Cleanup e-commerce financial data

Below is a consolidated research summary and the evidence base I will use to produce the comprehensive blog/newsletter content on "Cleanup e-commerce financial data" for US business owners and LLC founders.

It includes: key findings, step-by-step cleanup checklist, state-specific compliance notes, practical tools, and recommended next steps.1) Key findings (short):- Payment processors and marketplaces produce settlement reports that must be routed into clearing accounts in your accounting system so timing differences and fees are reconciled (payment settlement entities and Form 1099-K are relevant).- Reconciliation should be done channel-by-channel (Stripe, PayPal, Amazon, Shopify, bank/credit card) and include refunds/chargebacks and platform fees.- Sales tax compliance is state-specific and driven by economic nexus post-Wayfair; many states implement marketplace facilitator rules that shift collection/filing obligations to the marketplace for some transactions, but sellers must still verify registrations, exempt sales, and maintain records.- Clean chart of accounts, accurate COGS/inventory adjustments, depreciation/amortization schedules, and month-end close procedures are central to cleanup.- Use automation (QuickBooks/Xero + integrations, Avalara/TaxJar) where possible, and hire an e-commerce-experienced bookkeeper/accountant for backlog remediation and audit defense.- Data privacy and retention requirements (e.g., CCPA/CPRA in California) affect records management and access/ deletion requests—include privacy-treatment in cleanup policy.2) Step-by-step cleanup checklist (practical):- Snapshot: Export current reports from payment processors, marketplaces, bank statements, merchant statements, and previous accounting system backup.- Create/verify clearing accounts: Set up separate clearing accounts for each payment processor (Stripe, PayPal, Amazon Pay, Square).

Post settlements to clearing accounts, then clear to bank deposits when actual funds land.- Reconcile settlements: Match settlement reports (gross sales, refunds, fees, chargebacks, payouts) to payments recorded in accounting software; book fee and refund entries to correct accounts.- Reconcile bank and credit card statements monthly; investigate and fix differences.- Review chart of accounts: consolidate/correct revenue accounts by channel and product; separate shipping, discounts, sales tax collected, and merchant fees; ensure COGS and inventory valuation methods are consistent.- Fix inventory and COGS: Reconcile inventory counts and costing (FIFO/average), post adjustments for shrinkage or miscounts, and correct COGS entries for sales periods.- Sales tax cleanup: run a state-by-state sales report, identify states with nexus (economic or physical), ensure you’re registered where required, verify returns filed and payments made, and document exemptions and resale certificates.- Marketplace facilitator check: identify sales routed through marketplaces; confirm whether the marketplace collected/ remitted sales tax; if not, ensure seller filings are in order.- IRS & information reporting: confirm gross payment amounts on 1099-Ks vs. reported revenue; reconcile differences before tax filing; document adjustments for returns and fees.- Document chargebacks/refunds: ensure they reduce taxable revenue where appropriate and are supported by transaction records.- Data retention & privacy: keep records per federal/state tax retention rules (generally 3–7 years) and ensure you can respond to CCPA/CPRA requests if applicable.- Create recurring processes: monthly reconciliations, quarterly tax checks, and annual cleanups; use automation for sales tax calculation and filings when possible.- When to hire: engage a qualified ecommerce CPA/bookkeeper if backlog >3 months, significant mismatches exist, or if you face an audit.3) State-specific & regulatory notes (how to cover in the blog):- Economic nexus (post-Wayfair): explain how Wayfair changed obligations, and that nexus thresholds vary by state (e.g., $100k or 200 transactions in many states).

Sellers must review each state’s law and register where thresholds met.- Marketplace facilitator rules: most states require marketplaces to collect and remit sales tax on marketplace sales; sellers must still track transactions and maintain exemption documentation.- Provide examples and links for major states (California, New York, Texas) and recommend readers check their state revenue department pages for exact registration and filing steps.- Privacy: call out California CCPA/CPRA as the strongest state-level privacy regime; advise inclusion of data inventory and retention policy in cleanup.

Below is a consolidated research summary and the evidence base I will use to produce the comprehensive blog/newsletter content on "Cleanup e-commerce financial data" for US business owners and LLC founders.

