Q&A: What is ecommerce bookkeeping?

May 23, 2023

Explore the top 6 crucial questions that every online business owner should know about ecommerce bookkeeping

Explore the top 6 crucial questions that every online business owner should know about ecommerce bookkeeping

1) What is ecommerce bookkeeping?

Ecommerce bookkeeping is the accounting procedure that is used to categorise and arrange your financial situation. It includes the recording and categorizing of your financial transactions, reconciling accounts, balance sheet preparation, payroll management, and ensuring that financial records are accurate and up-to-date. While ecommerce bookkeepers are essential for creating your financial records, they generally don't provide you with any strategic financial advice or long-term planning.

To become a bookkeeper, you don’t necessarily need to have a degree in accounting or finance or have much previous experience. Further responsibilities include categorizing income and expenses, paying vendor bills, or sending invoices to your wholesale customers, usually through some kind of accounting software, like Quickbooks or Xero. 

Traditional bookkeepers often don't understand ecommerce bookkeeping—a very different bookkeeping process than it is for a physical store.  

Read about how ecommerce accounting is different here Ecommerce bookkeeping: 6 tips every ecomm business needs to know


2) How to do bookkeeping for an online store?

Using an ecommerce bookkeeping specialist is key to maintaining the accuracy of your online store’s books. Despite this, many try to do their ecommerce bookkeeping by using a DIY accounting software such as Quickbooks and adding on an app integration through the Intuit ecommerce services offered to integrate with your relevant apps, meaning that a lot of the important nuances of ecommerce bookkeeping may be lost in your books. It's important to make sure any bookkeeping solution you choose, has the ecommerce knowledge you need to get the most from your financials.

The best option is to find a cost-effective automated solution that integrates with Shopify, Amazon, Paypal, and other apps and pushes the data into your bookkeeping software in real-time.

To simplify the process and save you time and money on bookkeeping, you can use an automated bookkeeping service like Finaloop which covers your accounting software, app integrations, and full-service bookkeeping so you can get the most accurate ecommerce books with only about 15 minutes of input a month.

To find out more about ecommerce bookkeeping read our blog on Ecommerce bookkeeping: 6 tips every ecomm business needs to know

3) How much does ecommerce bookkeeping cost?

Generally, bookkeepers range between $250 a month for very simple and small businesses to up to $5,000 a month for large, more complex brands.

4) What is the best accounting method for ecommerce?

There are two commonly used accounting methods for ecommerce businesses; accrual accounting and cash basis accounting. Choosing the best accounting method for your ecommerce business will depend on, the size of the business, its structure, legal requirements, and specific accounting needs. Cash basis accounting is usually better for small ecommerce businesses because it is simpler and easier to track, while the accrual basis method provides a more accurate representation of a company's long-term financial health. 

If the IRS feels the method you choose doesn’t clearly reflect your income they can recalculate your income using the method they choose. This could lead to you paying huge sums in unnecessary penalties.


5) What is Cash Basis Accounting?

Cash basis accounting recognizes transactions when cash is paid or received and doesn’t account for accounts payable or receivable. Most small ecommerce businesses tend to use the cash basis because it is simpler and easier to track, and provides a good fit for a small company. However, it isn’t very useful for long-term planning and growth, as the numbers may be skewed. The cash basis shows only when cash was exchanged, making it difficult to determine when an event actually occurred.

6) What is Accrual Basis Accounting?

Accrual basis accounting records revenues and expenses when they are actually incurred. This method provides a more comprehensive view of the financial performance and obligations of the business. It is suitable for ecommerce businesses that have a large volume of transactions, manage inventory, or have long-term contracts. Accrual accounting provides a more accurate representation of a company's long-term financial health, because it takes into account the revenues and expenses that have already been incurred and are expected to result in a future cash inflow or outflow.

Read more in our blog Cash Basis Accounting vs Accrual Basis Accounting

7) What cloud tools do you use for bookkeeping?

Cloud-based tools are vital in helping you achieve efficient and accurate books, by ensuring streamlined bookkeeping processes and enhanced productivity. Industry-leading cloud accounting software such as QuickBooks Online, Xero, and Zoho Books offer features like invoicing, expense tracking, bank reconciliation, and financial reporting, all accessible from anywhere with an internet connection. Additionally, you can utilize cloud storage platforms like Google Drive for secure document management and collaboration.


Accurate ecommerce accounting and ecommerce bookkeeping is essential for your ecommerce business’ financial health.  Finaloop’s bookkeeping solution built for ecommerce and DTC brands allows brands to get their financial data 100% accurate, in real time, and fully reconciled 24/7.


Sign up HERE to get your financials set up today.

About Finaloop


We are a technology company providing automated end-to-end accounting service to ecommerce businesses. Our system connects to your apps, syncs all your data and reconciles your books in real-time, replacing your bookkeeper, your accounting software, and your ecomm integrations. We offer reconciled books available 24/7, tax-saving insights, and a single place for

all your financial data.


*The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.*

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