Ecommerce Bookkeeping: The Small Business Guide

Moreover, stockouts can damage businesses’ relationships with their customers. Good cash flow and the ability to increase order size gives you an advantage. Inventory management is also ecommerce bookkeeping closely related to how well you manage your ecommerce finances. Your bookkeeping system needs to separate the sales tax from the purchase because sales tax is not part of your revenue.

As we mentioned earlier, the number one reason eCommerce businesses go out of business is a lack of cash flow. Well-researched resource allocation is another clear marker for effective eCommerce accounting procedures. For example, using a scalable outsourced accounting firm ensures that you don’t overpay for services you don’t need. If your in-house bookkeeper tries to perform accounting responsibilities while you’re in growth mode, details that grow into larger issues quickly get lost in the shuffle.

Intuit QuickBooks Online: Best for Accountants and Bookkeepers

Even if you have experience with bookkeeping, there are some important nuances to ecommerce accounting you’ll want to follow. Here, you’ll learn about how to keep books for an ecommerce business, tools to help you, and common mistakes to avoid. A bookkeeper is primarily responsible to record and track a company's financial transactions which include, purchases, sales and expenses. These transactions are first recorded as general ledger, which are later used while preparing a balance sheet. Accounting software aids in inventory management by monitoring the available stock, and some systems can even generate purchase orders.

To succeed, the total expenditures for an online business should not exceed overall sales. QuickBooks allows you to create sales receipts, sales orders, and invoices, which you can then link with your other accounts to help you track inventory. When a sales order is fulfilled, Quickbooks lets you quickly and seamlessly update your inventory tracking on the cloud to reflect your current inventory levels. You can even set up alerts to let you know when a certain type of inventory is getting low, so you will know when to restock. Keeping track of inventory cash flow means knowing the overall cost and value of your inventory, which tells you how much net profit you make from the sale of your inventory.