Best eCommerce Accounting Software (And How To Choose)

Choosing the right accounting software for your eCommerce business can be tricky. There are many options out there, and each one has its own set of features and benefits. 

This blog post will walk you through the best eCommerce accounting software options and help you decide which one is right for you. We'll also give you some tips on choosing the right software for your business.

If you're running an eCommerce business, you need to make sure that your accounting software is up to the task. Unfortunately, not all accounting software is created equal, so it's important to do your research and find the right one for you. In this article, we'll discuss some of the best eCommerce accounting software options available and tips for choosing the right one for your business.

Whether you are a small business or a large eCommerce store, proper accounting software is essential to your company's success. 

It will help you keep track of your expenses and profits, but it can also make tax time much easier. In this article, we will compare some of the best eCommerce accounting software options available and provide tips on choosing the right one for your business.

We'll also provide tips on finding the right software for your needs and advice on what to look for when making your decision. So if you're looking for an eCommerce accounting solution, keep reading!

Let's get started!

What is eCommerce Accounting?

Accounting for e-commerce involves locating and organising all of your company's data and transactions online. This relates to:

• Sales orders
• Sales receipts
• Invoices
• Credit card statements
• Bank statements

Your data are interpreted, analysed, and classified by an eCommerce accounting specialist, and they are summed up and reported on as well. To succeed in any kind of business, you need more than just to keep track of all the money you make and spend. It is necessary to perform an analysis of the data in order to determine whether or not the company is making a profit. The owners of businesses now have the ability to make informed decisions about their companies' futures thanks to these studies.

Importance of eCommerce Accounting

1. Following orders

Buying and selling products is at the heart of online commerce. You acquire a variety of products and then sell them to your clientele. Your online store receives thousands of orders every hour from customers all around the world. You are going to need to keep a record of all of these and monitor their delivery. Accounting for online trade can be of assistance with this procedure.

2. Examining data

The simple act of recording and keeping track of data is insufficient. You need to perform an in-depth analysis of the data in order to comprehend the consequences about the profits and losses. Accounting procedures for e-commerce can also be of assistance here.

3. Making reports

Because you own the company, it is imperative that you are familiar with all of its features, both minor and major. A professional in eCommerce accounting can provide assistance with the generation of reports that summarise all of your data in a format that is easy to understand.

4. Keeping track of profits and losses

We are striving to achieve our monetary objectives through operating a firm in the hopes of realising a profit. At the end of the fiscal year, you should perform a profit-and-loss analysis by computing all of your sales and expenses, as well as any applicable taxes and liabilities. You will find that this makes it easier for you to take the necessary measures.

5. Planning for the future

In light of the existing state of affairs, you formulate strategies for the future of your company. You should stick to the same strategy if your company is already successful, but you should adapt your approach if you run into problems along the way. Accounting for e-commerce will assist you in comprehending the current standing of your company and in determining actionable business strategy.

6. Enhancing your company

Everyone is interested in developing their company further. But how do you go about doing that? First things first, you have to get an idea of where you are in the current industry and how much potential your company has. After conducting an analysis of the pertinent components of your company, you might then choose to take efforts to improve your company.

The practise of soliciting feedback from clients can also assist companies in improving the quality of their goods and services. An expert in accounting for e-commerce can provide you with a fresh viewpoint on your company, which can help you better understand its operations.

E-procurement solutions, collaboration software, and office productivity tools are examples of the kinds of automation tools that firms investigate as part of the process of enhancing their business operations and so saving time.

7. Obtaining tax advantages

At the end of the year, when you are filling out your tax return, it is in your best interest to have all of your profit and loss statements ready to go.

If you do not have your calculations correct, it is possible that you will be required to pay a considerable sum of tax. Employing the services of a competent eCommerce accountant will assist you in keeping accurate financial records. As a result, you will be in a better position to reduce the amount of money you need to pay in annual taxes.

The operation of a business on one's own is a challenging endeavour. Employing the services of an eCommerce accountant can relieve some of the pressure placed on your shoulders, particularly if you do not possess the necessary financial management skills.

What Is It That You Require?

Let's take a look at a few particular aspects of that issue to assist you answer it:

• Accounting - These services, first and foremost, include accounting in its most fundamental form. If you've been using spreadsheets, this is an automatic step up from that, but it's still a step (or two) below employing an accountant. If this is your major use for it, you should ensure that it functions the way you want it to, that it syncs up correctly with your bank, and that it is something you won't despise having to use.

• Invoices - A significant number of these providers will take care of your invoices for you. Integrating your billing process with your accounting software can be helpful, but if you already have an invoice management system that is functional, you may not need to do so. (And if you are particular about the way in which your bills are processed, using a third-party system may not be the best solution.)

