TL;DR: E-commerce accounting differs fundamentally due to multi-platform sales, complex fee structures (Amazon deducts 8-15% before paying you), and multi-country VAT obligations. Amazon FBA sellers must reconcile full settlement reports using automation tools like A2X (£19-£199/month) or Link My Books (£10-£50/month) to save 10-20 hours monthly. Shopify sellers face payment gateway fragmentation and must track COGS accurately using FIFO or weighted average inventory valuation. Multi-channel VAT compliance requires navigating UK VAT (20%), EU VAT via OSS, and potentially US sales tax. Outsource when revenue exceeds £100K annually.
Introduction
E-commerce accounting differs fundamentally from traditional retail bookkeeping. When you sell through Amazon FBA, Shopify, eBay, and Etsy simultaneously, your financial data fragments across multiple platforms, payment processors, and currencies. Amazon deducts fees before paying you. Shopify splits revenue between Stripe, PayPal, and bank transfers. Meanwhile, HMRC expects accurate VAT returns, inventory valuations, and profit calculations, regardless of how many sales channels you operate.
The search term “e-commerce accounting” generates 800 monthly searches in the UK, with “accounting for e-commerce businesses” and “e-commerce accounting services” adding another 400+ searches. Yet most content addresses general bookkeeping, not the platform-specific challenges Amazon and Shopify sellers face daily: reconciling Amazon Seller Central settlement reports, tracking Shopify cost of goods sold (COGS) across fluctuating inventory, or managing VAT across multiple EU marketplaces.
This e-commerce accounting guide provides a platform-specific playbook for Amazon FBA sellers and Shopify store owners. Whether you process 100 orders monthly or 10,000, you will learn how to reconcile Amazon settlements, track Shopify inventory, manage multi-channel VAT, split payment gateway transactions, and value inventory correctly. The guide includes software recommendations, common mistake warnings, and outsourcing decision frameworks.
Acenteus CCA specializes in e-commerce accounting services for Amazon FBA sellers, Shopify merchants, and multi-channel retailers. Our accounting for e-commerce businesses combines automated reconciliation tools with expert oversight, delivering accurate financial reports whilst you focus on growth. Contact us for a complimentary e-commerce accounting assessment.
What is e-commerce Accounting? (And Why It Is Different)
When does the tax year end in the UK? The tax year runs from 6 April to 5 April the following year. The current 2025-26 tax year ends on 5 April 2026 at 11:59 PM. Unlike calendar year countries, the UK tax year end date remains fixed on 5 April regardless of weekends or bank holidays.
Why does the tax year end on 5th April? The quirky date traces back to 1752 when Britain adopted the Gregorian calendar. The old tax year ended on Lady Day (25 March), but the calendar change added 11 days. The Treasury refused to lose revenue, so moved the tax year end to 5 April (25 March + 11 days). A further day was added in 1800, creating the modern 6 April to 5 April tax year.
Use-It-or-Lose-It Tax Allowances
E-commerce accounting is the process of recording, reconciling, and reporting financial transactions for online retail businesses. Unlike traditional brick-and-mortar accounting, accounting for e-commerce sellers involves:
- Multi-platform revenue: Sales through Amazon, Shopify, eBay, Etsy, your own website
- Complex fee structures: Amazon FBA fees, Shopify transaction fees, PayPal fees, Stripe fees
- Payment gateway fragmentation: Money arrives via multiple processors (Stripe, PayPal, Klarna, Amazon Pay)
- Inventory across locations: FBA warehouses, 3PL fulfillment centers, your own storage
- International VAT compliance: Selling to EU customers triggers VAT obligations in multiple countries
- Currency fluctuations: If you sell internationally, exchange rates affect profitability
- Returns and refunds: High return rates in e-commerce impact revenue recognition
Traditional vs e-commerce Accounting
Aspect | Traditional Retail | e-commerce |
Sales recording | Daily till totals, single location | Multiple platforms, hourly updates |
Payment processing | Cash, card terminal (same day) | 5-14-day payment delays (Amazon, PayPal) |
Fees | Card processing (~1.5%) | Platform fees (8-15%), fulfillment fees, storage fees |
Inventory | Single warehouse/shop | Multi-location (FBA, 3PL, own warehouse) |
VAT | Single jurisdiction | Multi-country (UK, EU, US sales tax) |
Returns | 5-10% return rate | 15-30% return rate (fashion up to 50%) |
The complexity of e-commerce business accounting means generic accounting software (designed for service businesses or traditional retail) fails to handle platform-specific data. Most e-commerce sellers need specialized e-commerce accounting software or e-commerce accountants familiar with Amazon Seller Central and Shopify reporting.
