Key Takeaways
1. NetSuite supports multi-currency and multi-language transactions, crucial for global eCommerce operations, enabling accurate financial tracking and compliance.
2. Automated tax compliance tools in eCommerce accounting software prevent errors, reduce penalties, and simplify multi-state filings with differing rates, ensuring compliance with regulations.
3. Real-time inventory management across multiple channels reduces stockouts and overstocking, increasing operational efficiency and customer satisfaction.
4. Automated systems for daily bookkeeping, including payment processing, bank reconciliation, and inventory tracking, ensure error-free operations and reliable financial records for eCommerce businesses.
5. Integrating accounting software like NetSuite with eCommerce platforms automates order processing and tax calculations, streamlining workflows and improving financial accuracy.
As a business owner, the financial health of your company is what determines your overall progress.
E-commerce businesses, in particular, need to have a streamlined financial history because of the regular inflow and outflow of cash.
To run and sustain an e-commerce business, an accounting software will make sense of all your data.
An ideal accounting software will seamlessly integrate with your website and sync all the data, saving you time and reducing the chances of error.
It should offer you a collective system that provides up-to-date and real-time financial insights, because let’s face it, automation is no longer an indulgence but a serious need.
An ideal accounting software should do more than just show numbers. It should have scalability options as well as a proper inventory management system in place.
So what kind of software is right for your e-commerce business?
Well, we have a detailed list.
The 5 Best Ecommerce Accounting Software (Based On Suitability and Business Size)
The type of accounting software you choose should match your business needs, of course.
Most businesses have different sorts of accounting requirements, which is why the software they use could also be different.
E-commerce businesses use this software to:
- Track expenses
- Bank reconciliations
- Raise invoices
- Send and receive online payments
- Project management
- Inventory management
- Generate financial reports
- Perform tax assessment
So what kind of software is right for your business?
1. QuickBooks Online: For Small Businesses That Prioritize Structure Over Flexibility
Imagine you’re a small business owner with no prior accounting education. How do you track your profit and expenses?
With QuickBooks Online you can strategically plan your finances, by tracking your income, monitoring your expenses, managing your taxes, invoicing your clients, and viewing updated reports.
82% of small businesses fail due to poor cash flow management and this could be avoided by integrating QuickBooks Online into your business and even tracking how much money is coming in and out of your account.
This accounting software empowers you by providing complete insight into your profit-generating streams for comprehensive record-keeping and staying in the good books of the IRS by filing your taxes on time.
And here’s the best part – if you’re moving from another accounting software, you can easily import your accounting history. This way, you don’t have to worry about losing important financial data nor do you have to sit down to manually enter it all.
So, how does it work?
The Quickbook Online dashboard is customizable, giving you an overview of your profit, loss, expenses, sales, and invoices.
The best part about QuickBooks Online is that you can easily connect it to your bank account — a feature that automates all your transactions. So every time you make a transaction, it is immediately categorized, giving you better clarity and understanding of where your money is being used.
And if required, you can also track your sales tax.
There’s a ‘My Accountant’ tab available that allows you to invite your in-house accountant or even hire one.
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Features of Quickbooks
Detailed record keeping: It provides you with a thorough understanding and detailed records of your business expenses. In fact, it focuses so much on minute details that you can split your expenses into different categories; an ideal feature should you have per diem employees. There’s an addition of a custom tag feature that allows you to categorize your expenses more efficiently.
Inventory management: Quickbooks allow you to track your inventory far more efficiently. The management system helps you track the cost of your goods and even integrate data with third-party platforms like Shopify and Amazon.
An extensive range of integrations: QuickBooks Online gives access to over 750 apps and an in-house bookkeeping system. This option allows business owners to focus on growing their business instead of doing daily bookkeeping tasks manually.
QuickBooks Online add-ons: With QuickBooks Online, you can monitor employee timesheets, run an effective payroll system, manage individual employee and customer accounts, plan and prepare for tax season, and gain regular insight into your business’s financial health.
