E-Commerce Accounting and Taxes

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E-Commerce Accounting and Taxes

Accounting and Taxes for eCommerce Business

Whether you are just starting your e-Commerce business or an experienced entrepreneur selling on Amazon, Shopify, or a similar platform, having an e-Commerce accounting partner to help you keep track of all the profits from your company is crucial to your continued financial success.

Interactive Accountants believes that hiring a professional e-Commerce CPA who understands all the e-Commerce accounting procedures and e-Commerce tax laws associated with your business is one simple way to make sure all your financial records are in order.

While you are the expert on the ins and outs of your e-Commerce company and industry, nobody expects you to be a financial expert on top of running your business. It is a significant benefit to small business owners to work with a professional who understands the processes for keeping and filing financial records related to your online business.

Accounting for e-Commerce

When selling your products on a marketplace facilitator (MPF) like Amazon or Etsy, these platforms have multiple levels of memberships and a variety of services that they offer to fulfill orders placed at your shop. Like all good things– these valuable services come at a cost.

Looking at Fulfilled by Amazon (FBA), a platform for sellers to reach clients through Amazon’s third-party services, FBA charges monthly professional seller fees, referral fees, fulfillment fees, as well as other expenses related to your business. Amazon and other MPFs deduct these fees automatically before releasing your earnings to you, the seller. Despite seeing those costs on a monthly basis through your MPF platform, when they are integrated into your financial e-commerce accounting statements you are able to get a complete picture of what your business pays in outsourcing fees.

Why e-Commerce Accounting is Unique

The differences in running a face-to-face small business compared to a virtual small business are nuanced when it comes to traditional vs e-Commerce accounting needs. Sometimes e-Commerce business owners face difficulties navigating these nuances. That’s where a licensed e-commerce accounting and tax pro can help.

Some areas we help with that are different than other, businesses that are not e-Commerce are:

  • Transactional data: most businesses have records of their transactions through bank accounts or credit, but with e-Commerce businesses, transactional data is stored on the site where you sell.
  • Inventory and costs of goods sold (COGS): inventory-based businesses need to know all there is about inventory management and accurate calculation of COGS.
  • Sales tax: sales tax for online businesses is complicated because you are often selling across state lines or even to other countries– all places where sales tax amounts might differ.

Why You Should Hire an E-Commerce Accountant

All of those unique circumstances for e-Commerce small business owners can be easily taken care of when you hire a professional e-Commerce accounting firm to manage your e-Commerce books and financial reports.

Interactive Accountants sets you up with cloud-based accounting software like QuickBooks or Xero and establishes connections to all your MPFs or Shopify sites. This way, all your sales data is integrated within the accounting for e-Commerce software, where you can track all of your transactional data, inventory, and other financial information related to your small business.

Our firm performs regular updates to your books, and reconciles your accounts every month, ensuring accuracy and providing you with the financial data you need to make important decisions and maximize profits.

Taxes for e-Commerce

As an e-Commerce business, you are required by the federal government to file corporate taxes. Any e-Commerce business owner who owes more than $1,000 in taxes by year's end is expected to make payments to the IRS quarterly.

Paying your e-Commerce taxes on the right payment schedule as set forth by the IRS is something that should be an afterthought when considering an accounting firm to help you with your e-Commerce business. It is important to the future success of your company that your e-Commerce taxes are properly filed. Unfortunately, many accounting firms are not licensed CPA firms, meaning they do not have the licensing and skillset to handle your corporate e-Commerce taxes.

At Interactive Accountants, our licensed e-Commerce tax CPAs have been preparing corporate tax returns for over 25 years. We handle all federal e-Commerce taxes and state e-Commerce filings, delivering them not only on time but error-free. Our job as your e-Commerce accounting partner is to always guide you and your company to be in compliance with all federal and state tax laws.

What is Economic Nexus for e-Commerce Sales Tax?

As an e-Commerce business, many of the products you sell online are subject to sales tax and if one thing is for certain, it's that sales tax law is not simple. In June 2018, things become even more complicated for e-Commerce taxes. At that time, South Dakota vs. Wayfair established the concept of economic nexus. The Supreme Court case passed 5-4 in favor of states charging a sales tax on purchases from out-of-state sellers.

There are new tools that e-Commerce business owners can use, two being Avalara and TaxJar. These tools help you in maintaining compliance with your sales tax obligations, while also requiring you to make the final determination about an item you are selling being subject to tax in the states you have nexus with.

Contact Interactive Accountants for E-Commerce Accounting and Taxes

At Interactive Accountants, our name says it all– we value interactions with our clients to make informed decisions about your business. Your personal team of dedicated accounting professionals will focus on keeping your financial records up to date so that you can handle the other day-to-day aspects of your e-Commerce business.

Call us at or schedule a free consultation with our owner Matthew Shiebler, CPA. Matthew is a small business owner himself and has been practicing accounting for over 25 years. With the most up-to-date software and training in e-Commerce accounting and e-Commerce taxes, we are the perfect choice to help your business thrive.