Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.
Take the first step to successfully starting and growing your business.
Join for free)
Posted: Tue 9th Dec 2025
8 min read
E-commerce in the UK has never been stronger.
From independent Shopify stores to Amazon sellers and direct-to-consumer brands, more businesses than ever are selling online. But as sales accelerate, so does the complexity of the numbers behind them.
If your accounting doesn't keep up with your e-commerce activity, your data quickly becomes unreliable – and that can lead to cash flow shocks, VAT errors and poor decision-making.
In this blog, I take a look at the most common e-commerce accounting problems UK businesses face – and how to fix them before they hold you back.
The one thing you can be certain of is that the money that comes into your business bank account from your platform does not represent the full value of your sales.
You need to consider VAT, platform fees and any delay in the platform paying out. There might be foreign currencies to deal with as well.
So, don't base your bookkeeping on the value of the payout – you have to dig deeper.
Download transaction reports from your platform for a period and work out:
the gross value of sales
how much of that total is VAT
how much the platform is charging you (these are expenses, not negative sales)
anything else that's being deducted
how much you can expect to receive in the bank (and when)
Use this data to do the correct accounting for your sales. In an ideal world, the amount you can expect to receive in the bank will be the amount the platform has paid in.
Check you've done it correctly and repeat the process for several more periods so you know what the right answer looks like in your accounting software.
And only then – and only if it's a better option – should you look to automate the accounting process. Integration software, such as A2X, is worth looking at and there are others out there.
Tip: Don't import every individual transaction into your accounts. Post summarised data for a day, week and so on, and drill into your platform to see individual transactions.
It's great that you can sell to anyone in the world.
However, the tax authorities worldwide can see what you're up to and may want their piece of the pie, usually as a sales tax such as VAT.
VAT starts to get complicated because of rules related to:
where your customers are based
whether your sales are business to business (B2B) or business to consumer (B2C)
whether you're selling products, services or digital outputs
Get on top of the VAT rules that apply as soon as you can and bring in help where you need to.
Tip: Don't forget that the taxman can see what you're up to (might even be a customer!).
For every sale, there's a cost of sale (as Isaac Newton almost once said). If you sell a football online, you have the costs of:
the football
packaging
shipping
export duties if the customer is overseas
platform fees and commissions
advertising and marketing
Identify and take account of these costs as soon as you can and make sure you're actually making a profit.
As usual, all roads lead back to good bookkeeping and a finance team that fully understands your business.
Revenue growth can look fantastic – but it means little if you don't know which products are profitable.
It's all too easy to lose visibility of cost of goods sold (COGS) once you've factored in fees, shipping and advertising spend.
Make sure your e-commerce accounting includes all the related costs and is complete.
Read more:
Every business should monitor its cash flow, and e-commerce businesses are no different. Three of the biggest headaches are:
delayed payouts from the platforms
funding the purchase of stock for resale
setting aside money to pay the VAT
Set up and run a simple cash flow model and consider opening a second bank account to put money aside for tax and future stock purchases.
You shouldn't be short of information from your e-commerce platforms.
Plus, if your bookkeeping is working well, your accounting software will be providing even more financial information you can use.
Make sure the two sets of data are consistent with each other, as this is a good sanity check for your e-commerce accounting.
And make sure you can see clearly where you're making a profit and where you're not and take action to improve the profit margins of each item you're selling online.
The reports from your e-commerce platform might not be everything you desire as they have to cater for users across the world and can be a bit generic. You might have discovered this at the bookkeeping stage!
Equally, the reports you get from your bookkeeping software will only be as good as your bookkeeping and how thoroughly you've set up the chart of accounts.
Business owners often try to manage it themselves, resulting in late reconciliations, inaccurate VAT returns and reactive decision-making. Often a false and frustrating economy.
Get help early on from a bookkeeper or accountant who understands e-commerce systems and workflows.
Once the correct accounting framework is in place and you're getting meaningful information about sales, profits and cash flow, you have some choices around:
automation and apps
financial controls such as bank reconciliations and gross profit reviews
outsourcing, bringing the bookkeeping in-house or sharing the work
E-commerce accounting should become a routine process, embedded in your business, that works consistently well and provides the financial information you need to grow your business and your profits.
Read more:
Selling online to anyone in the world is a golden opportunity that's available to any business. But remember:
the platforms will take a share of the spoils
it may take some time before you receive your money
VAT and similar sales taxes are a big part of the e-commerce landscape
all sales have costs of sales so make sure you're making a profit
Good bookkeeping is an essential part of online selling – if you have an online platform, then you'll need a financial platform to go with it.
