Ecommerce Bookkeeping 101 for Small Business: A Step-by-Step Guide 2023

Then, you are paired with a highly experienced eCommerce bookkeeper aligned to your specific business needs. Every service to save you money at tax time, with access to a CPA all year. Whether you are selling on one platform or multiple marketplaces, owning an eCommerce store is not always easy. Our Sales Tax Assessment compares your numbers to the latest state guidelines. And we will confidently recommend the states you should be registered, collecting, and remitting Sales Tax. Unless you take the time to ensure you’re taking full advantage of these financial tools.

The merchant fee will vary depending on the platform you use, but it’s details like this that you need to keep in mind when using an ecommerce platform. Luckily, there’s lots of bookkeeping software that integrates with ecommerce platforms, making it easier to manage your sales and expenses. The goal of bookkeeping is to show you the financial picture of your business, https://www.bookstime.com/ balance your accounts, and improve cash flow management in a strategic way. It helps you understand where your money is going so you can make informed decisions. The administration for a successful ecommerce business can get complicated quickly. And if your online store sells on marketplaces or uses Google Ads, you are probably met with international tax rules.

Meet your bookkeeper

When you work with LedgerGurus, you aren’t just getting an accountant or bookkeeper. With years of varying business experience, we can provide you with a team that is the right fit for your company and your financial needs. As you can see, if you really want to tame that ecommerce accounting beast, you need both great tools and, at some point, a great ecommerce accounting specialist. While this may seem like a reasonable approach, an ecommerce accountant knows this leaves out a huge amount of data that can really make or break your business. But if you were to model your ecommerce accounting on this, you would end up with a hot mess AND an inaccurate picture of your business.

For ecommerce business owners it can be difficult to get the right amount of inventory on hand without overstocking. And if your shop grows, you want your stock to grow with it. These reports provide valuable insights into your business’s financial performance and help guide decision-making. You didn’t start your ecommerce business so you could juggle accounts and balance books.

How to track inventory in ecommerce bookkeeping

An ecommerce CoA should track both merchant fees (per payment gateway), shipping-out expenses, Warehouse costs, and fulfillment fees as separate sub-accounts of COGS. This enables you to analyze these costs on a standalone basis and provides a more accurate gross profit for purposes of understanding your business’s financial health. Alternative sales, inventory management, sales tax, shipping, merchant fees, foreign sales, and multiple currencies are just a few. Acuity provides a complete sales tax management service for our ongoing monthly customers.

Using this method means your books mirror all the current transaction information, storing them across your payment methods and bank accounts. Every industry comes with its unique challenges for accounting. E-commerce accounting differs from traditional accounting procedures. E-commerce accounting comes down to the complex sales tax nexus for online sales, shipping and inventory challenges, and the issues arising from international sales.

Why A Startup Bookkeeping Assistant Is Your Best Choice?

Sales taxes are not revenue, and your accounting system should automatically deduct those with each purchase. This way you can remit taxes, which means that you’re sending back the money that you owe to the government. Financial statements provide a snapshot of your company’s revenue, expenses, profitability, and debt and are an integral part of ecommerce bookkeeping. One way to report sales e-commerce bookkeeping tax in your bookkeeping records is to debit the amount you’ve collected from your cash account and credit it to your sales revenue and sales tax payable accounts. You’ve set up your online store on Shopify and are taking advantage of the cloud to sell your products 24/7 around the world. If you keep up with your ecommerce accounting, you can see how your store is performing at any time.

Some e-commerce platforms will handle both sides of the transaction — collecting it from customers and remitting it to your state sales tax authority. While additional payment types can make life easier for your customers, keep in mind that they’re less straightforward from a bookkeeping perspective. In that case, the sale won’t be fully recognized in your books until you deposit that money into your bank account.

Sales tax can be very confusing, depending on where you’re selling your products online. Whether you do bookkeeping yourself or decide to hire a certified bookkeeper, understanding how money flows through your business is vital. The payment provider you use should keep a log of the fees incurred for each payment.