Enterprise Ecommerce / How to Sell Online

E-Commerce Accounting FAQs, Part 1

David Callaway / 2 min read
Table of Contents

    Accounting. It’s one of the least glamorous e-commerce topics, but one of the most important — especially for small businesses who keep their own books. To help you get a handle on your accounting and taxes (April 15 is less than two months away!), we teamed up with our friends at Webgility to get some answers to frequently asked QuickBooks and accounting questions from QuickBooks Pro Advisor Jim Savage. You can follow Jim on Twitter for more tips and info.

    Which version of QuickBooks is right for my business?

    This is one of the questions I’m asked most often by small business owners. There are a lot of options out there. If you’re looking for a cloud-based solution, there’s QuickBooks Online. If you have a Mac, QuickBooks Mac is a must. And even if you decide to go with the desktop software, you still have to choose between the Pro, Premier and Enterprise versions. Check out Intuit’s full product list with pricing to get an idea of your options. To help get the ball rolling on your decision, here are some of the main differences: There are many other factors to consider based on the nature and needs of your business. If you’re still having trouble picking the right software for you, I recommend consulting a QuickBooks Pro Advisor in your area. He or she should be able to take a look at your company and work with you to decide which will best fit your needs.

    Do I use Sales Orders, Invoices or Sales Receipts?

    Sales Orders are used to track orders that you have received but not shipped. They need to be converted to an Invoice or a Purchase Order in QuickBooks. Invoices record the sale of an item to a customer, but they do not record the payment. The payment needs to be recorded in QuickBooks and applied against the invoice. Sales Receipts are used to record the sale and the payment. This is often the easiest way to record your e-commerce sales.

    Do I need to capture all of the customer information in QuickBooks?

    I usually recommend not bringing customer information into QuickBooks. It often leads to a very confusing customer database if names are not entered exactly the same way, because you will end up with multiple records for the same customer. QuickBooks is a great accounting system; it is not a CRM (Customer Relationship Management) system. In most cases, you can set up a generic customer in QuickBooks for web orders to keep your QuickBooks data manageable.

    How do I make sure I get accurate financial data?

    Making sure your Chart of Accounts and Item List are set up correctly is critical when creating the accounting foundation of your business. Every business is different, but the key areas are:

    • Income Accounts — Make sure the Sales (Income) accounts are defined before you start downloading orders. If you want to track sales by different product lines of business or product type, consider using sub-accounts for your main sales account or perhaps using classes (in Premier or Enterprise) to separate product sales by type.
    • Cost of Goods Sold — Much like Sales, if you wish to separate the product cost by type, use sub-accounts or classes to distinguish them. Also, any cost related to the product (i.e. shipping costs) should have its own sub-account.
    • Sales Taxes — This can be a complete discussion in itself, but make sure you are capturing sales tax correctly and that you have the reporting necessary to provide accurate sales tax reporting. Every state is different and the rules are constantly changing, so you may to solicit advice from a local CPA or other reputable source.

    We hope this gives you a good start on the basics of e-commerce accounting. In Part 2 of this series, we’ll get a little more in-depth. If you have questions Jim might be able to help with, let us know in the comments!


    David Callaway

    David Callaway

    David Callaway creates and edits content for Bigcommerce marketing and the platform itself. He is a writer of words, sharer of ecommerce wisdom and digital high-fiver of Bigcommerce clients. He is also very tall.

    View all posts by David Callaway

    5 comments on “E-Commerce Accounting FAQs, Part 1

    1. Booker Williams on

      Great info David. I been switching providers like QuickBooks to outsourcing and I haven’t seemed to find one that I like both have their ups and downs. I feel with these resources I have more knowledge to better understanding QuickBooks giving me the power to finally do my own bookkeeping.

    2. Tejaswi Raghurama on

      Brilliant comprehensive article David. Loved the way you guys summarised the comparison between QuickBooks and QuickBooks Online.

      One thing you missed though is support for multiple Tax Rates. QuickBooks Online and Xero both support it really well. Also i noted that Webgility doesn’t support it and allows to sync only single tax rate in all orders.

      At ZapStitch we have identified the gap and we support syncing of multiple tax rates (State, County and Municipal). Would love if you could give it a try :) Thanks again for the insightful blog.

    3. Kelly Boros on

      A QuickBooks pro adviser can also help you harness the power of your QuickBooks data. You can export QuickBooks into excel and use it as a cash flow forecasting tool to plan for the next few moths, or even to help budget for the year ahead. QuickBooks can do more for your businesses than just keep your books in order.

    4. Johnson on

      Thanks for the great info about Custom Fields, as that explains a lot! I am writing an application that creates an IIF file to be imported into Quickbooks and in the Item, I have created a custom filed called BOL_Number. I am trying to figure out what !SPL column heading in the IIF file needs to be to map to the BOL_Number custom field. I have figured out that OTHER2 and OTHER3 seem to map to Other 1 and Other 2 custom fields, respectively (not sure why…), but unable to figure out the BOL_Number column name. Any ideas OpenERP Solutions on this would be great!

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