Overview:

Running an online store is fun—until the numbers start piling up and you're not sure where your money's going. This blog walks you through how to do accounting for your e-commerce business without losing your mind. You'll learn how to pick the right accounting method, stay on top of sales from different platforms, track inventory costs properly, and avoid surprises with sales tax. By the end, you'll know exactly what steps to take to keep your finances clean, clear, and growth-ready—even if you're not a “numbers person.”





Introduction

Hey there, online store owner!

Let's be real—running an eCommerce business is exciting. Watching orders come in, growing your brand, building something of your own… that's the fun part. But when it comes to accounting? We'd all rather do something else.

Still, if you feel your financials are all over the place and affecting your overall business. Trust me—you're not alone. 

I'll walk you through the essentials of how to do e-commerce accounting step by step, so you can keep things clean, compliant, and stress-free. Let's dive in.

Step 1: Pick the Right Accounting Method

If you're starting your e-commerce accounting from scratch, the first thing you need to figure out is whether you'll use the cash basis accounting method or the accrual basis accounting method.

  • Cash basis accounting is super straightforward. In this method, there is no delay in the transaction or money changing hands. If you're just starting or running a very simple business, this approach works well.
  • But if you're managing inventory, offering discounts, or dealing with debt, delayed payments, accrual accounting is the better fit. It tracks your income and expenses when the transaction happens, not just when the cash changes hands. This accounting method will give you a more accurate overview of your business.

My suggestion? If your e-commerce business is growing or you want better financial clarity, go with accrual. It might take a little more setup, but it pays off in the long term.

Step 2: Keep Business and Personal Finances Separate

Don't use your personal bank account as a business account. Open a separate bank account and a dedicated credit card for your business. This one small move will help you:

  • Keep cleaner records
  • Avoid confusion during tax time
  • Look more professional (even to yourself)
  • Plus, your future accountant will thank you.

Step 3: Track Income from All Sales Channels

If you're selling on multiple platforms like Amazon, Etsy, Gumroad, each one has it's own payment schedules, fees, and return policies.

Here's what you want to track:

  • Total (gross) sales
  • Platform fees.
  • Shipping and packaging costs
  • Discounts and returns

Tools like A2X or Link My Books can sync your transactions with accounting software like BDGAGSS and QuickBooks. Trust me, you don't want to do all of this by hand.

Step 4: Handle Inventory and COGS Like a Pro

Inventory is where e-commerce accounting gets tricky. You're not just tracking what you sell— you also need to keep track of how much it costs you to buy or make the products.

Here's a simple formula to go for :

COGS = Beginning inventory + Purchases – Ending inventory

You'll also want to include shipping fees, packaging, and storage costs. Why? Because this tells you your actual profit, not just your sales numbers.

If you're not tracking inventory and COGS properly, your financial reports won't tell the real story and will create problems when you try to scale your business.

Step 5: Don't Let Sales Tax Catch You Off Guard

Sales tax laws are a maze: different states, different rates, different rules.

You might have a tax obligation (called nexus) in states where you store products or ship frequently. If you're not sure where you owe sales tax, you're not alone—and you're not doomed.

Here's how to stay on top of it:

  • Use a tool like TaxJar or Avalara.
  • Make sure your checkout system is collecting the right amount.
  • Reconcile what you've collected with what you pay to each state.

The sooner you automate this, the less you'll stress later.

Step 6: Use the Right Tools for the Job

When it comes to accounting, you only need the right tools and don't always need to know and handle everything.

A few popular options:

  • BDGAGSS: A one-stop platform providing bookkeeping, payroll, tax compliance, and financial reporting services, great for e-commerce businesses of any size.
  • QuickBooks Online: Easy integration with Shopify, Amazon, and others.
  • Xero: Excellent if you're handling inventory or working globally

Pick any one platform that fits your workflow and stick with it. These platforms help with everything from profit reports to sales tax summaries.




Step 7: Categorize Your Expenses (It Makes a Big Difference)

Not all expenses are created equal, and how you track them matters.

Common e-commerce expenses include:

  • Inventory and packaging
  • Advertising (Meta, Google, influencers)
  • Monthly software tools
  • Payment processing fees
  • Freelancers or consultants

By categorizing properly, you'll:

  • Know exactly where your money's going.
  • Make smarter spending decisions.
  • Maximize your deductions at tax time.

Step 8: Reconcile Your Accounts Every Month

I know, reconciliation sounds boring—but it's important. It means comparing your bank transactions to what's in your books. This helps you catch:

  • Duplicate charges
  • Missing payments
  • Incorrect data entries

Think of it as a monthly checkup for your business finances. It doesn't take long, and it can save you from huge headaches down the road.

Before You Go

Accounting may not be the most exciting part of running a business, but it's still it's an important part.  Your decision-making will improve when your numbers are in order. You feel more confident and ready to grow without constantly worrying about the back-end.

The best part? You don't have to do everything.

Platforms like BDGAGSS, QuickBooks, and  A2X exist to take this burden off your plate, so you can get back to what you love: running your store.

Blogged by: BDGAGSS