• Payroll - Do you have staff members or independent contractors that need to be compensated? Look for a system that is sophisticated enough to manage payroll as well as all the complications that go along with it (taxes, benefits, etc.). Consider utilising electronic contract manufacturing software if you are in need of putting together a contract in the shortest amount of time possible.

• Taxes - Do you prepare your own taxes, or do you work with an accountant or tax preparer? In either case, you should ensure that the option you choose is able to fulfil your requirements. If you decide to hire a professional, you can go so far as to enquire as to whether or not they can provide a referral. If you do your own taxes, you might want to look into taking some tax preparation lessons.

• Time monitoring - Do you keep track of the hours that you work? You really ought to be, even if you're not billing clients by the hour. If keeping track of the passage of time is an essential component for you, you should look for a solution that incorporates this feature. There are also several solutions for time tracking that are stand-alone; therefore, you will need to choose whether or not it is vital to have a solution that is integrated.

• Keeping track of receipts: Would you be willing to photograph each and every business receipt? It is a terrific method to cut down on the amount of paper you have to track, but if you don't bother, you shouldn't let yourself be fooled by the fancy apps.

• Keeping tabs on your income and outgoings is an important part of budgeting; however, do you also need assistance estimating how much money you will have in the future? Because a budget is not a regular feature, careful shopping is required.

• Reports: Keeping tabs on all of your financial information is an important first step. But making use of that data is what has the potential to make it wonderful. Creating a visual representation of data is one method to increase its utility. Graphs! There are going to be a lot of these services that have fancy-looking graphs; however, you need to be sure that they are actually producing meaningful data.

• Do you already have an accounting system that you would like to import into your new system? Investigate the import choices provided by each provider.

• Exporting: If you're the kind of person who likes to put a variety of computer systems through a rigorous trial run, you might be interested in the various exporting possibilities. The application will allow you to import your data, but will it also allow you to export it?

• Paying bills — Not all services offer this feature, and not all freelancers have a lot of bills to pay. Likewise, not all services offer this feature. If you have this requirement, you should seek a provider that provides more complex choices for keeping track of your spending and paying for them as well.

• When it comes to keeping track of your sales, companies that specialise in inventory management, such as QuickBooks inventory management, can be of great assistance to you. If you are selling something, you need to be sure you are keeping accurate records. This is well above what the majority of freelancers are able to accomplish, so you will most likely need to look into specialised software.

Important Accounting Software Features for Online Shops to Search For

1. Ecommerce platform and payment gateway integrations

When it comes to picking an accounting system, the ability to link with eCommerce platforms and payment processors is possibly the single most significant consideration for time-crunched owners of small businesses.

Manually updating your transactions and data is probably the last thing you want to do because it is a procedure that is both time-consuming and prone to errors caused by humans.

It would be beneficial for you to search for accounting software that is compatible with e-commerce platforms such as Shopify, WooCommerce, and BigCommerce, as well as third-party tools such as payment processors, inventory management systems, customer relationship management solutions, shipping software, and so on.

2. Usability

When evaluating the usefulness of the software, there are a number of aspects that need to be taken into consideration.

Degree of accounting expertise

Consider your current degree of expertise in accounting as a first step. Do you have a thorough understanding of accounting principles and the processes that go into them?

When it comes to effectively managing the finances of your company, be sure you don't get fooled into thinking that just because you have accounting software, you're good to go.

When businesses purchase accounting software, one of the errors they can make is to believe that they do not need to know anything at all about financial accounting since the programme will just take care of it for you. This is one of the most common misconceptions.

If you do not have at least a pretty solid understanding of the fundamentals of accounting for small businesses, you may find it more beneficial to hire a small company accountant rather than manage your accounts on your own.

Amount of time

You should also give some thought to how much time you can spare on a weekly basis to deal with your financial matters. This is an essential consideration.

If you're the only one working at your company, there's a good chance you won't have enough time to put into some aspects of the business.

Needs and preferences

Consider both the requirements of your company and your own personal preferences next. For instance, if you're a sole proprietor who's often on the move, your best bet will be to choose a cloud-based solution that also includes a mobile app that's simple to operate.

On the other hand, if you have a group of people working for you, you will require a multi-user access plan.

You should also take advantage of free trials to get a feel for different solutions and to see if there is a particular software that is a better fit for you in terms of its user experience and design.

This can help you determine which solution will best meet your needs.

3. Customer support

When switching from one accounting software to another or when using one for the first time, it is inevitable that there may be some teething troubles. In spite of how educational the user guides and knowledge base resources are, there are times when you will require the assistance of an expert to lead you through a solution.

The staff that provides assistance to customers enters the scene at this point. You are required to look at user reviews and testimonials before settling on a service. When doing so, you should pay close attention to the different support channels that are provided, the response times, and the consistency.

