Accounting for Sellers

Welcome to Accounting for Sellers, the place where your eCommerce numbers stop feeling mysterious and start working for you. Sales are exciting—but the real power comes from knowing what you keep, where it goes, and how to turn your books into better decisions. From payouts that don’t match your store’s “sales” total to fees that hide inside platforms, accounting is the difference between guessing and steering with confidence. This hub is built for modern sellers who want clarity without the corporate fog. Explore articles that break down bookkeeping essentials, platform payouts, COGS and landed costs, inventory accounting, cash flow rhythms, and the financial reports that matter most—profit and loss, balance sheet, and cash flow statements. We’ll also cover clean chart-of-accounts setup, reconciling payment processors, tracking refunds and chargebacks, and staying organized for tax time. Whether you’re just starting, scaling into multiple channels, or preparing for funding or an exit, these guides help you build accurate, audit-ready books—and a financial foundation that supports growth.

1. Bookkeeping: recording transactions accurately and consistently.

2. Accrual vs. cash: when revenue/expenses are recognized vs. when cash moves.

3. Chart of accounts: categories that organize income, expenses, assets, and liabilities.

4. P&L: shows revenue, expenses, and profit over a period.

5. Balance sheet: snapshot of assets, liabilities, and equity.

6. Cash flow statement: explains cash in/out and why it changed.

7. COGS: direct costs to produce/prepare products for sale.

8. Gross margin: revenue minus COGS—key profitability signal.

9. Operating expenses: overhead like software, payroll, rent, and agencies.

10. Reconciliation: matching records to bank/processor statements for accuracy.

1. Gross sales vs. net sales: before vs. after discounts, returns, and allowances.

2. Processor fees: costs taken out of payouts—track separately from revenue.

3. Refunds: reduce revenue and may include fee impacts depending on policy.

4. Chargebacks: disputes that can remove funds plus added fees.

5. Sales tax payable: collected funds you owe to tax agencies (not income).

6. Discounts: can be marketing expense or reduction of revenue depending on setup.

7. Shipping income vs. shipping expense: keep them distinct for clarity.

8. Gift cards: usually recorded as liability until redeemed.

9. Deposits timing: payout delays can create confusing “cash vs. sales” differences.

10. Breakage: unredeemed gift card value—handled with care and rules vary.

1. Marketplace payouts: deposits net of fees, returns, and adjustments.

2. Settlement reports: the “source of truth” for reconciling platform activity.

3. Fulfillment fees: storage, pick/pack, and shipping costs that affect margin.

4. Advertising fees: sponsored listings and campaign costs—track by channel.

5. Returns reserves: funds held back to cover expected returns.

6. Inventory reimbursements: claims or credits for lost/damaged inventory.

7. Chargeback adjustments: platform-specific dispute handling and fees.

8. Multi-channel accounting: separating DTC vs. marketplace income and costs.

9. 3PL invoices: warehousing and shipping bills that need clean categorization.

10. SKU-level profitability: mapping fees/costs to products for true margins.

1. Landed cost: product cost plus freight, duties, and import fees.

2. Inventory valuation: what inventory is “worth” on the books at a point in time.

3. FIFO/LIFO/weighted average: methods that affect COGS and reported profit.

4. Cutoff timing: ensuring transactions land in the correct month.

5. Prepaids: annual tools/insurance recorded over time instead of all at once.

6. Accrued expenses: costs incurred but not yet paid (like contractor work).

7. Owner draws vs. payroll: how you pay yourself affects reporting and compliance.

8. Intercompany transfers: moving inventory between entities and how to record it.

9. KPI tie-in: connecting accounting categories to CAC, LTV, and contribution margin.

10. Audit readiness: clean support docs, consistent categorization, and reconciled accounts.

1. Payment gateways: how money moves from customer to processor to your bank.

2. Authorization vs. capture: approved vs. actually collected funds.

3. Payment method mix: cards, wallets, BNPL—each can have different fees.

4. Currency conversion: FX fees and how multi-currency sales settle.

5. Taxes/fees at checkout: separating sales tax from revenue in your records.

6. Discount allocation: splitting discounts across items for accurate margins.

7. Partial refunds: tracking item-level refunds and related fees.

8. Tips/donations: special handling for pass-through funds vs. income.

9. Fraud tools: cost of protection vs. impact on approval rates.

10. Checkout reporting: aligning store orders with processor settlements.

Q: Why don’t my payouts match my store “sales”?
A: Fees, refunds, holds, chargebacks, and payout timing create gaps.

Q: Is sales tax revenue?
A: No—usually it’s a liability you collect and later remit.

Q: What reports matter most monthly?
A: P&L, balance sheet, cash flow view, and channel margin breakdown.

Q: How do I track inventory accurately?
A: Use consistent SKU records and update costs with landed cost changes.

Q: Cash vs. accrual—what’s better?
A: Accrual is often clearer for inventory businesses; cash is simpler—choose what fits.

Q: What’s the biggest bookkeeping mistake?
A: Mixing personal and business expenses—separate accounts early.

Q: How often should I reconcile?
A: Monthly at minimum; high-volume sellers often do it weekly.

Q: Do I need an accountant or bookkeeper?
A: Many sellers use a bookkeeper for monthly closes and an accountant for taxes/strategy.

Q: How should I categorize ad spend?
A: Keep it separate by platform/channel so you can judge performance clearly.

Q: What should I save for tax time?
A: Bank/processor statements, invoices, receipts, payroll docs, and sales tax filings.

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