Amazon FBA Accounting: Reconciling Seller Central
Amazon FBA (Fulfillment by Amazon) sellers face unique accounting challenges. Amazon handles storage, picking, packing, shipping, and customer service, but deducts fees before paying you. Your Amazon Seller Central account shows hundreds of transactions daily: sales, refunds, FBA fees, storage fees, advertising costs, and chargebacks. Reconciling these transactions is the foundation of accurate e-commerce accounting amazon sellers require.
Understanding Amazon Settlement Reports
Amazon pays sellers every 14 days via settlement reports. A settlement report is NOT your sales revenue. It is the net amount Amazon transfers to your bank after deducting:
- FBA fulfillment fees
- FBA storage fees (monthly and long-term)
- Referral fees (8-15% of sale price)
- Advertising costs (Sponsored Products, Sponsored Brands)
- Refunds and reimbursements
- Chargebacks
Example: Your settlement report shows £10,000 transferred to your bank. However, your actual sales were £18,000. The difference (£8,000) represents Amazon fees and refunds deducted before payment.
If you record only the £10,000 bank deposit in your accounting system, you:
- Understated revenue (missing £8,000 in actual sales)
- Fail to record expenses (missing £8,000 in Amazon fees)
- Cannot calculate true profitability
How to Reconcile Amazon Seller Central
Step 1: Download settlement reports from Amazon Seller Central (Reports > Payments > Settlement Reports).
Step 2: Break down each settlement into:
- Gross sales revenue (total orders before fees)
- Amazon fees (fulfillment, referral, storage, advertising)
- Refunds and returns
- Reimbursements (damaged inventory, lost items)
- Net settlement (amount deposited to your bank)
Step 3: Record gross revenue in your accounting system (not just net deposits). This ensures your profit and loss statement shows true sales and expenses separately.
Step 4: Match net settlement amounts to bank deposits. Discrepancies indicate missing transactions or Amazon errors (common with reimbursements).
e-commerce Accounting Software for Amazon FBA
Manual reconciliation of Amazon settlements is impractical for sellers processing 1,000+ orders monthly. Best e-commerce accounting software for Amazon FBA includes:
A2X (£19-£199/month)
- Automatically reads Amazon settlement reports
- Posts summarized journal entries to Xero, QuickBooks, or Sage
- Splits revenue, fees, refunds, and taxes
- Handles multi-marketplace (Amazon UK, US, EU)
- Most popular e-commerce accounting integration for Amazon sellers
Link My Books (£10-£50/month)
- Similar to A2X but lower cost
- Integrates with Xero and QuickBooks
- Handles Amazon, eBay, Shopify
- Good for smaller sellers (under £500K revenue)
Webgility (£99-£299/month)
- Multi-channel reconciliation (Amazon, Shopify, eBay, Walmart)
- Real-time inventory sync
- Suitable for large sellers with complex operations
Without e-commerce accounting software, Amazon sellers spend 10-20 hours monthly reconciling settlements manually. A2X or Link My Books reduces this to 1-2 hours monthly, and e-commerce accountants familiar with these tools can handle reconciliation entirely.
Common Amazon FBA Accounting Mistakes
Recording net deposits only: Many sellers record only bank deposits (net settlements), missing gross revenue and expense detail. This understates turnover, making your business appear smaller (problems for loan applications, business valuations, or HMRC inquiries).
Ignoring FBA inventory in transit: When you ship inventory to Amazon FBA, it remains your asset until sold. Many sellers expense inventory when shipped to Amazon, understating asset value and distorting profitability.
Missing reimbursements: Amazon reimburses sellers for lost or damaged inventory. Reimbursements appear in settlement reports but are often missed in manual reconciliations, understating income.
Not accruing for long-term storage fees: Amazon charges long-term storage fees (inventory held 365+ days) on the 15th of the month. Many sellers do not accrue for these fees, leading to surprise expense spikes.
Shopify Accounting: Tracking COGS and Inventory
Shopify accounting differs from Amazon FBA accounting. Shopify does not handle fulfillment (unless using Shopify Fulfillment Network), so you control inventory, shipping, and customer service. However, accounting for e-commerce business on Shopify involves unique challenges: payment gateway fragmentation, Shopify fees, and accurate COGS tracking.
