Bookkeeping Basics
Learn fundamental bookkeeping principles every online seller should know
Read MoreComprehensive accounting resources, calculators & guides for Amazon, Shopify, Etsy, eBay & Walmart sellers
Powerful tools to calculate profitability, taxes, and costs for your online business
Step-by-step tutorials for mastering ecommerce accounting and bookkeeping
Download ready-to-use spreadsheets for tracking finances and managing books
Never miss important tasks with our comprehensive bookkeeping checklists
Learn fundamental bookkeeping principles every online seller should know
Read MoreMaximize deductions and minimize tax liability for your online business
Read MoreNavigate complex sales tax requirements across multiple states
Read MoreChoose the right inventory valuation method for your business
Read MoreOf small businesses fail due to poor cash flow management
Recommended frequency for reconciling accounts and reviewing finances
IRS 1099-K reporting threshold for online marketplace transactions
Self-employment tax rate for online sellers on net earnings
Average COGS percentage for profitable ecommerce businesses
Recommended record retention period for tax and financial documents
Bookkeeping for online sellers involves tracking, recording, and managing all financial transactions related to your ecommerce business, including sales, expenses, inventory costs, marketplace fees, shipping costs, and tax obligations across platforms like Amazon, Shopify, Etsy, eBay, and Walmart.
Cost of Goods Sold (COGS) is calculated using the formula: Beginning Inventory + Purchases - Ending Inventory = COGS. For ecommerce, include product costs, shipping from suppliers, customs/duties, prep fees, and packaging. Use our COGS calculator to get accurate calculations for your business.
Yes, if you expect to owe $1,000 or more in taxes when you file your return. Online sellers typically need to pay quarterly estimated taxes covering both income tax and self-employment tax (15.3%). Payments are due April 15, June 15, September 15, and January 15.
Cash accounting records transactions when money actually changes hands, while accrual accounting records income when earned and expenses when incurred. Most small online sellers use cash accounting because it's simpler and provides a clearer picture of actual cash flow.
Amazon reserve accounts should be tracked separately as restricted cash on your balance sheet. Record the reserve as an asset when Amazon holds funds, and adjust your books when funds are released. This ensures accurate cash flow reporting and prevents overstating available cash.
Popular options include QuickBooks Online, Xero, and Wave. The best choice depends on your platform (Amazon, Shopify, etc.), transaction volume, and integration needs. Many sellers use specialized tools like A2X or Link My Books to connect marketplace data with their accounting software.
Amazon payout reconciliation involves matching settlement reports with bank deposits, accounting for all fees, refunds, and adjustments. Download settlement reports from Seller Central, match gross sales, subtract all fees and refunds, and verify the net amount matches your bank deposit.
Common deductions include: product costs (COGS), marketplace fees, advertising, shipping supplies, storage fees, software subscriptions, home office expenses, professional services, education, and business travel. Keep detailed records and receipts for all business expenses.
You need sales tax permits in states where you have "nexus" (significant presence). This includes your home state, states with inventory (like FBA warehouses), and states where you exceed economic nexus thresholds (typically $100,000 in sales or 200 transactions annually).
An LLC provides liability protection and is simple to maintain. An S-Corp election can save on self-employment taxes once you're profitable (typically earning $50,000+ annually). Consult with a tax professional to determine the best structure based on your income and business goals.