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Ecommerce Bookkeeping: Things Business Owners Should Know
Running an online store is exciting, but behind every successful sale is something often overlooked — eCommerce bookkeeping. This is the backbone of your financial health. It helps you keep track of every dollar that comes in and goes out. In this guide, we’ll walk you through the ins and outs of eCommerce bookkeeping, from basic tasks to tools, tax handling, and why it matters so much for your business.
What is Ecommerce Bookkeeping?
Ecommerce bookkeeping is the process of recording, organizing, and managing the financial transactions of your online store. It includes tracking sales, inventory, payments, taxes, and expenses. Whether you sell on platforms like Shopify, Amazon, or eBay, good bookkeeping ensures your numbers are accurate and up-to-date.
Think of it as your store’s diary — one that records every invoice, refund, and sale so you know exactly where your money is going and coming from.
What Are The Examples of Ecommerce Bookkeeping?
Here are a few everyday examples that fall under eCommerce bookkeeping:
- Recording sales from your online marketplace (e.g. Amazon, Etsy)
- Tracking cost of goods sold (COGS)
- Managing inventory levels and restocking
- Handling sales tax collected from different states or countries
- Logging fees from payment processors like PayPal, Stripe, or payment gateways
- Recording returns and refunds
- Matching bank deposits with sales
These activities ensure your financial statements such as balance sheets, income statements, and cash flow statements stay accurate.
How Ecommerce Bookkeeping is Beneficial for Your Online Business?
Bookkeeping isn’t just about staying organized — it’s about growing smarter. Here’s how it helps:
- Better decisions: Knowing your numbers helps you make smart choices about spending and pricing.
- Tax readiness: Clean records make tax return season less stressful.
- Improved cash flow: Track income, expenses, and debits and credits to avoid surprises.
- Inventory control: Manage stock using methods like FIFO and LIFO accounting.
- Stronger financial management: Keep track of your working capital, net worth, and gross margin.
What Does Ecommerce Bookkeepers Do?
An eCommerce bookkeeper takes care of all the financial details so you can focus on running your store. They handle:
Daily eCommerce Bookkeeping Tasks
- Record sales and refunds
- Log expenses
- Update inventory levels
- Check for any payment issues
- Reconcile point of sale data
Weekly eCommerce Bookkeeping Tasks
- Review bank statements
- Track accounts receivable and payable
- Monitor sales across platforms like Shopify and Amazon
- Handle customer returns
- Review shipping fees and marketplace charges
Monthly eCommerce Bookkeeping Tasks
- Create financial statements
- Compare income vs. expenses
- Update the chart of accounts
- Reconcile bank accounts
- Calculate gross income and net profit
Quarterly eCommerce Bookkeeping Tasks
- File estimated taxes
- Check inventory valuation
- Review balance sheet and income statement
- Analyze your business process
Yearly eCommerce Bookkeeping Tasks
- Prepare year-end financial reports
- File annual tax return
- Evaluate pricing and marketing strategies
- Budget for the next year
- Work with a Certified Public Accountant for audits
Ecommerce Bookkeeping Best Practices
Want to stay ahead? Follow these simple steps:
Integrate your Store with Accounting Software
Use tools like QuickBooks, Xero, or FreshBooks to automate data collection and track financial transactions.
Configure Tax Rules
Set up tax settings correctly based on where your business has a nexus (a physical or digital presence). This is key for managing sales taxes in the United States and international taxation.
Maintain your Account Daily
Small updates every day avoid big problems later. This includes updating receipts, checking inventory, and logging expenses.
Manage your Return
Returns can mess with your inventory and revenue tracking. Always record them accurately.
Automate your Workflow
Use automation to sync orders, process payments, and track shipping. This saves time and reduces errors.
Track your Expenses
Keep an eye on costs — from shipping and packaging to advertising and technology tools — so you can boost profits and manage your budget.
Handling Sales Tax in Ecommerce Bookkeeping
Managing sales tax can be tricky, especially if you sell in different states or countries.
Register your eCommerce Business
Make sure your business is legally registered to collect and file taxes.
Categorized the Taxable Product
Know which of your products are taxable. Digital items, for example, may have different rules.
Identify Where You Have Nexus
You must collect sales tax where you have a nexus — meaning you have a presence, like a warehouse or employees.
Collect Sales Taxes
Use a payment processor that collects taxes during checkout.
File Tax Return
File your returns on time. This might be monthly, quarterly, or yearly, depending on your tax rate and state laws.
How To Calculate Sales Taxes in Ecommerce Bookkeeping
Your sales tax rate will help you decide how much to gather and send.
Your sales tax amount is obtained by adding your state, county and city sales tax rates and then multiplying the total percentage by your sales figure.
The following is the formula:
Sales tax = Sale price x Sales tax rate
Here is a sample application of the equation:
You sold a $100 item. The overall sales tax is 7% if your city sales tax rate is 2% and your state tax rate is 5%.
0.07 times $100 equals $7
$7 would be the sales tax, bringing the item’s last price to $107.
Correctly tracking sales tax in your chart of accounts helps to show how much of your cash in the bank should be reserved for taxes.
Reporting sales tax in your bookkeeping records can be done by debiting the sum you have gathered from your cash account and crediting it to your sales tax payable and sales revenue accounts.
Common Mistakes in Ecommerce Bookkeeping
Avoid these common errors:
- Trying to do it all manually instead of using bookkeeping software
- Failing to meet international tax rules
- Keeping inaccurate inventory levels
- Not syncing transactions from marketplaces like Amazon Marketplace
- Mishandling sales tax
- Disorganized records
- Not reconciling bank accounts often
Top Tools For eCommerce Bookkeeping
These tools can help streamline your process:
A2X
Connects your Shopify, Amazon, or eBay accounts directly with your accounting software.
FreshBooks
Great for small business owners who want simple financial services.
QuickBooks
A well-known option for complete financial management, from invoicing to tax filing.
Bench
A done-for-you bookkeeping service that matches you with real bookkeepers.
How BIT Accounting Professional Helps In Ecommerce Bookkeeping?
BIT Accounting specializes in helping eCommerce businesses with clean, compliant, and reliable bookkeeping. Here’s how they support you:
- Handle inventory management software and stock tracking
- Set up automated systems for payments and invoicing
- Ensure you stay compliant with local and international tax laws
- Provide detailed financial reports and help with budget planning
- Support with tools like QuickBooks, Xero, and NetSuite
- Guide you through corporate finance, cash flow forecasting, and more
BIT Accounting is your reliable partner when it comes to understanding the financial economics of running a store in today’s digital world.
Conclusion
eCommerce bookkeeping isn’t just a routine task — it’s the foundation of a strong business. From handling expenses and inventory to dealing with sales taxes and financial statements, it’s what keeps your online store running smoothly. With tools like FreshBooks and QuickBooks, plus professional support from BIT Accounting, you can turn financial chaos into clarity and focus on what matters most — growing your business.
FAQs
1: Do I need to hire a bookkeeper for my online store?
If your business is growing or you’re struggling to keep up, hiring a bookkeeper or a service like BIT Accounting can save you time and money.
2: What’s the difference between bookkeeping and accounting?
Bookkeeping is about recording daily transactions. Accounting interprets and analyzes those records to help with decision-making.
3: What is FIFO and LIFO in inventory management?
FIFO (First In, First Out) and LIFO (Last In, First Out) are ways to calculate the cost of goods sold and track inventory.
4: Can I use Excel for eCommerce bookkeeping?
You can, but using accounting software makes it easier and reduces errors.
5: How do I handle sales tax in different states?
Use tax software or services to track where you have nexus and apply the correct sales tax rates.
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