Shopify Payment Gateway Reconciliation
Shopify stores typically accept payments via multiple gateways:
- Shopify Payments (Stripe backend)
- PayPal
- Klarna
- Afterpay
- Manual payment methods (bank transfer, cash on delivery)
Each gateway has different payout schedules:
- Shopify Payments: Daily or weekly payouts (configurable)
- PayPal: Instant or 1-3 day holds
- Klarna: Bi-weekly settlements
Recording revenue requires matching Shopify order data to gateway payouts. If a customer orders on January 5 but Shopify Payments pays you on January 8, when do you record revenue? Accrual accounting says January 5 (when the sale occurred). Cash accounting says January 8 (when you received payment). Most e-commerce businesses use accrual accounting for accurate profitability tracking.
Shopify Fee Structures
Shopify charges multiple fees depending on your plan:
- Monthly subscription: £25-£2,000/month (Basic, Shopify, Advanced, Plus)
- Transaction fees: 0-2% per order (waived if using Shopify Payments)
- Shopify Payments processing fees: 1.5-2.4% + 20p per transaction
- Shopify Shipping discounts: Negotiated rates with carriers
- Third-party app subscriptions: Varies (Klaviyo, ReCharge, Yotpo)
These fees reduce net revenue but often appear as separate transactions. Proper e-commerce accounting services for Shopify stores must capture all fee categories to calculate true profit margins.
Tracking Shopify Cost of Goods Sold (COGS)
COGS represents the direct cost of products you sell: product purchase price, inbound shipping, customs duties, and packaging. Accurate COGS tracking is essential for profitability analysis. However, many Shopify sellers struggle with COGS because:
- Shopify does not automatically track landed costs (product cost + shipping + duties)
- Product costs fluctuate (currency changes, supplier price increases, bulk discounts)
- Inventory may be sourced from multiple suppliers
- Inventory valuation methods (FIFO, LIFO, weighted average) affect COGS and profit
Shopify Inventory Valuation Methods
Shopify stores must choose an inventory valuation method:
FIFO (First In, First Out): Assumes the oldest inventory sells first. Most common for e-commerce (matches the physical flow of goods). When product costs rise, FIFO shows higher profits.
Weighted Average: Averages the cost of all inventory units. Simpler but less accurate for products with frequent cost changes.
Specific Identification: Tracks the cost of each item (jewelry, high-value electronics). Impractical for high-volume sellers.
Example: You sell t-shirts. In January, you bought 100 units at £5 each. In February, you bought 100 units at £7 each. In March, you sold 150 units. What is your COGS?
FIFO: 100 units at £5 + 50 units at £7 = £500 + £350 = £850 COGS
Weighted Average: (100×£5 + 100×£7) / 200 = £6/unit. 150 units × £6 = £900 COGS
FIFO shows lower COGS (£850) and higher profit. The weighted average shows higher COGS (£900) and lower profit. HMRC accepts both methods but requires consistency year-over-year.
Best Accounting Software for e-commerce (Shopify)
Shopify sellers need accounting software for e-commerce that integrates with Shopify, syncs orders automatically, and tracks inventory accurately.
Xero (£12-£37.50/month)
- Native Shopify integration (syncs orders, fees, payouts)
- Multi-currency support
- Inventory tracking with COGS
- Popular with UK e-commerce businesses
- Best e-commerce accounting software for small to mid-size Shopify stores
QuickBooks Online (£10-£45/month)
- Shopify integration via third-party apps (A2X, Webgility)
- Strong inventory features
- Less intuitive than Xero for e-commerce sellers
- Better for US-based sellers (Xero is stronger in the UK/AU)
FreeAgent (£10-£24/month)
- UK-focused accounting software
- Shopify integration available
- Simpler interface, but fewer advanced features
- Good for solo Shopify sellers under £100K revenue
Accounting Software for e-commerce Website (Custom Platforms)
If you run a custom e-commerce platform (WooCommerce, Magento, BigCommerce), integration options differ. WooCommerce integrates with Xero and QuickBooks via plugins. Magento requires middleware (Webgility, OneSaas). BigCommerce has native Xero and QuickBooks integrations.
For e-commerce accounting software free options, Wave Accounting offers free software but lacks robust e-commerce integrations. Most sellers outgrow free tools once revenue exceeds £50K annually.
