Every channel into one ledger
Shopify, Amazon, eBay, card machine and processor, reconciled to the settlement statements rather than to the bank line.
E-commerce and online retail
The money that lands in your bank is not your turnover
A marketplace pays you net of commission, fulfilment, advertising and refunds. Book that as income and your turnover is understated, your costs vanish, and you can cross the VAT threshold without noticing.
What you get
- Every channel reconciled to its settlement statements
- Turnover recorded gross, every fee visible
- Stock counted and valued properly
- Marketplace, OSS and IOSS VAT set up
- Margin by product and by channel
- One fixed monthly fee
The numbers that decide it
Four figures worth knowing by heart
Four numbers decide an online retail year. The first is the one that catches people out.
GrossNot the settlement figure — your turnover
£90,000VAT registration, on rolling turnover
Closing stockOne of the biggest inputs to your profit
1m + 7dAfter each VAT period, the return and payment
2026/27 figures. See key tax dates and the calculators for the full picture.
Your year
Two peaks, and they are not the same peak
Your busiest trading month and your worst cash month are usually about eight weeks apart. Knowing that in advance is most of the job.
Every monthChannels reconciled to settlement statements, not to the bank line.
Every VAT quarterReturn and payment, one month and seven days after the period ends.
Peak tradingStock and cash both stretched at once. The forecast matters most here.
JanuaryReturns land. A provision made in December is what keeps the month readable.
Your year endStock counted and valued. It is one of the largest numbers in your accounts.
RollingCross £90,000 of gross sales in any twelve months and registration is due in 30 days.
Source: gov.uk VAT, marketplace and Making Tax Digital guidance, checked July 2026.
The thing that makes it different
The money that lands is not your turnover
A marketplace pays you a settlement figure — sales, minus commission, minus fulfilment, minus advertising, minus refunds, netted off and paid on their cycle rather than yours. Book that payout as income and three things go wrong at once: your turnover is understated, your costs vanish entirely, and you can believe you are under the VAT threshold when you are well over it.
The second thing that makes e-commerce different is stock. In a product business the closing stock figure is one of the largest single inputs to profit, and therefore to tax. A guessed stock number is a guessed tax bill.
Neither is hard once the channels are reconciling into one ledger properly. Both are painful to unpick a year later, which is why generic bookkeeping struggles here.
The detail that decides it
What actually moves the numbers in e-commerce
Online retail generates more bookkeeping per pound of turnover than almost anything else, and three specific errors account for most of the damage.
- Gross versus net is the classic mistake
- A marketplace pays you a settlement figure after commission, fees, refunds and advertising. Your turnover is the gross sales, not the money that landed. Booking the payout as income understates turnover, hides the fees entirely, and can leave you thinking you are under the VAT threshold when you are over it.
- Marketplace VAT
- For a lot of sales the platform is treated as the supplier and accounts for the VAT itself, which changes what appears on your return. Selling into the EU brings OSS and IOSS into it. Neither is difficult once set up correctly; both are painful to unpick a year later.
- Stock is the profit figure
- Closing stock is one of the largest single inputs to profit, and therefore to tax. Counting it properly at the year end is a few hours that changes a number worth thousands.
- Returns and refunds
- A high-returns category needs a provision, otherwise December looks excellent and January looks like a catastrophe when the same goods come back. It also changes what you can afford to spend acquiring a customer.
- Reconciling every channel
- Shopify, Amazon, eBay, a card machine and a payment processor each report differently and settle on different cycles. Getting them into one ledger that reconciles is the whole job in e-commerce bookkeeping.
Gross versus net
The same month, booked two ways
One month on a marketplace
A seller whose marketplace settlement for the month was £8,400. That is the figure that appeared in the bank, and it is what a lot of people book as their sales.
- Gross sales through the platform
- £12,000
- Platform commission and fees
- −£1,800
- Fulfilment and shipping
- −£1,100
- Advertising spend on the platform
- −£450
- Refunds netted off
- −£250
- Settlement received — NOT your turnover
- £8,400
Book the £8,400 and your turnover is understated by £3,600 a month, £43,200 a year — enough on its own to put a seller the wrong side of the £90,000 VAT threshold without knowing it. The £3,600 of costs also disappears, so the accounts show a better margin than the business actually earns.
Worked through at 2026/27 rates from our own calculators, which follow gov.uk guidance checked in July 2026. An example, not advice — your figures will differ.
What we do about it
The channels reconciled, properly
Gross sales, real costs
Turnover recorded gross and every fee visible, so your margin is the one you actually earn.
Stock counted and valued
At the year end, properly, because it is one of the biggest numbers in your accounts.
VAT across marketplaces and borders
Deemed supplier rules, OSS and IOSS set up before they are a problem rather than after.
Margin by product and channel
Which SKUs make money after fees and returns, which is not the list most sellers expect.
A returns provision
So December's figures survive January.
Questions
What people in this trade ask us
How much does it cost?
A fixed monthly figure agreed in writing after a 30-minute discovery call. For e-commerce the drivers are the number of sales channels and payment processors to reconcile, transaction volume, whether stock is tracked properly, and whether you sell across borders. One Shopify store with Stripe is straightforward; four marketplaces, two currencies and Amazon FBA is not. FreeAgent is included, worth up to £330 a year, and Xero suits most sellers with stock.
Why do my accounts never match my platform reports?
Because the payout is not the sale. Every platform settles net of something — commission, payment processing, advertising, shipping subsidies, refunds and sometimes marketplace-collected VAT — so booking the money that lands in the bank as revenue understates both turnover and costs, often by 20% or more. Done properly, each sale is recorded gross and every deduction is booked as its own cost, which is the only way to see a real margin. This is the single most common error in e-commerce bookkeeping and it distorts VAT as well as profit.
Does Amazon handle VAT for me?
For some transactions. Large marketplaces are treated as the deemed supplier for certain sales — particularly imports and sales by overseas sellers — and account for the VAT themselves. That does not remove your obligations: you still have to account correctly for everything from their reports, distinguish deemed-supplier sales from your own, and file your own returns. The reports are detailed and easy to double-count. Assuming the platform has dealt with it is how sellers end up either paying VAT twice or not at all.
Can holding stock abroad create a VAT registration?
Yes, and it is the most common surprise in this sector. Storing stock in another country — usually through Amazon's pan-European or European fulfilment programmes — generally creates a VAT registration obligation in each country where the inventory physically sits, from the first sale rather than at a threshold. Sellers frequently enable a programme that redistributes stock automatically and find out months later. Check where your stock is before enabling any cross-border fulfilment option, and factor the cost of multiple registrations into the decision.
How should I be tracking stock and cost of goods?
Properly, because without it your margin is a guess. The minimum is a cost of goods figure that moves with sales rather than with purchases: buying £20,000 of stock in March does not make March a bad month, and selling it in June does not make June a good one. That means a stock count at least at the year end, ideally quarterly, and a system that values what is on hand. Landed cost matters too — duty, freight and fulfilment fees belong in cost of goods, not in overheads.
What are OSS and IOSS, and do I need them?
One Stop Shop lets you report VAT on business-to-consumer sales across the EU through a single return rather than registering in every member state. Import One Stop Shop lets you collect EU VAT at checkout on consignments up to €150, so parcels clear customs without the customer being charged on delivery — which materially reduces refused deliveries. You need them if you sell to EU consumers at any scale. Neither covers stock held in the EU, which is a separate registration question entirely.
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