4. Elaborate reports

The process of data analysis is an essential component in the operation of your eCommerce business. It would be helpful if you had a clear understanding of how well your firm is doing, understood what is working or not working, and analysed the patterns of financial growth and expansion inside your organisation.

You will be able to simply keep track of important performance measures and save time by making use of software that gives you the ability to generate reports whenever you need them.

In your reports, growth KPIs like revenue, client acquisition cost, customer lifetime value, average purchase value, and conversion rates should be displayed.

In addition, some examples of operational metrics that you should be watching include the cost of sales, the contribution margin, the profit margins, the rate at which customers become repeat customers, the rate at which they receive refunds, and the rate at which they receive returns.

5. Frequently updated software

Updating software on a regular basis is a sign that a firm is expanding and making an effort to be on the cutting edge of technology advances, trends, and accounting methods that are considered to be the most effective. You may get the most up-to-date information by checking a provider's website, blog, social media channels, and product roadmaps.

Additional Questions That Should Be Requested

Even though the characteristics that we have outlined above will be applicable to the vast majority of eCommerce merchants, there may be more features that you need to take into consideration. This will depend on the type of your company as well as the requirements that are unique to it.

As a means of assisting you in this endeavour, we have compiled the following list of questions for you to consider in order to conduct a more in-depth analysis of the requirements of your company and to establish any additional capabilities that may be necessary:

• What aspects of my present accounting procedure do I wish to modify, and why? What is helping me, and what isn't helping me at all? Does the software have the capability to help fill in the blanks?

• When I look ahead one year, three years, and five years from now, what do I want the state of my company to be? Does the programme provide sufficient levels of flexibility and scalability to satisfy my company's needs even as those needs continue to develop?

• What are the essential characteristics of my package? What are some things that are recommended but not required to have?

• Will there be any risk to my data?

Online Accounting Software Tips

Consider the following advice as you deliberate between the several possibilities and select one:

• You'll never know if a system is worth the hype it receives until you give it a try for yourself. Therefore, connect it to your bank, enter some data, and examine its functionality.

• Be adaptable; keeping track of your funds can be done in a variety of ways, and it's possible that you'll need to find a method that works better for you. When looking for a solution that can work for you, try not to be as strict as possible.

• Inquire around – Have a conversation with some other independent contractors, consult your accountant, and post a query on Twitter. There is no one else who can answer this issue on your behalf, but it doesn't hurt to acquire some input and first-hand experience whenever possible. This may be an effective strategy for rebutting all of the claims and flashy marketing. Every single one of these services generates output.

• You are not going to get wedded to the online accounting software you use, so switching is quite acceptable. You always have the option to change your mind. If something doesn't work after you've given it some time to prove itself, you should try something else.

Best eCommerce Accounting Software

1. QuickBooks Online

It is not difficult to comprehend the reasons why QuickBooks continues to hold the greatest portion of the accounting software industry. QuickBooks Online is a cloud-based accounting solution that provides a vast array of features, integrations with more than 650 apps, and extensive reporting capabilities. It is tailored to meet the needs of small and mid-sized enterprises.

QuickBooks is compatible with a variety of eCommerce platforms, including Shopify, PayPal, Square, GoCardless, and WooCommerce, amongst others. The programme interfaces to various eCommerce systems such as Wix, Magneto, and BigCommerce through the use of third-party connectors. Shopify and WooCommerce can be integrated with the software directly.

1. Benefits

• Compatible with a wide variety of the applications that eCommerce companies now employ. In the event that a direct integration is not an option, you may still connect extra applications to the accounting software by making use of an online automation service such as Zapier.

• Users of QuickBooks Commerce are granted access to a greater number of features. Order management, inventory management across different channels, automated order and delivery workflows, and so on are just a few examples of what may be done.

• Depending on the subscription you choose and the add-on features you purchase, over 80 different reports are available.

2. Drawbacks

• In terms of the overall user experience, it lags below Xero. There are times when the software is difficult to manage, and there is a rather steep learning curve associated with using it. In addition, we found the user interface to be a little bit confusing, as it isn't always clear how one may access particular capabilities. This was something that bothered us.

• Users have the ability to contact the support team via phone or email; however, the quality of support that they receive can vary. Depending on the members of the support team, users could receive responses that are instructive or gain information that is incomplete or answers that are ambiguous. There is also the possibility that resolving an issue will take several days or even weeks.

2. Xero 

Xero proves to be a good competitor to its other accounting software by having a clever design, an interface that is easy to use, and a broad selection of integration choices.

The Xero App Marketplace features a listing of hundreds of apps that are geared towards the needs of small businesses. The programme integrates with payment processing platforms such as Stripe, GoCardless, PayPal, and Square, as well as eCommerce applications such as BigCommerce, CS-Cart, and Bold Commerce (which allows you to set up a Shopify site using their platform).