Multi-Channel VAT Compliance for e-commerce Sellers
e-commerce VAT is complex. If you sell to UK customers, you charge 20% UK VAT. If you sell to EU customers, you may charge UK VAT, EU VAT, or no VAT depending on:
- Your annual sales to the EU (distance selling thresholds)
- Whether you use Amazon’s EU fulfillment network
- Whether you register for the OSS (One Stop Shop) VAT scheme
- Customer location (business vs consumer)
UK VAT for e-commerce Sellers
If you are UK VAT-registered and sell to UK customers, you charge 20% VAT. Simple. However:
- Some products are zero-rated (children’s clothing, books)
- Some products are reduced-rate (energy-saving products)
- Digital products have different VAT rules
Amazon and Shopify can auto-calculate UK VAT if configured correctly. However, sellers must ensure VAT settings match product categories. Misconfigured VAT rates trigger HMRC penalties.
EU VAT After Brexit
Brexit eliminated the EU distance selling threshold for UK sellers. Now, UK sellers face two EU VAT options:
- Register for OSS (One Stop Shop): Allows UK sellers to charge and report EU VAT via a single HMRC portal. Covers sales under €150 to EU consumers. Simplifies compliance but requires accurate VAT tracking per EU country.
- Register for VAT in each EU country: Required if you store inventory in EU FBA warehouses (Germany, France, Poland, etc.). Each country has different VAT rates, filing frequencies, and language requirements. Expensive and complex.
Most UK e-commerce sellers use OSS for direct-to-consumer sales under €150. If you sell above €150 per order or use EU FBA warehouses, you likely need local VAT registrations.
Amazon FBA Pan-EU VAT Obligations
Amazon’s Pan-EU program stores your inventory across multiple EU countries (Germany, France, Italy, Spain, Poland, Czech Republic). This improves delivery speed but triggers VAT obligations in each country where inventory is stored. Even if you never intended to send inventory to Poland, Amazon may move your stock there, creating a Polish VAT obligation.
Solution: Either avoid Pan-EU (limiting your inventory to UK FBA only) or engage e-commerce accounting services with EU VAT expertise. Many UK sellers avoid Pan-EU due to compliance costs.
US Sales Tax for UK e-commerce Sellers
If you sell to US customers (via Amazon US, Shopify), you may owe US sales tax. Unlike UK VAT (federal tax), US sales tax is state-level. Each state has different rates, rules, and thresholds (economic nexus).
UK sellers typically trigger US sales tax obligations if:
- You store inventory in a US FBA warehouse (physical nexus)
- Your sales to a US state exceed $100,000 annually (economic nexus)
US sales tax compliance is beyond most UK accountants’ expertise. Sellers with significant US sales engage specialist e-commerce accounting firms familiar with US sales tax.
Payment Gateway Reconciliation: Shopify, PayPal, Stripe
e-commerce sellers receive payments through multiple gateways. Reconciling these payments to your bank account is critical for accurate e-commerce accounting procedures.
Shopify Payments (Stripe)
Shopify Payments is powered by Stripe. Payouts occur daily or weekly (configurable). However, Shopify Payments payout amounts do NOT equal your Shopify sales because:
- Stripe deducts processing fees (1.5-2.4% + 20p per transaction)
- Shopify deducts subscription fees from first payout of the month
- Refunds reduce payout amounts
- Chargebacks deduct from payouts
To reconcile Shopify Payments:
- Download payout reports from the Shopify Payments dashboard
- Match payout amounts to bank deposits
- Break down payouts into gross sales, fees, refunds, and chargebacks
- Record gross sales as revenue, fees as expenses
e-commerce accounting integration tools (A2X, Link My Books) automate this process, syncing Shopify Payments data to Xero or QuickBooks.
PayPal
Many Shopify sellers also accept PayPal. PayPal fees (2.9% + 30p in the UK) are deducted from each transaction. Payouts can be instant (to your bank card) or delayed (1-3 days to your bank account).
Common PayPal reconciliation mistake: Recording only PayPal transfers to your bank, missing gross sales and fees. Correct approach: Record gross sales when orders occur, record PayPal fees as expenses, and reconcile net PayPal balance to bank deposits.
Klarna, Afterpay, Clearpay
Buy-now-pay-later (BNPL) services charge merchant fees (3-5%) and pay sellers bi-weekly or monthly. Customers pay Klarna, not you. Klarna pays you (minus fees). Your accounting must record:
- Gross sales to customer
- Klarna fees as expenses
- Net Klarna settlements as bank deposits
Without automated e-commerce accounting solutions, reconciling Klarna settlements is tedious and error-prone.
