First-time ecommerce sellers ask the same twelve questions, usually in the same order, usually about four months after their first sale when the bank balance and the profit figure stop agreeing. Answers below, direct, with sources where a number is involved.
Why does my bank deposit never match my sales?
Because the deposit is net and your sales are gross. Amazon, Shopify, Walmart, and the rest subtract fees, refunds, shipping charges, advertising, and reserve holds before they wire you anything.
Amazon documents this in its settlement report reference: a settlement summarizes every transaction in the period and resolves to a single disbursement. The correct treatment is to record gross revenue, then record each deduction as its own expense or contra-revenue account. Recording the deposit as revenue understates both your sales and your costs, and it will not survive a review.
Should I use cash or accrual accounting?
Accrual, if you hold inventory. Cash accounting records the purchase of goods when you pay for them, which means a container arriving in March makes March look catastrophic and June look fantastic.
The IRS covers permitted accounting methods and the rules on changing them in Publication 538. Read the section on inventories before you commit, and talk to a CPA about your specific situation, because switching methods later involves filing to request the change.
What actually goes into cost of goods sold?
Product cost plus everything required to get the unit into sellable condition at your fulfillment point. That means the unit price from your supplier, inbound freight, duties and tariffs, customs brokerage, prep and labeling, and inspection.
It does not include marketplace referral fees, fulfillment fees, storage, advertising, or your own salary. Those are operating expenses. Sellers who fold fulfillment fees into cost of goods sold produce a gross margin that looks stable while the real problem hides one line down.
Do I need to collect sales tax on marketplace sales?
Usually no, because the marketplace collects it. Most states have marketplace facilitator laws putting the collection obligation on the platform rather than on you.
California, for instance, makes the marketplace facilitator the retailer for sales made through its marketplace as of October 1, 2019, under the Marketplace Facilitator Act, per the California Department of Tax and Fee Administration. Your own website sales are a separate question with a separate answer, and the rules vary by state. Check your state’s revenue department rather than assuming.
How do I handle the sales tax the marketplace collected?
It is not your revenue and it is not your expense. Money in, money out, same amount.
The cleanest treatment posts marketplace-collected tax to a liability or pass-through account that nets to zero each period. Sellers who run it through revenue inflate their top line and confuse every ratio that depends on it.
What is a reserve, and why is Amazon holding my money?
A reserve is funds the marketplace withholds against potential refunds, chargebacks, and claims. It is your money, it is just not available yet.
Book it as a receivable or a separate asset account, not as revenue you have not received or as a fee. If you ignore reserves entirely, your cash forecast will be wrong by whatever the reserve balance happens to be, and that number moves.
When do I recognize revenue?
At the point of sale, not at the point of payout. An order placed and shipped on the 28th is revenue that month even if the settlement arrives on the 12th of the following month.
This is the single most common source of month-end discrepancy for new sellers. Two-week settlement cycles rarely align with calendar months, so every period end has orders sitting between shipped and paid.
How should I handle returns and refunds?
Reverse the revenue, reverse the cost of goods sold if the unit comes back sellable, and expense it if it does not. A refund is not a marketing cost and it is not a discount.
Watch the second half of that. Sellers routinely reverse the revenue and forget the inventory side, which leaves phantom units in the ledger that never physically exist.
Do I need SKU-level accounting, or is a summary enough?
Summary is enough if you only need a correct tax return and your catalog is small. SKU-level becomes necessary once product mix, not total volume, is what determines whether you make money.
The practical trigger is usually somewhere past a few hundred active SKUs or a couple of million in revenue. Tools split along the same line. A2X and Link My Books focus on getting accurate summarized settlement journals into your accounting system, while platforms like ConnectBooks carry SKU-level profit and loss, landed cost allocation, and inventory valuation alongside the sync. Buying the second when you need the first is an expensive way to be organized.
Why is my inventory value wrong?
Almost always one of four things: landed costs not allocated, units received but never booked, units sold but never relieved from inventory, or a valuation method applied inconsistently.
Pick a valuation method, write it down, and apply it every period. First in, first out is the common choice for ecommerce and is what most inventory-aware tools in this category use. Switching methods mid-year to make a number look better is the kind of thing that gets noticed later.
How much does the accounting software cost?
The range is wide because these tools do different jobs. Settlement syncing starts cheap; A2X lists US$29 per month for Amazon, Shopify, Etsy, eBay, or PayPal and US$79 per month for Walmart on its pricing page as of August 2026. Inventory-aware platforms start higher; ConnectBooks lists Gold from $149 per month on its pricing page the same month.
Then there is the accounting system underneath. QuickBooks Online lists Simple Start at $38, Essentials at $75, and Plus at $115 per month on Intuit’s US pricing page in August 2026, with inventory tracking beginning at Plus. Xero lists Early at $25, Growing at $55, and Established at $90 on its US pricing page, with Inventory Plus sold as a paid add-on on the top two plans. Xero has also posted that subscription prices increase from October 1, 2026.
When should I hire a bookkeeper instead of buying software?
When the problem is judgment rather than volume. Software is good at repeating a decision you have already made. It is bad at deciding whether an unusual adjustment is a data error or a real event.
A reasonable sequence for most sellers: software first to stop the bleeding on data entry, then a bookkeeper who reviews rather than rekeys, then a CPA who sees the reviewed books once a quarter. The Small Business Administration has a plain-language overview of what business financial management involves, which is a useful frame before you start interviewing.
None of the above is tax or legal advice. State rules vary, your facts vary, and the cost of a one-hour conversation with a CPA who has closed books for a marketplace seller is lower than the cost of unwinding a year of them.
