store. This can include keeping track of inventory, sales, expenses, refunds, and taxes.

There are a few different ways to manage e-commerce in accounting, but there are core principles that you should keep in mind, no matter what method you choose.

5 e-Commerce Accounting Tasks to Immediately Start:

– Categorize every transaction.

– Keep a business budget.

– Stay current with taxes.

– Determine the difference between returns and chargebacks.

– Record information accurately.

More in detail :

1. Categorize Every Transaction

The first step in accounting for eCommerce is categorizing each transaction. You need to know what kind of product each transaction is for and how it fits into your inventory. This will help you better understand your business finances and make more informed decisions about where to allocate your resources.

2. Keep a Business Budget

A budget is an essential tool for any business, but it’s especially important for eCommerce businesses. With a budget, you can track your income and expenses so that you always know where your business stands financially. This will help you make informed decisions about how to grow your business and avoid financial problems down the road.

3. Stay Current with Taxes

Taxes are a complex and ever-changing business area, so it’s important to stay up-to-date on the latest tax laws. This is especially true for eCommerce businesses, which may be subject to different taxes than traditional businesses. A qualified accountant can help you navigate the tax laws and ensure that you’re paying the correct amount of tax.

4. Determine the Difference Between Returns and Chargebacks

Returns and chargebacks are two types of transactions that can occur in eCommerce. It’s important to understand the difference between the two so that you can properly account for them. Returns are when a customer returns a product they purchased, while chargebacks are when a customer disputes a charge on their credit card.

5. Record Information Accurately

Accurate record-keeping is essential for any business, but it’s especially important for eCommerce businesses. This is because eCommerce businesses deal with a lot of data, including customer information, order details, and financial transactions. If this data is not accurately recorded, it can lead to financial problems down the road.

How do you record e-commerce sales?

If you want to record a sales invoice for sales made through an e-commerce platform, you will need to create or update a ledger for the e-commerce operator. The ledger will need to include the name of the e-commerce platform, the date of the sale, and the amount invoiced.

You can then create a sales invoice in your accounting software by including the information from the ledger. Be sure to include the e-commerce operator’s name, the date of the sale, and the amount.

When you record the sale in your accounting software, you will also need to include the name and contact information of the customer. This will help you keep track of your customers and ensure that you are able to reach them if there are any problems with their orders.

What are the best accounting practices to use for an online business?

To optimize your online store’s accounting:

– Connect it to powerful accounting software

– Check reconciliations regularly

– Stay on top of inventory and COGs (Cost of Goods Sold)

— Updated refund &chargeback procedures & track other expenses carefully.

Go with a cloud-based accounting solution for the ultimate in convenience & accessibility.

These practices will help you keep a closer eye on your business’s finances and ensure that you are making informed decisions about where to allocate your resources.

Why, you ask? So you can:

– Automatically update your records

– Send invoices & collect payments online

– View reports from anywhere, anytime

How does eCommerce affect accounting?

E-commerce technology likewise allows businesses to monitor customers’ selections by keeping track of their clicking habits. This data and technology can assist accountants in giving useful information that helps determine the true cost of items. Advertising expenditures may be directly linked with the goods sold. Complex, data-driven, and global. These are only a few words that describe how e-commerce affected accounting.

Technology has drastically changed the way we do business, and e-commerce is one of the most significant game-changers. Here are a few ways that eCommerce has affected accounting:

1. Increased complexity

The biggest change that eCommerce has brought to accounting is increased complexity. With businesses now operating on a global scale, there are more transactions and data to keep track of than ever before. This has made it essential for accountants to be able to use technology to its full potential in order to keep up with the demands of eCommerce.

2. Data-driven decision making

Another change that eCommerce has brought to accounting is the need for data-driven decision-making. With so much data available, it’s essential for accountants to be able to analyze this data and use it to make informed decisions about the business. This requires a different set of skills than traditional accounting, but it’s essential for businesses to be able to compete in the eCommerce world.

3. Greater need for transparency

Lastly, eCommerce has also brought a greater need for transparency when it comes to accounting. With businesses now operating on a global scale, there is a greater need for accountants to be able to show where the money is coming from and where it’s going. This transparency is essential for businesses to build trust with their customers and investors.

Check out our article for more detailed information!

Which accounting software is best for e-commerce?

QuickBooks. The most popular accounting software for small and medium companies is QuickBooks.

FreeAgent is the second most popular accounting software for e-commerce businesses.

Xero is another great option for online retailers.

Wave Accounting is a good choice for e-commerce businesses on a tight budget.

Use accounting software to automate bookkeeping tasks, track inventory levels, manage sales tax and invoicing, and stay on top of your business finances. For more options and tips, read our article.

How can a poor accounting method affect the business?

Bookkeeping is vital to any business as it provides insight into past spending and areas of improvement. Without proper bookkeeping, you may end up paying your debts late, leading to more interest rates, loss of credit, etc. Having a good accounting method helps business owners avoid these costly bookkeeping mistakes. Poor accounting can also result in the loss of customers, as they do not have faith in the company’s ability to manage their finances. Furthermore, it can also lead to legal trouble if the business is not adhering to the proper accounting standards. Therefore, it is essential to have a good accounting method in place to avoid any negative consequences for the business.

What are some common bookkeeping mistakes?


– Keeping track of receipts and invoices.

– Separating personal and business expenses.

– Reconciling accounts on a regular basis.

– Tracking inventory levels accurately.

– Using accounting software or keeping digital records.

For more information on bookkeeping mistakes and how to avoid them, check out our article.


E-Commerce has had a big impact on accounting, causing increased complexity, the need for data-driven decision-making, and greater transparency. These changes have made it essential for accountants to be more tech-savvy than ever before. To stay on top of their game, accountants should use accounting software to automate bookkeeping tasks, track inventory levels, manage sales tax and invoicing, and stay on top of their business finances. Additionally, they should avoid common bookkeeping mistakes such as failing to track receipts and invoices or not separating personal and business expenses. By taking these steps, accountants can ensure that they are providing the best possible service to their e-commerce clients.

Accounting and bookkeeping for an e-commerce company may appear to be complicated, but they don’t have to be. By following some best practices and keeping on top of your finances, you can ensure that your business runs smoothly and avoid any costly mistakes. If you don’t know where to start or if you want to build on what you already have we can help. Our bookkeeping and accounting services are designed to meet the unique needs of e-commerce businesses. We have many great articles that can help you get started. If you have any questions, feel free to reach out to us. We hope to have answered some critical questions and offer valuable insight into what you need to know about bookkeeping for your e-commerce business!

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