Inventory Valuation for e-commerce Businesses
Inventory valuation determines the cost of unsold stock on your balance sheet. UK accounting standards (FRS 102) require inventory to be valued at the lower of cost or net realizable value. For e-commerce sellers, inventory valuation affects:
- Balance sheet accuracy (inventory is often your largest asset)
- Profit and loss (COGS = opening inventory + purchases – closing inventory)
- Tax liability (higher inventory value = lower COGS = higher profit = more tax)
Inventory Valuation Methods
FIFO (First In, First Out): Most common. Assumes oldest inventory sells first. Matches physical flow for most e-commerce products. In rising-price environments, FIFO shows higher profit (oldest, cheaper inventory expensed first).
Weighted Average: Averages cost of all inventory. Simpler but less responsive to price fluctuations. Suitable for sellers with stable product costs.
Standard Cost: Assigns a fixed cost per unit, updated periodically. Used by manufacturers but rare in e-commerce retail.
Example of Inventory Valuation Impact
You start the year with £10,000 inventory (100 units at £100 each). During the year, you purchase £50,000 more inventory (500 units at £100 each). At year-end, you have 150 units remaining unsold.
FIFO closing inventory: Most recent purchases remain. 150 units × £100 = £15,000
COGS = £10,000 + £50,000 – £15,000 = £45,000
Weighted average closing inventory: (£10,000 + £50,000) / 600 units = £100/unit. 150 units × £100 = £15,000 (same in this example because price did not change)
If product costs fluctuate, FIFO and weighted average produce different COGS, affecting taxable profit. HMRC requires consistency year-over-year unless you can justify a method change.
Tracking Inventory Across Multiple Locations
Many e-commerce sellers store inventory in multiple locations:
- Amazon FBA warehouses (UK, EU, US)
- 3PL fulfillment centers
- Your own warehouse or home
- In-transit inventory (shipped to FBA but not yet received)
Accounting software for e-commerce sellers must track inventory by location. If you ship 500 units to Amazon FBA, your accounting should reflect:
- 500 units in FBA (asset)
- 500 units removed from your warehouse (asset transfer, not expense)
When FBA sells a unit, COGS is recorded. If you expense inventory when shipped to FBA, you understate assets and overstate expenses, distorting profitability.
Common e-commerce Accounting Mistakes
Mistake 1: Recording Net Deposits Instead of Gross Sales
Many e-commerce sellers record only bank deposits (net of fees and refunds). This understates revenue and expenses, making financial reports inaccurate. Always record gross sales, then separately record fees and refunds.
Mistake 2: Mixing Personal and Business Expenses
e-commerce sellers (especially sole traders) often use personal accounts for business purchases. Mixing personal and business transactions makes reconciliation nearly impossible and triggers HMRC scrutiny. Open a separate business bank account (Tide, Starling, Revolut Business) and use it exclusively for business.
Mistake 3: Ignoring Inventory Valuation
Many sellers do not track inventory value, expensing purchases when made rather than when sold. This violates UK accounting standards and distorts profitability. Accurate inventory valuation is mandatory for businesses above £85K turnover (VAT threshold).
Mistake 4: Not Reconciling Payment Gateways
Sellers often assume payment gateway deposits match sales. However, fees, refunds, and chargebacks cause discrepancies. Monthly reconciliation of Stripe, PayPal, and other gateways is essential.
Mistake 5: Missing Multi-Currency Gains and Losses
If you sell internationally, currency fluctuations affect profitability. For example, you sell $1,000 worth of products when £1 = $1.30 (£769 revenue). When Amazon pays you 14 days later, £1 = $1.35 (£741 received). You have a £28 foreign exchange loss. Accounting software for an e-commerce business must track these currency movements.
Mistake 6: Failing to Separate COGS from Operating Expenses
COGS includes direct product costs (purchase price, shipping, customs duties). Operating expenses include marketing, software subscriptions, salaries, rent. Many sellers lump all expenses together, making gross margin calculations impossible. Separate COGS from operating expenses for meaningful profitability analysis.
