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5 Best Accounting Software for E-commerce Businesses

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Accounting software to simplify your accounting tasks

With customers in multiple states — and sometimes even around the world — online businesses need robust accounting software that can help do the heavy lifting.

Integrating your e-commerce accounting software with your e-commerce platform is crucial. This will help cut time-consuming duplicate entries and errors. You’ll also have the benefit of having your inventory and sales changes update automatically in your e-commerce software. The information sharing goes both ways so neither system has to be manually kept in sync.

That makes life a lot easier, right?

Having integrated sales tax support and inventory tracking will save you from unnecessary stress. Tracking and reporting state and local sales tax can be a real challenge by hand, but is easy with accounting software. 

One thing to note is the number of integrations in a single software. The more automated systems are usually referred to as “Enterprise Software”.  You can expect greater benefits with a little more initial setup cost investment. As long as the solution is right for your business, the investment is always worth it.

If you like your current system, but it doesn’t offer a built-in solution, don’t panic! There’s several good inventory management stand-alone software you can use. Avalara Tax and Tax Jar are great for tackling the challenges of multi-state sales tax.

Here are Today CFO’s top picks for the best accounting software for online sellers:

QuickBooks Online

For most online sellers, it’s recommended that e-commerce businesses invest in QuickBooks Online. Intuit has built a strong community with business owners and small business accounting. QuickBooks Online supports hundreds of native apps, providing integration solutions for every situation. Most e-commerce systems will integrate with it and strive for smooth, seamless interfaces.

QuickBooks Online starts with excellent inventory accounting, which is critical for e-commerce retailers. As your needs grow, you may have more complex supply chain management needs. You’ll be able to add robust solutions without changing your entire accounting system. 

Another QuickBooks advantage is the ability to automatically apply sales tax. Using the customer’s address, it keeps track of the sales taxes due. Then, it allows you to electronically file your sales tax report where available. If the state, city or county doesn’t allow electronic filing, don’t worry, built-in reports make manual filing simple.

Xero

Xero is a good start for e-commerce businesses who are tackling their own accounting.

Its e-commerce connectivity and inventory accounting is on par with QuickBooks. But its built-in sales tax processing is less robust. You can manually create unlimited taxing jurisdictions and sales tax rates. 

We recommend Xero if you plan to add sales tax integration through Avalara or Tax Jar. It’s also a good option if your e-commerce platform already controls sales tax.

Xero relies on bank feeds and doesn’t like to play nice with file imports. So choose them carefully if you’re still working with smaller, regional banks. Those banks often have difficulty connecting and staying connected with Xero’s transaction importing. National banks like Bank of America, Chase, and Wells Fargo connect easily with this accounting software.

FreshBooks

FreshBooks includes good e-commerce connectors that can link to popular sites. Shopify, WooCommerce, Squarespace, Wix, eBay, and Amazon all support FreshBooks integrations.

FreshBooks, like Xero, cannot calculate a sales tax rate based on a customer’s address. They also don’t offer electronic sales tax filing. FreshBooks offers limited inventory or cost accounting. The build-in inventory doesn’t track quantity or cost per unit.

The lack of this feature is okay when you’re only starting. As your company grows, FreshBooks is only recommended if you have little inventory. You could also get by if your e-commerce platform tracks the cost per unit of inventory already. Most business owners will find the functionality lacking as you grow your business.

Zoho

Zoho Books does not link directly with any e-commerce platforms. You must use a third party service to bridge the gap. Zoho Inventory starts at $49 per month for more than 25 orders. Kloud Connectors costs $30 per month for each e-commerce integration.

The advantage of using Zoho Books is their seamless integration with over 40 other Zoho apps. Together, it’s a powerful suite for managing your entire business and gaining transparency. Financial data appears in the customer relationship management (CRM), sales and marketing modules. They even offer modules for inventory, team communications, and employee recruitment.

The integration requires more planning than QuickBooks Online or Xero. If you’re willing to put in the effort, this is a solid time investment for longevity and future growth. The ability to add modules while keeping other systems means easier growth options. Moving from one system to another is more difficult than switching on new modules in Zoho.

Wave

Although Wave has a free option and is sometimes desirable, it is Today CFO’s least favorite in this list.

Some industries have less complicated accounting. E-commerce businesses aren’t one of them and should never skimp on accounting software. Wave doesn’t offer multichannel retailing, inventory management, or robust sales tax, which can make compliance reporting more difficult later on.

Their integration options are the biggest aspects that make e-commerce accounting difficult. They don’t provide development tools as efficiently as QuickBook Online or Xero. That leads to less integration options. 

Some platforms will share data, but most are through third party bridge software. If you insist on using free accounting software, or you don’t have the budget, Wave is your best bet.

Since Wave connects with Zapier, you’ll get a little extra growth potential out of it.

Zapier allows you to build “Zaps” between Wave and a variety of e-commerce platforms. It’s not quite the same as genuine integration. You’ll have to construct several Zaps to get the same functionality. Zaps often perform one single function, so you’ll need one for each transaction you want to sync.

For example, you may set up a Zap to record an invoice or receipt in Wave when there’s a sale in your e-commerce software. If you decide to use Wave, we recommend pairing it up with an e-commerce platform offering inventory and sales tax management.

Final Thoughts: Accounting Software for Online Entrepreneurs

To eliminate excessive data entry and errors, e-commerce businesses must invest in accounting software that integrates with their e-commerce platform and leaves room for growth. 

Designing and setting up a robust system might not be at the top of your to-do list. It may also feel daunting to some business owners with all the options out there. But with the help of an outsourced CFO or accountant, the integration will be quick and seamless.

Not sure which system and process is right for your e-commerce business? Book a free, no pressure strategy session with our team of certified accountants and financial experts at Today CFO. We’ll learn more about your company’s needs and find the solution that’s right for you.

About The Author

Tom is the creator of the AIM Framework and Accounting Impact Method. He spends less time on fruitless theoretical methods, and most of his time bringing practical financial, tax, and technology solutions to business owners who want to make an impact on the world.

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