Why Accounting for E-commerce is Different From Others

Okay, so you have created an e-commerce store on a big platform. Ordering inventory, maintaining inventory, shipping, attracting traffic to your products, branding, and so on are all on your mind. You know you will need to conduct some accounting for your business, but it will be that simple. When it becomes too time-consuming or complicated, you can even hire an accountant.  


These techniques will make you feel like you are in charge of your finances. However, accounting for Ecommerce is not the same as accounting for any other type of firm. Whether it’s bookkeeping or data entry outsourcing, managing e-commerce business is different from others. Building your e-commerce accounting process by following other firms will certainly offer you a misleading view of your company, which could significantly impact its performance. So, in order to get it right, what would you or your accountant need to know about e-commerce accounting? 

What’s so unique about e-commerce accounting? 

Accounting complications exist in every sector. Understanding these complexities is critical for obtaining accurate figures that lead to well-informed decisions. If you perform your own accounting or have hired an accountant, you should understand e-commerce accounting and its unique features. Here are the differences in e-commerce accounting and their solutions based on the area of accounting: 

Finding the transactional data 

It’s incredibly easy to find financial transactions for businesses that are not in the e-commerce industry. Simply glancing at a business’s bank account or credit cards will usually reveal every transaction that has occurred. Ecommerce enterprises, on the other hand, are a different story. Many accountants will approach e-commerce bank transactions similarly to other industries. There are two issues with this method: 


  • Income (and other figures) are incorrect. 
  • Transactions are not timed correctly. 

Solutions: Learn how to locate this information in your selling channels’ back-end reports. 

Hire accountants with experience obtaining data from various selling channels. 

CGOS and inventory 

You are an inventory-based company if you run an e-commerce business. As a result, it’s no surprise that your inventory and COGS metrics are among the most crucial to understand! This field of accounting will require more understanding than a conventional business. You will need to be well-versed on the following topics: 


  • How to estimate the correct COGS? 
  • Controls and inventory management for your most valuable assets 
  • How to account for inventory flow in your company? 


Solution: When correctly set up, inventory management tools can track the majority of this for you. Accountants that specialise in e-commerce also help in this process.  

Income and other numbers 

Many accountants are unaware that the amount of money deposited into your bank account from your sales is not an accurate income figure. These funds come from your selling channels as “net deposits.” A “net deposit” indicates that the amount deposited in your bank account was impacted by other transactions other than sales. These transactions include sales, refunds, sales tax, chargebacks, and customer-paid shipping, among others. 

Solutions: You will need to dig into the back-ends of all your sales channels to identify the transactions that genuinely make up an e-commerce business. This is where you will get actual sales and other activity figures.  

You can make your e-commerce accounting process easy with the help of outsourced e-commerce accounting service providers like Whiz Consulting, who will help you tackle all the challenges of the e-commerce business.