It includes: key findings, step-by-step cleanup checklist, state-specific compliance notes, practical tools, and recommended next steps.1) Key findings (short):- Payment processors and marketplaces produce settlement reports that must be routed into clearing accounts in your accounting system so timing differences and fees are reconciled (payment settlement entities and Form 1099-K are relevant).- Reconciliation should be done channel-by-channel (Stripe, PayPal, Amazon, Shopify, bank/credit card) and include refunds/chargebacks and platform fees.- Sales tax compliance is state-specific and driven by economic nexus post-Wayfair; many states implement marketplace facilitator rules that shift collection/filing obligations to the marketplace for some transactions, but sellers must still verify registrations, exempt sales, and maintain records.- Clean chart of accounts, accurate COGS/inventory adjustments, depreciation/amortization schedules, and month-end close procedures are central to cleanup.- Use automation (QuickBooks/Xero + integrations, Avalara/TaxJar) where possible, and hire an e-commerce-experienced bookkeeper/accountant for backlog remediation and audit defense.- Data privacy and retention requirements (e.g., CCPA/CPRA in California) affect records management and access/ deletion requests—include privacy-treatment in cleanup policy.2) Step-by-step cleanup checklist (practical):- Snapshot: Export current reports from payment processors, marketplaces, bank statements, merchant statements, and previous accounting system backup.- Create/verify clearing accounts: Set up separate clearing accounts for each payment processor (Stripe, PayPal, Amazon Pay, Square).

Post settlements to clearing accounts, then clear to bank deposits when actual funds land.- Reconcile settlements: Match settlement reports (gross sales, refunds, fees, chargebacks, payouts) to payments recorded in accounting software; book fee and refund entries to correct accounts.- Reconcile bank and credit card statements monthly; investigate and fix differences.- Review chart of accounts: consolidate/correct revenue accounts by channel and product; separate shipping, discounts, sales tax collected, and merchant fees; ensure COGS and inventory valuation methods are consistent.- Fix inventory and COGS: Reconcile inventory counts and costing (FIFO/average), post adjustments for shrinkage or miscounts, and correct COGS entries for sales periods.- Sales tax cleanup: run a state-by-state sales report, identify states with nexus (economic or physical), ensure you’re registered where required, verify returns filed and payments made, and document exemptions and resale certificates.- Marketplace facilitator check: identify sales routed through marketplaces; confirm whether the marketplace collected/ remitted sales tax; if not, ensure seller filings are in order.- IRS & information reporting: confirm gross payment amounts on 1099-Ks vs. reported revenue; reconcile differences before tax filing; document adjustments for returns and fees.- Document chargebacks/refunds: ensure they reduce taxable revenue where appropriate and are supported by transaction records.- Data retention & privacy: keep records per federal/state tax retention rules (generally 3–7 years) and ensure you can respond to CCPA/CPRA requests if applicable.- Create recurring processes: monthly reconciliations, quarterly tax checks, and annual cleanups; use automation for sales tax calculation and filings when possible.- When to hire: engage a qualified ecommerce CPA/bookkeeper if backlog >3 months, significant mismatches exist, or if you face an audit.3) State-specific & regulatory notes (how to cover in the blog):- Economic nexus (post-Wayfair): explain how Wayfair changed obligations, and that nexus thresholds vary by state (e.g., $100k or 200 transactions in many states).

Sellers must review each state’s law and register where thresholds met.- Marketplace facilitator rules: most states require marketplaces to collect and remit sales tax on marketplace sales; sellers must still track transactions and maintain exemption documentation.- Provide examples and links for major states (California, New York, Texas) and recommend readers check their state revenue department pages for exact registration and filing steps.- Privacy: call out California CCPA/CPRA as the strongest state-level privacy regime; advise inclusion of data inventory and retention policy in cleanup.

Tools & integrations to recommend

- Accounting: QuickBooks Online, Xero- Sales tax automation: Avalara, TaxJar- Channel connectors: apps that sync Shopify/Amazon/Etsy to accounting software- Processor docs: Stripe/PayPal settlement and reconciliation tools; Amazon seller reports- Bookkeeping/cleanup services: specialist e-commerce bookkeepers (examples found in results)

Sources and next steps

- I will use the authoritative sources and expert guides found to build: 1) a step-by-step blog post with state-specific guidance summary and links, 2) a downloadable cleanup checklist, and 3) newsletter content tailored to US LLC owners highlighting compliance risks.