Running a small business means more freedom—but also more financial responsibility. You’re in charge of profits, payroll, and staying tax compliant.
These small-business bookkeeping tips will help you maintain accurate records, ensure tax compliance, manage cash flow, and make informed business decisions.
For ecommerce sellers juggling transactions across multiple sales channels and payment processors, proper bookkeeping is not just good practice—it’s essential for survival.
These tasks are high stakes—incorrect financial records or tax filings can lead to losses, fines, or litigation. Staying on top of your books can protect your business from these setbacks and set the stage for long-term success.
What is bookkeeping?
Bookkeeping is the process of recording a business’s financial transactions. Some small business owners handle bookkeeping themselves, while others hire professional bookkeepers to do the job. Whichever route you choose, it’s crucial to make sure that your books are accurate and up to date.
Why is bookkeeping crucial for ecommerce businesses?
Ecommerce businesses handle a high volume of daily transactions. Without accurate bookkeeping, it’s easy to lose track of cash flow, inventory, and taxes.
Unlike traditional retail, ecommerce presents unique financial tracking challenges that require specialized attention:
- Multichannel sales tracking: Selling on platforms like Shopify, Amazon, and Etsy, each with different fee structures and payment schedules.
- Digital payment processing: Managing payment gateways like PayPal or Stripe, each with different transaction fees, settlement time frames, and reconciliation processes.
- Complex sales tax requirements: Navigating economic nexus laws in multiple states or countries.
- Inventory management: Tracking cost of goods sold, returns, and inventory levels across multiple platforms.
Clean, consistent bookkeeping systems help online sellers avoid tax compliance issues and cash flow problems, and make smarter financial decisions.
8 small-business bookkeeping tips for 2025
Here are some tips for small businesses to help the bookkeeping process go smoothly.
- Choose the right bookkeeping system
- Select the best bookkeeping software for your ecommerce needs
- Separate personal and business finances
- Automate repetitive bookkeeping tasks
- Stay up to date, and outsource if you can’t keep up
- Stay compliant with tax laws and sales tax requirements
- Manage cash flow effectively
- Perform regular financial checkups
1. Choose the right bookkeeping system
Small businesses typically use one of two systems: manual or digital.
- Manual bookkeeping: Requires recording all transactions by hand in physical ledgers. It’s inexpensive upfront, but more prone to human error. Fixing mistakes can be time consuming and costly.
- Digital bookkeeping: Uses software to automate and organize records. It’s faster and more accurate, but new users often face a learning curve. Some bookkeeping software is free, while others cost several hundred dollars a month, depending on features and scale.
Once you have the right bookkeeping system in place, stick with it. Switching later increases the chances of data transfer errors.
2. Select the best bookkeeping software for your ecommerce needs
When choosing digital bookkeeping software for your ecommerce business, prioritize tools that integrate seamlessly with your sales channels. There are hundreds of software options available at different prices and with varying features.
For ecommerce businesses in 2025, the most valuable bookkeeping software features include:
- Cloud-based access to financial data from anywhere
- Automatic syncing with multiple sales channels and marketplaces
- Built-in sales tax calculation and reporting across jurisdictions
- Inventory tracking that integrates with your sales platforms
According to ShipBob’s list of top ecommerce accounting software in 2025, popular tools include QuickBooks, FreeAgent, Wave Accounting, FreshBooks, and NetSuite. Other highly rated platforms that integrate with ecommerce platforms include A2X and Bench. These tools automatically sync sales data, inventory, and financial information.
For businesses with unique accounting needs, open-source software may be a good fit. It lets users customize a software’s underlying code to suit specific workflows.
📚Compare different software options with Shopify’s list of the eight best accounting software programs for small businesses.
3. Separate personal and business finances
It’s easy for small business owners to blur the lines between personal and business finances—especially in the early stages. But keeping personal finances separate from your business recordkeeping is critical for accurate bookkeeping.
Start by opening a separate business bank account and use it exclusively to track your business’s income and expenses. Only record information relevant to your business in your business’s financial records—personal transactions should never be included.
4. Automate repetitive bookkeeping tasks
Automation tools have become essential for efficient ecommerce bookkeeping. Automating repetitive tasks helps reduce errors and free up valuable time to focus on growing your business.
Bookkeeping tasks worth automating include:
- Digital receipt management: Use mobile apps that scan receipts and automatically categorize expenses.
- Bank and credit card feeds: Import transactions directly into your bookkeeping software.
- Sales channel integration: Record sales, fees, and payments from all platforms in real time.
- Invoice generation and payment reminders: Automate billing processes and follow-ups for outstanding payments.
Automating tasks like bank feeds and receipt scanning can save significant time, freeing you to focus on inventory management and customer service.
5. Stay up to date, and outsource if you can’t keep up
Falling behind on bookkeeping is one of the most common issues small businesses face. Even a few business transactions a day can easily pile up. Trying to work on a huge backlog of transactions can lead to fatigue and errors.
