E-commerce accounting guide

Introduction

Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. Accounting is one of the key functions for almost any business.

In this guide, you’ll learn to account for Ecommerce. Before you start you must have an understanding of:

• Bookkeeping and ledgers

• Taxation

This guide is helpful to you if,

1. you’re selling on any third-party platforms like Amazon, Flipkart or

2. on your own website

Ecommerce accounting is completely different from Retail accounting. Here we’ll only be talking about ecommerce accounting.

Difference between Ecommerce and Retail accounting:

1. In retail accounting, only a buyer and a seller are involved while selling a product. Whereas in e-commerce multiple trade contacts are involved such as:

   1. Payment gateway in case of prepaid orders

   2. Shipping providers in case of cash on delivery orders

   3. Third-party platforms like Amazon, Flipkart, etc

2. In retail accounting, payment is received as soon as the invoice is recorded. Whereas in e-commerce accounting payment is not received as soon as the invoice is generated. Payment might be received prior to invoicing or even after n number of days of invoicing.

3. In retail accounting, the customer who is buying the product is one form whom the payment is collected. Whereas in the case of e-commerce accounting, payment is collected from different sources like payment gateways, shipping providers, and third-party platforms.

4. In retail accounting, the payment collected and invoice amount is the same. Whereas in e-commerce accounting, payment collected might not be equal to the invoice amount. This can be because trade contacts charge multiple fees which are deducted at the time of settling the invoice. For example, Amazon deducts the commission while settling the invoice. It gets even complex when refunds are created.

5. In retail accounting, its just one transaction at once time. Whereas in e-commerce accounting, one payout will include multiple transactions having both payables and receivables.

1. What will the user learn?

2. Why is Eshopbox accounting required?

   1. Payment is not collected directly from the end customer

   2. The amount received against the order has already commission/fees adjusted, including both and credit note transactions

   3. Payment is not received on FIFO basis

   4. Multiple fees and rules

Concepts

Setting up

Tracking Inventory movement

Recording sales

Booking expenses

Receiving payouts

Common question

Taxation checklist