Ecommerce Bookkeeping: Bookkeeping Best Practices for Ecommerce Business

Ecommerce bookkeeping is important for running an online store smoothly. It helps track income, expenses, and profits. Good bookkeeping for an ecommerce business also ensures tax compliance and better planning. When asked what they like least, most e-commerce owners will say “accounting.” But here’s the thing: as your online store grows, your finances do too. Sales, returns, fees, and supplier costs all need to be tracked, sorted, and shared with tax agencies. To keep your store in top shape, it’s smart to follow key bookkeeping best practices. These ecommerce bookkeeping tips will help you stay on track and ready for tax time.

Best Bookkeeping Practices for Ecommerce Business

Inventory Management Across Sales Platforms

The first of many ecommerce bookkeeping tips is proper inventory tracking. Many e-commerce platforms have built-in tools for this. If you sell from one place, that’s enough. But if you sell on more than one site—like your website, Amazon, and eBay—things get tricky.

Sales from outside platforms might not sync with your main site. This makes it hard to track what you sold and what you still have.

Best practice: A solid inventory system supports accurate bookkeeping for an ecommerce business, helping you avoid missing or duplicate entries across sales channels.

Dealing with Merchant Fees

Running your store on a platform like Shopify, Etsy, or Amazon? You’ll face merchant fees. These platforms and payment processors charge a small fee for each sale.

Here’s the tricky part: the money you see in your bank is not the full sale. It’s the sale after fees. This can throw off your records if you don’t log it right.

Best practice:

• Log the full sale as revenue.
  
• Record the fee as a cost.
  
• Show the deposit as the result of the sale minus the fee.

Handling fees this way is vital in bookkeeping for an ecommerce business, ensuring accurate records and clean financial reports.

Keep Sales Tax Records

Ecommerce bookkeeping also means tracking sales tax. Some platforms handle tax—they collect and send it to the state. Others just collect it, and you must pay it.

No matter who sends the tax, remember: sales tax is not income.
It belongs to the state and must be tracked as such.

Best practice:

• Mark sales tax as a separate line in your books.
  
• Don’t treat it as revenue.
  
• Show gross sales, sales tax, fees, and net deposit all clearly.

Determine Your Break-Even Point (BEP)

The break-even point (BEP) shows when your income equals your costs. This is a key number for any e-commerce store.

Knowing your BEP helps you:

• Set prices that make a profit
  
• Plan costs like shipping or ads
  
• Stay ahead of losses
  

If your costs rise—say due to a repair or new tools—your BEP will rise too.

Best practice:

• Track fixed and variable costs
  
• Update your BEP often
  
• Use it to guide pricing and growth

Key Components Of Bookkeeping for an Ecommerce Business 

1. Sales Tracking

• Record every sale made on all platforms.
  
• Sync your store with bookkeeping software.
  

2. Expense Tracking

• Record what you spend on ads, tools, shipping, etc.
  
• Always save receipts and invoices.
  

3. Inventory Management

• Track product stock and updates in real-time.
  
• Match sales with inventory movement.
  

4. Cost of Goods Sold (COGS)

• Include product cost, shipping, and packaging.
  
• Calculate COGS to know the real profit.
  

5. Tax Compliance

• Collect and report sales tax properly.
  
• File state and federal taxes on time.
  

6. Bank Reconciliation

• Match books with bank statements monthly.
  
• It ensures all records are correct.

Why Bookkeeping for Ecommerce Is Unique

Bookkeeping for an ecommerce business is not like other industries. You deal with:

• Merchant fees
  
• Multiple sales platforms
  
• Stock levels
  
• Tax rules
  
• Returns and restocks
  

Each of these adds a layer of work. But if you keep it simple and follow the bookkeeping best practices, it’s easier to manage.

Common Bookkeeping Mistakes in Ecommerce

Bookkeeping is key for any ecommerce business, but small mistakes can hurt profits, lead to wrong tax files, and create messy books. Below are the most common errors in ecommerce bookkeeping and why you must avoid them.

