Cleanup accounting for e-commerce

Cleanup Accounting for E-commerce: Your Essential Guide E-commerce accounting cleanup is a crucial, focused effort to correct and organize your financial records, ensuring accuracy for financial statements, tax compliance, and informed business decisions.

This process is often needed due to complex multichannel settlements, overlooked sales tax registrations, unreconciled accounts, or inventory discrepancies. * Key Steps for a Successful Cleanup:

Cleanup Accounting for E-commerce: Your Essential Guide E-commerce accounting cleanup is a crucial, focused effort to correct and organize your financial records, ensuring accuracy for financial statements, tax compliance, and informed business decisions.

This process is often needed due to complex multichannel settlements, overlooked sales tax registrations, unreconciled accounts, or inventory discrepancies. * Key Steps for a Successful Cleanup:

Gather All Financial Records

Collect bank statements, credit card statements, merchant settlements (Amazon, Shopify, etc.), invoices, and tax returns.

Reconcile Accounts

Match bank, credit card, and marketplace settlements to your recorded sales, detailing gross sales, taxes, fees, and net deposits.

Categorize Transactions

Correctly classify all revenue, costs of goods sold (COGS), fees, and taxes.

Inventory & COGS Accuracy

Reconcile inventory records and accurately calculate COGS, including freight and duties.

Sales Tax Compliance

Confirm sales tax registration and filing status in all states where you have economic or physical nexus. Understand Wayfair-era rules and marketplace facilitator laws.

Automate

Implement integration tools (like A2X or Webgility) to automate data entry and reconciliation between marketplaces and your accounting software (QuickBooks, Xero) to reduce errors and improve reporting.7. Regular Bookkeeping: Establish a routine for monthly book closings and reconciliations to maintain financial health. Immediate Next Steps for US Business Owners / LLC Founders: * Download a bookkeeping cleanup checklist and start assembling your records. Reconcile bank, credit card, and marketplace accounts for the past 12 months, focusing on sales, sales tax, and inventory. Conduct a nexus assessment for states you ship to and confirm marketplace facilitator status. Consider engaging an e-commerce CPA if you face complex issues like multistate sales tax exposure or significant inventory valuation challenges.