Why Is Accounting Important For E-commerce?

Why Is Accounting Important For E-commerce?

Why is accounting so important for eCommerce, you ask? It’s simple – if you don’t keep a close eye on your finances, your business might end up more confused than a chameleon in a bag of Skittles. And trust me, you don’t want to be the eCommerce store scratching their heads come tax season!

E-commerce has taken the world by storm, and with good reason! It’s revolutionized how we buy and sell goods and services, giving businesses and consumers alike a world of opportunities at their fingertips. 

But let’s face it – success in any business doesn’t come easy. It takes a solid financial foundation to keep things running smoothly, and that’s where accounting comes in. Accounting is a crucial aspect of the foundation that can make or break an e-commerce business. 

So in this blog post, we’ll dive into why accounting is so important for e-commerce businesses and how it can help you reach the pinnacle of success.

3 Reasons Why You Need An E-commerce Accountant?

One of the main reasons why e-commerce businesses fail is due to poor cash flow management, including inadequate accounting practices. This underscores the critical role proper accounting plays in the success and longevity of an e-commerce business.

Inventory Management 

Regarding accounting for e-commerce businesses, inventory management is just one piece of the puzzle. 

With high transaction volumes, it’s essential to keep accurate inventory records to understand the cost of goods sold (COGS) and set product prices. This means selecting the right inventory valuation method, whether it be FIFO, LIFO, or Average Cost, based on your business’s unique needs and goals. 

Inventory can be a beast of its own so it is important to work with someone who knows, can anticipate the challenges and nuances that are associated with your business. Read more about ways for effective inventory management here. 

Sales Tax

Sales tax and income tax regulations can be complex, and it’s important to understand and comply with them to avoid penalties and fines. 

Additionally, if you plan to sell products or services internationally, it’s important to understand the international tax regulations that apply. Understanding of tax laws and regulations and keeping accurate records can help ensure that your business complies and avoid any legal issues.

Fraud Prevention

Credit card fraud, identity theft, and other types of fraud can occur in e-commerce transactions. 

To protect your business, it’s important to have internal controls in place, such as requiring signatures for large purchases and monitoring transactions for unusual activity. 

Additionally, accounting software with built-in fraud detection capabilities can help you catch and prevent fraud.

Which Accounting Method is Best For E-commerce? 

To manage your finances efficiently, you’ll need a reliable system that helps you stay compliant with basic accounting practices. There are two bookkeeping methods for e-commerce businesses: cash and accrual basis accounting. 

With cash accounting, you record income and expenses when money changes hands, which makes it easier to track transactions. On the other hand, accrual basis accounting records transactions when you receive orders or when a transaction occurs, even if you haven’t received payment yet. This method is used when businesses operate on credit or when they settle debts after a transaction occurs. 

Generally, an accrual-based accounting method is best for e-commerce businesses because it gives greater insight into the viability and financial health of one’s business.

 It looks beyond what you have in your bank account right now like the cash-based method which simply looks at your bank account balance in the here and now. 

With accrual accounting, you can see a clearer picture of your income and expenses as they happen, giving you the insight you need to make strategic financial decisions for the future.

Future of E-commerce & Accounting

As e-commerce grows, businesses are turning to automation and artificial intelligence (AI) to streamline their operations. For example, AI-powered accounting software can automate repetitive tasks, such as bookkeeping and invoicing, and free up time for more strategic activities. This technology can also help businesses identify trends and patterns in their financial data, providing valuable insights that can inform business decisions.

Data Analytics

One of the most significant changes is the using data analytics to learn how information is held, used, and managed.  Accountants are increasingly beginning to utlize data analytics to help businesses gain insights into their operations, make informed decisions, and stay ahead of the competition. This guide by reveals how data analytics can transform business.


The impact of financial technology (fintech) is also shaping the future of accounting and e-commerce. Fintech refers to the use of technology to improve financial services, such as payments, investments, and lending. Fintech companies are disrupting traditional banking and financial services, and they are changing how businesses and consumers access and use financial services. For example, payment platforms like PayPal and Square have made it easier for businesses to accept payments online and manage their finances.

Blockchain Technology

Another emerging trend is the use of blockchain technology to improve accounting processes. Blockchain is a decentralized ledger that records transactions securely and transparently. By using blockchain, businesses can improve the accuracy and reliability of their financial records, and reduce the risk of fraud and error.

Streamline Your E-commerce Accounting by Tekglide

Running an e-commerce business can be overwhelming, but Tekglide is here to help! Our expert team specializes in creating custom e-commerce websites optimized for QuickBooks integration. By integrating QuickBooks into your e-commerce website, you can streamline your accounting processes, eliminate manual data entry, and reduce the risk of errors. 

At Tekglide, we understand that every business is unique, so we offer custom e-commerce store development services tailored to your specific needs. Our team of experts can help you create a customized website optimized for QuickBooks integration, with features such as custom checkout processes, inventory tracking, and automated invoicing and payment processing. 

With this integration, you can easily track sales, inventory, and expenses in real-time to make informed decisions about your business. So let’s work together to take your e-commerce business to the next level!

Key Takeaways 

Accounting is crucial for e-commerce businesses as it helps accurately tracking financial transactions, manage inventory and understand business profitability. It also enables businesses to comply with tax regulations and make informed decisions based on financial data.

The future of accounting and e-commerce is exciting and full of potential. By embracing new technologies, such as data analytics, fintech, blockchain, and AI, businesses can stay competitive in the marketplace and meet the demands of modern business. As e-commerce continues to grow, the role of accounting will become increasingly important, and businesses that invest in their accounting function will be in a better position for success in the future. Tekglide can help take your e-commerce business to the next level by streamlining your business’s e-commerce accounting into your e-commerce website.