5 Ecommerce Bookkeeping Warning Signs
By Anna Young
Spot five ecommerce bookkeeping red flags on your balance sheet and P&L, with yes-or-no checks for inventory, sales tax, revenue, and COGS.
What's inside
Inventory balance red flags
How inventory should move on your balance sheet, why a missing or unchanging balance signals improper inventory accounting, and how to tell if your balance fits your sales.
Sales tax liability checks
Why every ecommerce business should see sales tax activity on its balance sheet, and why a missing liability points to both a reporting problem and a costly compliance risk.
Sales tax on your P&L
Why collected sales tax is not income and remitted sales tax is not an expense, and how sales tax showing up on your profit and loss statement misstates taxable income.
Revenue recording done right
Why recording only bank deposits misstates revenue and its timing, plus what correct reporting looks like, from gross channel data to fees, shipping, chargebacks, and payouts.
COGS and margin stability
How to use gross profit margin to spot COGS problems, and why wild margin swings usually mean inventory is being expensed at purchase or only recorded periodically.