1. Benefits

• When compared to QuickBooks, Xero is somewhat more affordable because all of its options allow for an infinite number of users.

• User-friendly design of the layout

• Excellent record-keeping for the inventory

2. Drawbacks

• Upgrades are necessary in order to use Xero's features that let you track numerous currencies, your time, and your expenses.

• Customer service is not as comprehensive as FreeAgent's offering. Inbound phone assistance is not currently offered by Xero. Instead, users have the option of contacting the support team via email or live chat (although the latter is typically reserved for inquiries regarding product purchases). Response times can sometimes be very slow; waiting up to a day to hear back from the support personnel is not uncommon at all.

3. FreshBooks

The simplicity of FreshBooks' interface and the dependability of its customer service won us over.

However, depending on the requirements of your company, there are a few potential drawbacks: if you have a team, you will pay additional fees for every person that you want to add to your plan. If you do not have a team, you will not incur any more costs. We believe that eCommerce merchants with a limited inventory will find a better fit with FreshBooks due to the restricted inventory accounting capabilities that FreshBooks offers.

Shopify and Squarespace are two of the platforms that are directly integrated with FreshBooks. Connectors provided by other parties give users access to a variety of additional eCommerce platforms, including eBay, WooCommerce, Magneto, and BigCommerce.

The comprehensive list of eCommerce and payment options that are now accessible may be seen on the FreshBooks website.  

1. Benefits

• User-friendly interface

• Help pages that are both useful and well written, as well as excellent phone support

• Regular upgrades that include the addition of additional functions

2. Drawbacks

• The plans only allow for a certain amount of billable clients to be supported.

• Capabilities for tracking inventory that are severely limited

• One user can be supported by each plan. Additional costs will be incurred on a per-user basis when adding members to a team.

• A double-entry accounting system is not supported by the Lite plan.

4. FreeAgent

FreeAgent demonstrates that it can compete successfully against larger market competitors by offering a dashboard that is simple to access, a fantastic user interface, and outstanding customer service.

The software is compatible with a variety of online payment and eCommerce platforms, including Stripe, PayPal, Sellwire, Shopify, and GoCardless, in addition to the web-based automation tool Zapier.

1. Benefits

• A dashboard that is simple to navigate

• Customer service that is superior to that offered by both QuickBooks Online and Xero. Users have the option of sending an email to the support team, reserving a call, or making an indirect call. In addition, the crew that provides customer assistance is quick to respond and offers helpful responses.

• Regular upgrades that include the addition of additional functions

2. Drawbacks

• The reporting is not very in-depth. FreeAgent provides a total of nine different reports. Even though the fundamentals are addressed, this may be restrictive for certain kinds of companies.

Employ Bookkeepers And Accountants In Your Business

As you can see, it is a wise decision to outsource these available choices as soon as you possibly can.

The majority of eCommerce businesses begin by bringing on an accountant. This is an excellent initial step, and it can assist you in preparing for and filing your taxes.

It is never too soon to begin looking for an accountant or bookkeeper to work with your company. If it isn't one of the fundamental abilities you bring to the table as an entrepreneur, it's definitely the first thing you should look to recruit someone else for or outsource.

When you first establish your firm, it is much simpler and more cost-effective to work with a qualified accountant than it is to go back and clean up the financials one to two years later.

Ensure that your accountant is on board with the goals of your company from the very beginning. Share with your accountant your plan to sell your company over the next three to five or more years if you want their assistance in maximising your profits both while you're still running the business and after you've sold it.

Because the majority of eCommerce businesses grow and bootstrap without seeking significant funding, these businesses need to have a solid understanding of their cash flow cycle in order to quickly turn over funds for the purpose of expansion.

In the long run, having a team member of the calibre of a CFO (or more frequently, a fractional team member) will pay for themselves 10 times over in terms of assisting in the effective management of cash flow.

When your company expands, the amount of cash that is often tied up in inventory also increases. When I was younger and had less expertise, I used to believe that the larger my firm became, the less difficult it would be to manage the cash flow. Although this is somewhat accurate, it is also the case that the risks and investments become a great deal larger to match the increase. If you are not a CFO yourself, you will need to have one on your side if you want to grow your business.

If you find that you are spending a significant amount of time on bookkeeping and other financial activities, it may be beneficial for you to engage a bookkeeper or make use of a productized bookkeeping service at this point.

Learn What Is Successful

The purpose of using online accounting software to keep track of your business's financial transactions is so that you can rapidly assess the state of your company and make any necessary course-correcting choices without spending all day doing so.

There's a good explanation for why you're not working in accounting. Find a solution that will allow you to continue working so that you may go forwards.