In short

For online sellers, accounting work goes beyond recording payouts. It covers choosing and documenting an inventory costing method, analysing contribution margin per channel after fees, returns and advertising, forecasting cash when platforms hold reserves or pay on delayed schedules, and preparing the year-end schedules a tax preparer needs, such as inventory counts, cost of goods sold and fixed assets bought for fulfilment.

Once the transactions in an ecommerce business are recorded correctly, the next question is what they mean. Accounting for online sellers is about turning reconciled payouts into decisions: which channel is worth growing, how much cash the business really has, and what the year-end numbers will look like before your tax preparer asks.

Contribution margin by channel

Revenue per channel is easy to find; profit per channel is not. We build a monthly contribution view that starts with gross sales on each channel and subtracts cost of goods sold, platform fees, payment processing, fulfilment, returns and the advertising spent on that channel. A marketplace that looks like your biggest channel by sales sometimes turns out to be the least profitable once its fees and return rate are included.

Inventory method and valuation

How inventory is costed changes reported profit. The IRS explains in Publication 538 that businesses must use accounting methods that clearly reflect income, and that changing a method generally requires IRS approval unless an exception applies. We help you document the method you use, reconcile the inventory value in the books to your stock system at least quarterly, and write off damaged or obsolete stock in a consistent way.

Cash forecasting around payout timing

Platforms often hold reserves, pay on rolling schedules or delay payouts for new sellers. Combined with the need to buy stock months ahead of a busy season, that can leave a profitable store short of cash. We prepare a rolling cash forecast that models payout timing, purchase orders and loan repayments, so you can see a squeeze coming rather than discovering it.

Year-end preparation

Before the books go to your tax preparer we close the year, confirm inventory and cost of goods sold, list fixed assets such as packing equipment or warehouse fit-out, and reconcile sales tax liabilities. That package usually saves the preparer time and saves you questions later.

Typical deliverables

  • Monthly management pack with channel contribution margins
  • Quarterly inventory reconciliation
  • Rolling thirteen-week cash forecast
  • Year-end close package for your tax preparer

This builds on our ecommerce bookkeeping routine. See all accounting services or book a consultation.