Best e-commerce Accounting Software: Comparison
Choosing the best accounting software for e-commerce depends on your platforms, sales volume, and complexity.
| Software | Price/Month | Best For | Amazon Integration | Shopify Integration | Multi-Currency | Inventory |
|---|---|---|---|---|---|---|
| Xero + A2X | £30-£50 | Mid-size sellers (£100K-£1M) | Excellent (via A2X) | Native | Yes | Yes |
| QuickBooks + Link My Books | £20-£60 | US-focused sellers | Excellent | Via app | Yes | Yes |
| FreeAgent | £10-£24 | Solo sellers under £100K | Limited | Limited | No | Basic |
| Sage 50 | £30-£60 | Large sellers (£1M+) | Via third-party | Via third-party | Yes | Advanced |
| Wave (free) | Free | Micro-sellers under £20K | No | Limited | No | No |
Best e-commerce accounting software for most UK sellers: Xero + A2X. This combination handles Amazon, Shopify, eBay, multi-currency, and inventory tracking. For sellers under £50K revenue, FreeAgent offers sufficient features at lower cost.
e-commerce accounting software for small business (under £100K revenue): FreeAgent or Xero Starter plan. Both offer core features without overwhelming complexity.
Best accounting software for e-commerce uk sellers specifically: Xero dominates the UK e-commerce market due to strong integrations, MTD VAT compliance, and local support.
When to Outsource e-commerce Accounting
Many e-commerce sellers start with DIY accounting but reach a point where outsourcing makes financial sense. Indicators you should consider e-commerce accounting services:
Revenue exceeds £100K annually: At this level, accounting complexity (VAT, payroll, year-end accounts) justifies professional support. DIY accounting consumes 10-15 hours monthly, time better spent on marketing and product development.
Multi-channel sales: Selling on Amazon, Shopify, eBay, and Etsy simultaneously multiplies reconciliation work. e-commerce accountants use automated tools (A2X, Link My Books) to handle multi-channel reconciliation efficiently.
International sales: EU VAT, US sales tax, and multi-currency accounting require specialist knowledge. Most DIY sellers lack the expertise to handle international compliance correctly.
Inventory complexity: If you hold £50K+ inventory across multiple locations (FBA, 3PL, own warehouse), accurate inventory tracking becomes critical. e-commerce accounting firms ensure inventory valuation complies with UK accounting standards.
Growth stage: If you are raising investment, applying for loans, or considering exit (selling your business), professional accounts are mandatory. Investors and buyers require audited or professionally prepared financial statements.
Cost of outsourcing: e-commerce accounting services typically cost £150-£500 monthly for businesses under £500K revenue. For sellers spending 10-15 hours monthly on bookkeeping (£15-£30/hour opportunity cost = £150-£450 monthly), outsourcing breaks even whilst providing professional expertise.
How Acenteus CCA Supports e-commerce Sellers
Acenteus CCA specializes in accounting for e-commerce businesses, particularly Amazon FBA sellers and Shopify stores. Our e-commerce accounting services combine automated reconciliation technology with expert human oversight, ensuring accurate financial reports whilst you focus on scaling your business.
For Amazon FBA Sellers
Amazon Seller Central reconciliation: We connect directly to your Seller Central account via A2X or Link My Books, automatically importing settlement reports. Our team reconciles:
- Gross sales revenue across all marketplaces (UK, EU, US)
- Amazon fees (FBA fulfillment, storage, referral, advertising)
- Refunds and reimbursements
- FBA inventory in transit and on-hand
- Multi-currency transactions and FX gains/losses
Services included:
- Monthly reconciliation of all Amazon settlements
- Accurate COGS tracking and inventory valuation
- VAT compliance (UK, EU OSS, or local registrations)
- Management reports showing true profitability (after all Amazon fees)
- Year-end accounts and corporation tax returns
Pricing: From £200-£600/month depending on sales volume and marketplace complexity.
For Shopify Sellers
Shopify accounting integration: We sync your Shopify store to Xero or QuickBooks, automating:
- Order data import (sales, refunds, discounts)
- Payment gateway reconciliation (Shopify Payments, PayPal, Klarna)
- Shopify fee allocation
- Inventory tracking with COGS
- Multi-currency handling
Services included:
- Monthly reconciliation of all sales channels
- Accurate COGS and gross margin tracking
- Inventory valuation (FIFO or weighted average)
- VAT returns and compliance
- Management reports and KPI dashboards
Pricing: From £150-£500/month depending on order volume and complexity.