If you struggle to keep up, consider hiring a professional bookkeeper. Unlike business owners who often juggle multiple tasks, bookkeepers focus exclusively on maintaining a business’s records. This helps ensure that your books are up to date.
6. Stay compliant with tax laws and sales tax requirements
Paying taxes as an ecommerce business owner presents unique challenges. Careful bookkeeping is essential to ensure you pay the right amount when tax season rolls around.
Tax compliance for ecommerce businesses includes:
- Economic nexus laws: Most states enforce economic nexus laws with varying thresholds. For example, California’s threshold is $500,000 in annual sales. Other states range from $100,000 to $500,000.
- Marketplace facilitator legislation: Understand when marketplace platforms like Amazon or Etsy collect and pay tax on your behalf.
- International sales considerations: Managing value added tax (VAT) or goods and services tax (GST) for cross-border ecommerce when applicable.
As a business owner, you may need to make periodic tax payments throughout the year, so set reminders for tax deadlines so you don’t forget. Quarterly estimated tax payments for 2025 are due on April 15, June 16, September 15, 2025, and January 15, 2026.
For the latest federal tax guidance, consult the IRS. If you sell in multiple states, check with a state-by-state sales tax resource to understand your collection and remittance obligations.
If managing taxes sounds overwhelming, consider hiring an accountant. They can handle changing federal and state tax regulations, find deductions that save money, and prevent you from making an incorrect tax payment.
7. Manage cash flow effectively
Cash flow is the money moving in and out of your business. Business expenses, loan repayments, and dividends paid to shareholders are examples of cash flowing out of a business, while sales, investments, and borrowing represent cash inflows. Businesses that don’t have enough cash coming in could face serious financial strain.
For ecommerce sellers, effective cash flow management requires strategies tailored to online sales patterns:
- Monitor inventory investments using sales velocity data to avoid overstocking
- Plan for marketplace payout schedules, which may delay access to your funds
- Account for return rates and their impact on available cash
A bookkeeper can help track these figures and prepare cash flow statements. They might also identify unnecessary business purchases or late-paying customers that affect profitability.
8. Perform regular financial checkups
Reviewing your financial records regularly—at least once per quarter—can identify trends, help with plans for growth, and improve budgeting.
Accountants work with bookkeepers to review how financial data is recorded and to ensure accuracy. They also check whether enough money has been set aside for taxes and if cash is used efficiently.
Navigating ecommerce-specific bookkeeping challenges
Ecommerce businesses face unique bookkeeping challenges that traditional brick-and-mortar retailers don’t encounter. Understanding and addressing these issues is crucial for maintaining accurate financial records and making informed business decisions.
Key ecommerce-specific bookkeeping challenges include:
- Managing inventory and sales across multiple platforms: Tracking inventory levels, costs, and sales across your website, marketplaces, and social media requires sophisticated systems and regular reconciliation.
- Tracking shipping costs and returns: Monitoring shipping expenses and return rates across different sales channels helps measure true profit margins.
- Handling marketplace fees and commission: Recording various platform fees, referral fees, and commission structures accurately is essential to understanding net revenue.
- Managing international sales and currency exchange: Dealing with currency conversion, international payment processing fees, and country-specific tax requirements for cross-border transactions.
Adopting ecommerce-specific bookkeeping practices helps you maintain better financial control and assess profitability across all sales channels and product lines.
Small business bookkeeping FAQ
What is bookkeeping and why is it essential for small businesses?
Bookkeeping is the careful recording of a business’s financial transactions, including its sales and expenses. It’s essential for small businesses to properly budget, pay taxes, and plan for growth.
What are the different types of bookkeeping systems?
Businesses use one of two systems: manual bookkeeping, where records are entered by hand, or digital bookkeeping, which uses software to track transactions.
How often should small businesses update their bookkeeping records?
How frequently you update your records depends on the number of transactions in your business. If transactions occur every day, then you should update your records daily.
What are some common mistakes to avoid in bookkeeping for small businesses?
Common bookkeeping mistakes include entering inaccurate data and failing to keep up with records. These errors can be time-consuming and costly to find and fix—and may lead to poor financial decisions.
How can I stay compliant with tax laws and regulations as a small business owner?
The best way to stay compliant with tax laws and regulations is to be aware of your tax obligations, and then maintain consistent and accurate bookkeeping records so you can pay the correct amount of tax. You may also want to hire an accountant with tax expertise to help you maintain compliance.
What bookkeeping software works best for small ecommerce businesses?
The best bookkeeping software for ecommerce businesses integrates directly with your sales channels and automates tasks. Popular options include QuickBooks, FreshBooks, Xero, and Wave.
How is bookkeeping different for online vs. brick-and-mortar businesses?
Ecommerce bookkeeping differs from traditional retail in several ways. Online businesses must track multichannel sales, manage various payment processor fees, navigate complex multi-state or international sales tax requirements, and reconcile inventory across digital platforms. They typically have unique expense categories, such as website hosting, online advertising, and shipping costs.