1. Mixing Business and Personal Costs

• Many new sellers use the same bank account for both work and home use. This mix causes confusion and errors at tax time. It also hides your true profits. To avoid this, set up a bank account and card just for your business.

2. Not Tracking Inventory Right

• Inventory is a top asset for online stores. It’s also one of the hardest parts of bookkeeping for an ecommerce business to get right. Not updating stock in real time leads to overstock, stock-outs, or wrong costs. These can hurt cash flow and tax reports. Use a tool that links stock with your books for real-time updates.

3. Missing Sales from All Channels

• If you sell on Amazon, Etsy, Shopify, and more, but only track some, your income reports will be wrong. Use tools that pull sales data from all channels into one place to keep records clean.

4. Ignoring Shipping and Fulfillment Costs

• Shipping, boxes, returns, and fees add up fast. If you skip these in your cost of goods sold (COGS), your profit numbers will be wrong. Track all these costs to get a true picture of profit per sale.

5. Not Backing Up Data

• Online stores rely on digital tools. But if you don’t back up your data, a crash can wipe your books. Use cloud apps or make regular backups to a secure spot.

6. Missing Sales Tax Rules

• Each state or country has its own sales tax rules. If you fail to charge tax or miss a due date, you may face big fines. Use tools that auto-track rules and help you file on time.

Recommended Tools for Ecommerce Bookkeeping

The right tools can cut errors and save time. Here are top picks for ecommerce bookkeeping:

1. QuickBooks Online

• Best for: Medium to large stores.
  QuickBooks is a top tool. It links with Amazon, Etsy, and Shopify. You can track sales, costs, taxes, and payroll. Its reports give deep insights.

2. Xero

• Best for: Small to mid-size stores.
  Xero is easy to use. It works with many store and stock tools. It helps you manage bills, taxes, and multi-currency sales.

3. Zoho Books

• Best for: Budget-friendly needs.
  Zoho is low-cost and full of features. It handles tax, auto-invoices, and syncs with online stores. It’s great for small sellers who want to save.

4. A2X

• Best for: Amazon or Shopify sellers.
  A2X links your store to QuickBooks or Xero. It sends clean sales data to your books, saving you time and fixing import errors.

5. Wave

• Best for: Small shops or part-time sellers.
  Wave is free. You can track sales, costs, and make reports. It’s great for new or side businesses, though it may not work well for big growth.

Ecommerce bookkeeping is key to a smooth business. As your store grows, your records can get more complex. By using smart bookkeeping steps, like tracking stock, logging fees, and setting aside sales tax, you stay in charge of your cash.
Want peace of mind? Work with a skilled bookkeeper who knows ecommerce. The right help keeps your books clear, your tax files on time, and your business on track.

At Meru Accounting, we handle ecommerce books with tools like QuickBooks, Xero, and Zoho Books. Our team keeps your records sharp, links with your sales sites, and handles taxes on time. With years of work in online store accounts, we help you grow with ease. Count on Meru Accounting to keep your business strong and stress-free.

FAQs

1. How do you track inventory when selling on many ecommerce platforms?
   Use one system to record all stock. It keeps counts clear even when platforms don’t sync with each other.
2. How should merchant fees be recorded in ecommerce bookkeeping?
   Record full sales as income. Note the fee as a separate entry to match the lower bank deposit.
3. Why must sales tax be kept separate from ecommerce revenue?
   Sales tax is not your income. It must be paid to the state. Show it apart from gross sales in your books.
4. What does the break-even point mean for an ecommerce store?
   It’s when income equals cost. Knowing this helps set prices and plan for profit.
5. Who handles sales tax collection on ecommerce platforms?
   Some platforms collect and send the tax. Others just collect, and you must pay it to the state.
6. What bookkeeping issues can ecommerce platforms cause?
   They often show net sales only. Without tracking fees and tax, your records can go wrong.
7. Why is it vital to track returns and restocks in ecommerce?
   Missed returns can skew profit. A full record of stock keeps your books correct.
8. What makes ecommerce bookkeeping harder than usual?
   You deal with fees, taxes, and stocks across many places. A set method keeps it under control.