For Multi-Channel Sellers (Amazon + Shopify + eBay + Etsy)
Multi-platform reconciliation: We handle sellers operating across multiple channels, consolidating financial data into unified reports. Our e-commerce accounting solutions integrate:
- Amazon (UK, EU, US marketplaces)
- Shopify or other hosted platforms
- eBay (UK, EU, US)
- Etsy
- Your own website (WooCommerce, Magento, etc.)
Services included:
- Consolidated profit and loss across all channels
- Channel-level profitability analysis (which platform is most profitable?)
- Unified inventory tracking
- Multi-country VAT compliance
- Cashflow forecasting
Pricing: From £400-£800/month depending on channels and complexity.
Software-Agnostic Support
We work with all major e-commerce accounting software:
- Xero (most common for UK e-commerce )
- QuickBooks Online
- Sage 50 and Sage Intacct
- FreeAgent
- Custom solutions for enterprise sellers
We also integrate with e-commerce accounting integration tools:
- A2X (Amazon, Shopify, eBay reconciliation)
- Link My Books (multi-channel reconciliation)
- Webgility (enterprise multi-channel solution)
- Veeqo (inventory management)
If you already use specific software, we adapt to your stack. If you are starting fresh, we recommend the best accounting software for e-commerce based on your business model and growth stage.
Hybrid UK-Supervised Model
Our e-commerce accounting services combine:
- UK-qualified oversight: Every month-end close is reviewed by UK-chartered accountants or ACCA-qualified professionals
- Offshore efficiency: Routine data entry and reconciliation handled by our offshore team (50-60% cost reduction vs full UK-based services)
- Technology leverage: We use A2X, Link My Books, and custom automation to minimize manual work
This hybrid model delivers Big Four quality at mid-tier pricing, typically 40-60% less than equivalent UK-only e-commerce accounting firms.
Free e-commerce Accounting Assessment
We offer complimentary accounting assessments for e-commerce sellers and e-commerce accountants serving this niche. Our assessment includes:
- Review of your current accounting setup (software, processes, pain points)
- Identification of common errors (missing revenue, incorrect VAT, inventory misstatements)
- Recommendation of the best e-commerce accounting software for your business
- Cost-benefit analysis of outsourcing vs DIY
- Implementation roadmap
Contact Acenteus CCA today to schedule your free e-commerce accounting assessment. Whether you process 100 orders monthly or 10,000, we deliver accurate financial reporting tailored to Amazon, Shopify, and multi-channel sellers.
Frequently Asked Questions (FAQ)
e-commerce accounting is the process of recording, reconciling, and reporting financial transactions for online retail businesses. It differs from traditional accounting due to multi-platform sales, complex fee structures, payment gateway fragmentation, and multi-country VAT compliance. Accounting for e-commerce businesses requires platform-specific expertise (Amazon Seller Central, Shopify reporting) and specialized software.
e-commerce accounting involves multiple sales channels (Amazon, Shopify, eBay), delayed payment processing (14-day Amazon settlements), complex fee structures (FBA fees, payment processor fees), multi-location inventory, and international VAT obligations. Traditional accounting software and accountants often lack the tools and expertise to handle these complexities.
The best e-commerce accounting software for UK sellers is Xero + A2X. Xero handles core accounting with strong e-commerce integrations. A2X automatically reconciles Amazon and Shopify settlements. For smaller sellers (under £50K revenue), FreeAgent offers adequate features at lower cost. The best accounting software for an e-commerce business depends on sales volume, platforms used, and complexity.
Download settlement reports from Amazon Seller Central (Reports > Payments > Settlement Reports). Break down each settlement into gross sales, Amazon fees, refunds, reimbursements, and net settlement. Record gross sales as revenue, fees as expenses, and match net settlements to bank deposits. e-commerce accounting software like A2X or Link My Books automates this process.
If your Shopify revenue exceeds £50K annually, an accountant is recommended. Accounting for an e-commerce business on Shopify involves payment gateway reconciliation, COGS tracking, inventory valuation, VAT compliance, and year-end accounts. e-commerce accountants familiar with Shopify save time and ensure compliance. For stores under £50K, DIY accounting with Xero or FreeAgent may suffice.
e-commerce accounting services include monthly bookkeeping, platform reconciliation (Amazon, Shopify, eBay), inventory tracking, VAT returns, management reports, and year-end accounts. e-commerce accounting services typically cost £150-£600 monthly depending on sales volume and complexity. Services are tailored to online retailers selling via multiple channels.
