All you need to know about eCommerce bookkeeping


ecommerce bookkeeping

The cash flow statement contains the details of every penny a business spends. It includes information about the rent, inventory, and income stream. A business owner needs to consider many elements when managing eCommerce bookkeeping. This includes considering the methods to track details like financial transactions. Business owners will need receipts, invoices, and templates for the different sales channels.

  • With this method, you only account for income or expenses when the cash is exchanged, which makes it easier to understand your cash flow.
  • Storage costs will end up overeating any type of bulk discount you are getting.
  • If you’ve been in business for a while, you can skip this section.
  • This is the most crucial piece of information for bookkeeping for online business.
  • It offers real-time financial reporting, easy bank reconciliation, and efficient invoice management.
  • If you suffer a loss, your cash flow statement pinpoints where overspending occurred so you can strategize to reverse the trend.

What is eCommerce Bookkeeping?

ecommerce bookkeeping

Every business should regularly analyze their finances and plan for growth – and ecommerce businesses (who are perhaps deciding whether they should cash flow or exit) are no exception. For product-based ecommerce businesses, inventory and Cost of Goods Sold (COGS) are the bridge between “cash received” and “true profitability”. Bookkeeping is the day-to-day work of recording transactions and reconciling them to real-world sources (bank statements, sales channel payouts, credit cards, etc.).

ecommerce bookkeeping

Cash Flow Statement: Explanation and Example

Just do your bookkeeper (and yourself) a favor, separate your expenses and use the business credit card for the business only. And no, your personal yacht (lucky you) does not belong on your balance sheet. Make sure to only include business related items in your financials. Make sure your bookkeeper or accountant understands the complexities of sales tax nexus and how to manage the compliance requirements. You’ll want to find a freelance bookkeeper who has experience working https://www.bookstime.com/ with ecommerce businesses like yours.

Set up your cloud accounting tech stack

On the other hand, you can spend money from your personal account to cover your business expenses. You’ll have to adopt this accounting system as your operations scale. Cash basis method for tax reporting is only permitted for companies with an average annual growth receipt of $5 million or less. However, this accounting method isn’t the ecommerce bookkeeping best choice for larger ecommerce operations since it does not recognize future account receivables and accounts payables.

Multistate sales tax compliance

ecommerce bookkeeping

It does an excellent job of meeting the needs of small businesses and freelancers and offers a user experience that is hard to beat. The margin between your cost of goods sold and net profit should be stable as well as predictable. And always remember to record your cost of goods sold when you sell each piece of inventory.

Sales Tracking

Wave’s https://dydensboss.com/2025/07/28/best-invoice-software-for-small-businesses-wave/ biggest downfall for ecommerce businesses is that it doesn’t natively integrate with seller platforms or offer more advanced features—in a sense, you’re getting what you pay for. You can always add more functionality with Zapier integrations, but that setup is a lot more time-consuming than many other accounting programs. Here are the five best options for accounting software for ecommerce businesses, so you can stop stressing about the books and start trying to catch up to those runaway sales. E-commerce accounting is about managing the financial aspects of online businesses, encompassing sales, inventory, taxes, and reporting. It ensures accurate and efficient record-keeping, which is crucial for the successful operation and growth of any e-commerce venture.

ecommerce bookkeeping

To prevent stockouts, Webgility automates inventory management and purchase orders. It integrates with QuickBooks Desktop/Enterprise to generate POs for out-of-stock items, ensuring timely restocking. Needs to track various fees from multiple platforms (transaction fees, listing fees, marketplace commissions, etc.) and integrate them into the bookkeeping system.

Cash flow and financial reporting insights

What works when selling a handful of products each month quickly breaks down when volumes increase and cash is tied up in stock. Shipping, customs duties, packaging and storage costs are also regularly excluded from cost of goods sold. Without a clear landed cost, businesses cannot accurately assess margin or plan reordering cycles. This matters because ecommerce decisions are often driven by margin. Pricing, promotions and ad spend should be based on net profitability, not assumptions drawn from incomplete data. When fees are not separated clearly, it becomes difficult to understand contribution margin by channel or product.

ecommerce bookkeeping

Meet your accounting team, delivering real-time bookkeeping for DTC, multichannel, and wholesale brands like you.

A chart of accounts (CoA) is essentially the breakdown and structure of your financials. With Bench, you get a team of bookkeepers who do your bookkeeping for you, and simple software to keep tabs on your finances. If you have a question about your books, you can message your bookkeeper any time through the Bench app. A budget calculator isn’t actually a calculator—it’s a spreadsheet in which you enter your budget for a set period, usually weekly or monthly. At the end of that period, you total up how much money you spent, so you can track whether you’re staying on budget. Using your calculator regularly is also a good way to monitor how and when your budget needs to be adjusted.


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