Recommended: 6 Best Practices For E-Commerce Business Accounting
2. Xero — For Businesses With Larger Teams & Unlimited Users
Xero is undoubtedly the underdog of accounting tools and a direct competitor of QuickBooks which is why so many businesses are making the switch.
E-commerce businesses with big teams can mostly benefit from Xero.
As of 2024, 15,584 companies are using Xero across the world with the United Kingdom grabbing 35.26% of the market.
Talking about the software, it is a cloud-based accounting solution that doesn’t come with user restrictions for any of its plans.
For instance, unlimited users can work on this app at the same time, and that too from different devices.
The one aspect of Xero that stands out is the language it uses to communicate with its users.
Another highlight feature of this best ecommerce accounting software, is that it has a user-friendly interface. The layout is extremely straightforward, especially when it comes to the reconciliation process.
The receipts are visible within a day, so you can track your day-to-day transactions quite conveniently. You also get to customize your dashboard as per your business needs.
How does Xero work?
Xero offers a 30-day free trial after which you can easily activate your account and transfer all key financial data.
Next, you’ll sync your bank account with Xero and this is when you’ll be asked if you wish to accept wire payments and generate online invoices.
Now comes the highlight feature as we mentioned earlier – the reconciliation process.
So, if you enter a transaction of $5,000 and you’ve recently deposited $5,000 in your bank account, you’ll find two matching options laid side by side. All you have to do is click on the icon that matches your transaction correctly.
As for the dashboard and the full chart of your accounts, they can easily be customized. What makes it so special is that you can easily import previous account charts here without having to do it manually. And not just your account details, you can import the list of your clients, vendors, and even customers here.
Features of Xero
So what difference does it make if you have all the financial data right in front of you? Your accountants still have to understand and make practical decisions yourself.
The decision-making process is made simpler by Xero as it provides you with an overview of your business’s financial health.
This means you have all the cash flow information on the screen.
In addition, there’s a page that gives you an extensive summary in the form of a flow chart, suggesting the impact of certain transactions, like bill payments on your bank balance.
Recommended: Balance Sheet Analysis Template For E-commerce Businesses
If you like to view your reports in specific formatting, this accounting software is your best bet.
You can integrate your own formulas, change the formatting from its general template, add new categories, make subgroups, and so much more to suit your needs.
3. Zoho Books — The Multilingual Accounting Software
ZohoBooks is a pocket-friendly accounting tool that offers an impressive range of features, becoming an impeccable choice for small businesses.
If you’ve already subscribed to other Zoho applications, this accounting tool will be a smooth ride.
With Zoho Books, you can automate regular accounting tasks and add efficiency to your business workflow.
Whether you want to check how much stock is currently present in your inventory, figure out how much you’ll require in the coming days, or understand how much has been consumed daily — all of it is there for you to see and manage.
Zoho Books is another cloud-based accounting software that generates invoices and can also be used on your smartphone.
And here’s the best part – if your company makes less than $50,000 in revenue per year, you are eligible to use its free plan.
Manage your expenses, track your tax situation, extract basic reports, and even make your own banking rules, like creating unique categories — Zoho Books offers all of this and more with several cost-effective plans.
How does Zoho work?
Zoho Books, along with its free plan, has another customer-oriented policy, and that is its 14-day free trial.
However, it’s only available should you opt for its Premium Plan.
When you’re creating your account, all you have to do is provide the location of your business, its name, and its official email address.
Next up, you’ll sync your bank account to start generating invoices, track transactions, and pay bills. This sums up the general information that’s required when you create your business profile.
Zoho Books is ideal as an e-commerce accounting tool as you can set up a client or vendor portal and get customer feedback.
When you view the dashboard, you find information regarding cash flow, your profit, expenses, credited payments, etc. You also see your top expenses to strategize better and manage finances more effectively. You can view your bank statements and seamlessly track projects.
