Common eCommerce Chart of Accounts
Introduction
As an eCommerce business owner, proper financial organization is crucial to understanding your true profitability. Central to this is a well-structured chart of accounts (COA) – not just a list of categories, but the backbone of your financial infrastructure that enables informed decision-making.
Using a tool like QuickBooks or Xero can provide a starting point, but eCommerce has specific needs like inventory, advertising and more, so here we will provide an understanding and downloadable spreadsheet of common eCommerce accounting charts of accounts.
What is a Chart of Accounts?
A chart of accounts is a financial organizational tool that provides a complete listing of every account in an accounting system, essentially a financial map for your e-commerce business. It categorizes all your financial transactions, making sure that your financial reports are accurate and comprehensive.
You want to strike a balance between granularity, and overkill, that you should be able to make informed decisions by the data and view the grouped amount by income percent, but not be overwhelmed by little details that don’t matter
As an Amazon business for example, if you ship products FBM (fulfillment by merchant) via Fedex, UPS, USPS, and DHL, it might seem like you want a separate account for each shipping expense “Fedex Shipping Expense”, “DHL Shipping Expense”, etc. If it matters to you and is used to analyze frequently then sure break it out, but in general, if they are close enough having a more simple ‘Shipping Expense’ will suffice, and give you simplicity. Plus, you can always go back and check the granular details
The Structure of a Chart of Accounts
The COA is divided into five main categories:
- Assets: Cash, inventory, equipment
- Liabilities: Credit cards, loans, accounts payable
- Equity: Owner’s investments, retained earnings
- Revenue: Sales across different channels (Amazon, website, etc.)
- Expenses: COGS, advertising, shipping, software subscriptions
Creating a Chart of Accounts for Your E-commerce Business
To set up a COA, start by identifying the accounts that are relevant to your e-commerce operations. Keep it simple yet comprehensive. Consider your sources of income, types of expenses, and the nature of your assets and liabilities. Tailor your COA to reflect the unique aspects of your business, like dropshipping, digital goods, or physical products.
eCommerce-Specific Considerations
Standard accounting software provides basic templates, but eCommerce businesses have unique needs:
Revenue Tracking
- Separate accounts for each marketplace (Amazon, Shopify, eBay)
- Subcategories for returns, refunds, and marketplace credits
- Sales tax collected (if applicable)
Cost of Goods Sold
- Product costs by category or individual SKU
- Inbound shipping and freight
- Import duties and customs fees
- Packaging materials
Operating Expenses
- Marketplace fees (commissions, monthly subscriptions)
- Advertising and PPC campaigns
- Storage fees
- Software subscriptions (inventory management, accounting)
- Product photography and listing creation
Downloadable List of Common Accounts for E-commerce Businesses
| Account # | Account Description | Account Type | Normal Balance (Increase) | Statement |
| 1010 | Cash | Asset | Debit | Balance Sheet |
| 1020 | Savings Account | Asset | Debit | Balance Sheet |
| 1110 | Car Asset | Asset | Debit | Balance Sheet |
| 1310 | Inventory Asset | Asset | Debit | Balance Sheet |
| 2010 | Accounts Payable Inventory | Liability | Credit | Balance Sheet |
| 2020 | Accounts Payable | Liability | Credit | Balance Sheet |
| 3010 | Owners Equity | Equity | Credit | Balance Sheet |
| 3020 | Retained Earnings | Equity | Credit | Balance Sheet |
Integrating Your Chart of Accounts with E-commerce Platforms
For eCommerce businesses, integrating your chart of accounts with your selling platforms provides several advantages:
- Automation: Reduces manual data entry and human error
- Real-time insights: Access up-to-date financial information
- Detailed reporting: Track profitability by product, channel, or campaign
- Tax compliance: Properly categorize transactions for tax purposes
Managing and Updating Your Chart of Accounts
A key advantage for eCommerce businesses is integrating the COA with online selling platforms. This integration automates transaction recording, ensures accuracy, and provides real-time financial data. It’s crucial for tracking profitability and managing inventory efficiently.
Conclusion
A key advantage for eCommerce businesses is integrating the COA with online selling platforms. This integration automates transaction recording, ensures accuracy, and provides real-time financial data. It’s crucial for tracking profitability and managing inventory efficiently.