Use accounting software for e-commerce that supports inventory tracking (Xero, QuickBooks, Sage). Record inventory purchases at cost (including shipping and duties). When products sell, record COGS using FIFO or weighted average valuation. Track inventory by location (FBA, 3PL, own warehouse). Conduct physical stock counts quarterly to verify accuracy.
COGS (Cost of Goods Sold) represents the direct cost of products you sell: purchase price, inbound shipping, customs duties, and packaging. COGS does not include operating expenses like marketing, software subscriptions, or salaries. Gross profit = Revenue - COGS. Accurate COGS tracking is essential for profitability analysis.
Amazon deducts multiple fees before paying you: FBA fulfillment fees, referral fees (8-15%), storage fees, and advertising costs. Your settlement reports show net deposits (after fees). To reconcile correctly, record gross sales as revenue and Amazon fees as separate expenses. Do not record only net deposits, as this understates revenue and expenses.
Best e-commerce accounting software for Amazon FBA is A2X + Xero or A2X + QuickBooks. A2X automatically imports Amazon settlement reports, splits transactions (revenue, fees, refunds, taxes), and posts to Xero or QuickBooks. This saves 10-15 hours monthly compared to manual reconciliation. Link My Books is a lower-cost alternative for smaller sellers.
If you sell to EU customers (post-Brexit), you may need EU VAT registration. For direct-to-consumer sales under €150, register for OSS (One Stop Shop) via HMRC. For sales over €150 or if you use Amazon's Pan-EU program (inventory stored across EU), you may need local VAT registrations in each country. e-commerce accounting services can advise on EU VAT obligations.
Download payout reports from the Shopify Payments dashboard. Match payout amounts to bank deposits. Break down payouts into gross sales, Stripe processing fees, Shopify subscription fees, refunds, and chargebacks. Record gross sales as revenue and fees as expenses. e-commerce accounting integration tools (A2X, Link My Books) automate Shopify Payments reconciliation.
Inventory valuation determines the cost of unsold stock on your balance sheet. UK accounting standards require inventory to be valued at the lower of cost or net realizable value. Inventory valuation affects profit (COGS = opening inventory + purchases - closing inventory) and tax liability. Use the FIFO (first-in, first-out) or weighted average valuation methods consistently.
Most e-commerce businesses use accrual accounting. Accrual accounting records revenue when sales occur (not when you receive payment) and expenses when incurred (not when paid). This provides accurate profitability tracking despite payment delays (Amazon's 14-day settlements, PayPal holds). Cash accounting is allowed for businesses under £150K revenue but less accurate for e-commerce.
e-commerce accounting services typically cost £150-£600 monthly for businesses under £500K revenue. Pricing depends on sales volume, number of platforms (Amazon, Shopify, eBay), and complexity (multi-country VAT, multiple warehouses). Outsourcing breaks even if you currently spend 10-15 hours monthly on bookkeeping, freeing time for business growth.
Free e-commerce accounting software like Wave Accounting offers basic features but lacks robust e-commerce integrations. Wave does not integrate with Amazon Seller Central or automate Shopify reconciliation. Most e-commerce sellers outgrow free tools once revenue exceeds £50K annually. Investing £10-£40/month in Xero or FreeAgent saves hours of manual work.
Common mistakes: recording only net deposits (not gross sales), mixing personal and business expenses, ignoring inventory valuation, failing to reconcile payment gateways, missing multi-currency gains/losses, and lumping COGS with operating expenses. These errors distort profitability, trigger HMRC inquiries, and make financial reports unreliable.
Use accounting software for e-commerce that supports multi-currency (Xero, QuickBooks, Sage). Record sales in the original currency (USD, EUR) and convert to GBP using daily exchange rates. Track foreign exchange gains and losses (unrealized on receivables, realized when paid). Amazon and Shopify handle currency conversion automatically, but your accounting must reflect FX movements.
Yes. Open a separate business bank account (Tide, Starling, Revolut Business, Wise) for all business transactions. Mixing personal and business finances makes reconciliation impossible, triggers HMRC scrutiny, and creates legal liability issues if you are a limited company. Business bank accounts cost £0-£10 monthly.
Contact Acenteus CCA for e-commerce accounting services tailored to Amazon FBA sellers, Shopify stores, and multi-channel retailers. We offer a free accounting assessment to review your current setup, identify errors, and recommend solutions. Whether you need full-service bookkeeping or advisory support, our team delivers accurate financial reporting whilst you focus on growing your business.
