In short

Ecommerce bookkeeping centers on settlement reports rather than invoices. Each platform payout is split into gross sales, platform fees, payment processing fees, refunds, chargebacks, advertising charges and reserves, then matched to the bank deposit. Inventory purchases are recorded to an asset account and relieved to cost of goods sold, with freight and landed costs included, so gross margin by channel and by month is reliable. Marketplace-collected sales tax is kept separate from tax the store collects itself.

Online stores rarely suffer from too little data. The problem is that storefronts, marketplaces, payment processors and ad platforms each produce their own numbers, and none of them line up with the bank. Bookkeeping for an ecommerce business is mostly the work of reconciling those sources into one ledger you can trust.

The weekly payout workflow

Our routine starts with the settlement or payout report from each platform, not the bank feed. For every payout we record:

  1. Gross sales for the period, split by channel if you sell in more than one place
  2. Platform and processing fees to their own expense accounts
  3. Refunds and chargebacks as contra-revenue, so returns are visible instead of hidden inside a smaller deposit
  4. Reserves and holds as a receivable from the platform until they are released
  5. The net deposit, which should now match the bank to the cent

When a payout does not tie out, the difference is usually a reserve release, a currency conversion or an advertising charge deducted at source. Finding it each week is much easier than finding it at year end.

Inventory and landed cost

Sellers who buy inventory generally account for it and figure cost of goods sold, as the IRS explains in Publication 334. In practice that means purchase orders, supplier invoices, freight-in and duties are capitalised to inventory, then relieved to cost of goods sold as units sell. We agree a method with you and your tax preparer and apply it the same way every month, so a large stock purchase does not make one month look like a loss.

What typically goes wrong

  • Deposits recorded as sales, which understates revenue and hides fees
  • Marketplace-collected sales tax booked as income
  • Gift card sales treated as revenue before they are redeemed
  • Ad spend charged by the platform and never recorded at all

What you receive each month

A reconciled ledger, a profit and loss with gross margin by channel, a balance sheet showing inventory and platform receivables, and a short note on anything unusual we found. If you also need help reading those reports, see our accounting services.

Read more about how we work with ecommerce businesses, or book a free consultation to walk through your current setup.