Top 5 Accounting Mistakes Brands Make
By EcomKeeper Team • 5 min read
Avoid These Common Pitfalls
E-commerce accounting is a different beast than traditional retail. High transaction volumes, multiple payment gateways, and inventory complexities make it easy to make mistakes. Here are the top 5 we see and how to fix them.
1. Mixing Personal and Business Finances
This is the cardinal sin of small business. When you use your business card for groceries or your personal card for inventory, you create a nightmare for reconciliation. Solution: Open a dedicated business bank account immediately.
2. Ignoring Sales Tax Nexus
Unlike a physical store, e-commerce stores can trigger tax obligations (nexus) in states where they don’t have a physical presence, simply by selling enough volume there. Solution: Use tools like Avalara or TaxJar integrated with your books.
3. Recording Net instead of Gross Sales
If Shopify deposits $97 into your account for a $100 sale (deducting a $3 fee), and you record $97 as revenue, your books are wrong. You understate revenue and understate expenses. Solution: Always record the gross sale amount and book fees separately.
4. Poor Inventory Management
Expensing all inventory the moment you buy it is “Cash Basis” thinking, but it distorts your profitability. You should only expense inventory (COGS) when it is sold. Solution: Track inventory as an asset.
5. Relying on Spreadsheet Manual Entry
Manual entry inevitably leads to typos and lost hours. Solution: Automate. Use EcomKeeper to sync data directly from your sales channels.