Features of Zoho
- Inventory management and invoicing capabilities: Zoho Books has a simple template for reporting when you compare it with its competitors. However, you can’t challenge its effectiveness when it comes to inventory management and invoicing capabilities. For example, you’ll be notified if you’re going low on stock, there are points attached to reordering, and there’s a free feature like a barcode generator. From tracking orders via serial numbers to impressive integrations with Shopify, I feel the functionality of Zoho is unmatched for somebody who runs an e-commerce brand.
- Access through your smartphone: Did you know you can scan a receipt even when you’re using the software from your phone? In addition, this software allows you to track mileage, send reminders to clients for payment, and change up fonts should you not find the regular ones attractive.
- Categorization options: One similarity between Zoho Books and the other two accounting software that we’ve listed above is that they let you track and categorize transactions by location.
- 24/7 support available: What makes Zoho Books better than Xero is its customer service. You can connect with its Support Team any time you need to. Get immediate and instant help whether you’re using its paid version or not.
Well, not everything about Zoho Books is super satisfactory.
When you compare its ability to integrate with third-party applications, you’ll be disappointed.
Therefore, it is better if you confirm your subscription after you’ve checked whether or not it can integrate with your payroll and POS system.
4. FreshBooks — The Handy Tool for Freelancers and Small Business Owners
FreshBooks is the go-to solution for freelancers and small businesses with a maximum of 50 employees. An easy-to-use accounting tool that is feasible and ready to be used on the go.
It has been proven to be an effective tool for individuals as well, especially if you need to track your cash flow and stay tax-compliant.
So if you’re like Jakub Szmyt and not able to file accurate taxes despite spending hours on your spreadsheet, it’s time you try FreshBooks.
This accounting software offers customizable invoices and the option to track your ongoing projects and get real-time information. You can even use FreshBooks to customize your email templates, making it more convenient for you to respond individually but more efficiently.
How does FreshBooks work?
To start with, you enjoy a free 30-day trial after which you’ll get to choose a plan. FreshBooks has four plans and you must choose the one that fits your business size and its complexities.
The dashboard provides a summary of your invoices as well as the profit and loss generated from all of your revenue-generating streams. You’ll get an overview of your spending as well to see how and where your money is being used.
Whether you are an iOS user or an Android one, this software works on both operating systems so you can catch up on your accounting even on your phone.
And let’s not neglect its best feature, the highly efficient invoicing system.
From having access to different customizable designs to adding discount vouchers or even tracking whether or not your invoice has been viewed by a client, FreshBooks has made everything possible and convenient.
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5. A2X — A Perfect Bridge Between Your E-Commerce Platform and Accounting Software
If you’re an e-commerce seller, you have to benefit from this impeccable accounting solution that is a match made in heaven for eBay sellers and other platforms.
This accounting solution was built by an E-commerce business owner who believed that accounting doesn’t need to be that complicated.
One interesting fact about A2X is that it has a free trial for as long as you need. During the free trial, you can view the COGS features and check how all the settings work.
For Amazon users, there’s a special inventory evaluation reporting feature. And when you’re ready, you can opt for its paid plans.
How does A2X work?
So here’s the tricky part — this is not an accounting software but a solution that brings your accounting software and e-commerce platform together.
Whether you use Shopify, eBay, or any other E-commerce platform, this platform automatically syncs all your data on other accounting software like Xero and QuickBooks Online.
Of course, it comes with an additional price tag but the amount of workload that gets automated is worth the cost.
How does it do that? it does so by adding meaning to the raw data that is being updated on your sales channel reports. It categorizes all of your transactions as per the instructions and commands you’ve integrated.
The Bottom Line
E-commerce is one of those industries that have a growing need for accurate accounting and good financial decisions.
Choosing the right e-commerce accounting tool can make or break the financial health of your business.
But your search isn’t just limited to e-commerce accounting tools only.
Rather, you also need a strong team to run and manage this software for your business.
That’s where Ledger Labs comes in. Our bookkeeping and accounting experts who have an experience of more than 12 years can easily take up your accounting requirements no matter what stage of your business you are at.
We make sure you never leave without the answers you are looking for. So, get in touch now and book a consultation!
