Accounting Guide 101 To Grow Your E-Commerce Business

Starting an e-commerce business is one of the best ideas you can think about when looking for a profitable investment. Being a new venture and trend, many people are getting into it without understanding its basics. There’s so much that goes into developing a successful e-commerce business, and proper accounting is one.

Managing your accounts is one of the important things you need to learn. Although you can hire someone to do it for you, learning the basics is necessary. That makes it easy to keep records and review financial activity for better management of resources.

This article offers a more in-depth look into e-commerce accounting and tips that could make it a success.

What Exactly Is E-Commerce Accounting?

The first step to start an e-commerce accounting is understanding what it entails. First off, it is an online platform that both the seller and buyer can access. Since building a strong foundation for your business relies on proper accounting, this digital platform will help you track transactions.

It helps document every transaction, then stores and provides the information for review when needed. Consequently, you will not forget important things taking place in your business. As an entrepreneur, you should think about accounting software to document and analyze the data.

Running a digital business becomes easier when you have working systems. Establishing a solid e-commerce accounting foundation and hiring experienced e-commerce accountants will help you do it stress-free. Your firm needs to take advantage of this growing trend.

Accounting Basics to Run an E-Commerce Business

There are basic things to do before jumping into e-commerce. That is especially in regards to accounting and record keeping. Here are five tips to help any e-commerce business grow its finances and scale its operations. Keep reading.

  • Invest in Accounting Software

Accounting information helps a business analyze its progress, generate detailed reports, and make critical decisions. Although there are various computer programs that you can use for basic accounting, purchasing quality software.

Good examples include:

Xero can help pull transaction data straight from your point-of-sale (POS) system, invoicing software, and banking statements. It dramatically speeds up bank reconciliation and credit card information, automatically paying bills. View your cash flow and follow up on outstanding invoices. Monitor your sales and spending and track specific parts of your business.

QuickBooks allows you to track your business’s profitability, any unpaid invoices and lets you follow your earnings and expenses over time and plan for ways to improve it in the future. Profitability measures let you easily and quickly track transactions and determine how much your business earns on inventory.

The internet has lots of accounting software that you can purchase. The best thing is to experiment with the free trials available on many of them to find one that works for you. It should also be easy to integrate with your platform to ensure it works automatically.

You may also want to consider connecting your marketplace systems and apps (such as Shopify, Ebay and OneSaas), to automate your business across accounting, ecommerce, billing & invoicing.

Fusion accountants provides comprehensive accounting and tax advisory services and focus on driving a clients business forward through the latest technology, accounting software automation and standardization of processes, helping you make critical business decisions easily.

After installation, you will save both time and money required in manually tracking your transactions. Besides, transferring processed data to books becomes easier.

  • Track All Your Cash Flows

Understanding a business’s financial situation is essential. Besides keeping an expense and revenue record, you need more tracking to ensure your business moves on well. You will not find ways to improve your business if you cannot explain its fairing financially.

Closely following your accounts will also help you gauge your liquidity levels. You also understand your payment cycle and easily plan your e-commerce business’s future. Ensure you generate factual and accurate cash flow statements for more accurate future forecasts. Hiring an experienced accountant will help in this process.

  • Calculate All Other Expenses

Expenses are part of businesses, and proper accounting must include them. In general, an expense is an amount spent in making an inventory that a business is selling. It is also known as the cost of goods sold, and it includes every penny spent from acquiring materials to selling the final product.

Many business people forget to include labor costs as expenses. In accounting, an expense is anything that will increase the overall cost of a product. Besides, you also need to keep a record of fixed expenses. A good example is a rent as it remains constant whether you do business or not.

Therefore, you need to ensure that your records accurately reflect the total expenses to make gross and net profit calculation easier.

  • Separate Your Bank Accounts

It is always advisable to have two or more bank accounts. Meaning, your personal and business finances should be kept separately to avoid any mix-ups. Besides, it makes it easier to run your business as its finances are distinct from personal ones making it more manageable.

Do some homework before opening a business bank account. Check out a variety of options available in the market and compare the various features. For example, it is necessary to look into the fee structures, the cost of running the account, and the benefits of specific options.

Doing it well helps you avoid high account running costs and also keeps your money safe. Otherwise, poor research can end up being costly.

  • Inventory Practices

The accounting process is wide, and inventory management is an essential part of it. Most businesses develop their inventory practices while starting but fail to review them over time. Meaning, the current practices become null and void once the business grows, making it difficult to sustain.

Your inventory practices should indicate the amount of inventory you can have in hand at one time. It also should be your ideal inventory management system and target turnover rate. It would be best if you always tracked inventory to ensure you aren’t holding more than you should or running out of it.

Constantly updating your inventory will help you operate your business efficiently. Your e-commerce business requires new policies and practices as you scale.


Accounting being a back-office operation can often get overlooked. However, as mentioned in this article, it is a critical part of any profitable e-commerce business. These simple accounting tips will help you develop a good foundation for your e-commerce business.

Following every step keenly will help you find long-lasting success with your e-commerce venture.


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