What accounting does an e-commerce business need?
E-commerce accounting starts with tracking revenue across multiple sales channels. If you sell on Amazon, Shopify, Etsy, and your own website, each platform reports sales differently and deposits funds on different schedules after deducting fees. Your books need to capture gross sales, platform fees, and net deposits accurately so you understand what you actually earned versus what landed in your bank account.
Inventory accounting is where many e-commerce businesses struggle. You need to track what you purchase, what you sell, and what remains in stock. Cost of goods sold should include actual landed costs like shipping to your warehouse and customs duties, not just the supplier invoice. Without accurate inventory tracking, you won’t know your true margins on each product or when to reorder.
Sales tax compliance gets complicated quickly. If you store inventory in Amazon FBA warehouses across multiple states or exceed sales thresholds in certain states, you have nexus and must collect and remit sales tax in those jurisdictions. This can mean filing obligations in dozens of states, each with different rates, rules, and deadlines.
Payment processors like Stripe, PayPal, and Shop Pay hold funds before depositing to your bank. The deposit you see is net of processing fees and often batched across multiple days of transactions. Reconciling these deposits back to individual orders requires either good software integration or careful manual work to avoid discrepancies.
Returns and refunds need proper handling. A refund issued in March for a January sale affects your revenue and inventory records. High return rates common in apparel and electronics can significantly reduce actual margins compared to what your sales dashboard shows. Your books should reflect these adjustments in the correct periods.
Platform fees eat into margins more than most sellers realize. Amazon referral fees, FBA storage and fulfillment fees, Shopify transaction fees, advertising costs, and shipping to customers all reduce what you keep from each sale. Tracking these at the order or product level shows you which items and channels actually make money.
Cash flow timing works differently than traditional retail. You make a sale today but Amazon pays you in two weeks. Meanwhile you’re paying suppliers, warehousing, and advertising upfront. Understanding this cash conversion cycle helps you avoid running short during growth periods when inventory investment outpaces collections.
Most e-commerce businesses need monthly bookkeeping that reconciles all sales channels, tracks inventory and COGS properly, and handles multi-state sales tax obligations. A provider offering small business bookkeeping in MetroWest Massachusetts who understands e-commerce can set up your chart of accounts to show profitability by channel and product rather than just an overall profit number that hides where you’re actually making or losing money.
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