E-commerce Accounting: Basic Guide to International Sales Taxes

Streamline your e-commerce accounting and bookkeeping systems, lower your taxes, and increase your profitability so you have more time to focus on the work you love. It is important to note recent changes to sales tax and the introduction of economic nexus. Following the US Supreme Court ruling last year in South Dakota vs. Wayfair, states no longer need to rely on physical presence to require businesses to collect sales tax. The most important thing to understand is that your cash flow statement will not reflect your profit or net income, because it does not take into account items bought or sold on credit. At Interactive Accountants, our name says it all– we value interactions with our clients to make informed decisions about your business. Your personal team of dedicated accounting professionals will focus on keeping your financial records up to date so that you can handle the other day-to-day aspects of your e-Commerce business.

Properly tracking your ecommerce income and expenses is essential for the financial health and growth of your online business in Canada. By accurately recording and classifying your income and expenses, you can better understand your financial performance, make informed business decisions, and stay compliant with government regulations. Ecommerce businesses face unique challenges and opportunities when it comes to accounting.

Use Case Solutions

If you’re a merchant outside of the UK selling goods that do not exceed £135 in value directly to UK customers and not on an online marketplace , you need to register for UK VAT and collect 20% VAT. For those with revenue under NZD $60,000 in a year, registering for GST is voluntary. Businesses with making more revenue, regardless of whether you’re based in New Zealand or not, need to register and charge 15% GST on all sales.

If you’re selling to the US but not based there, you don’t have to apply for tax unless you meet the tax registration annual threshold, generally 200 transactions or US $100,000. Once you surpass it, you have what’s called an economic nexus in the country and you’ll need to meet tax requirements and charge tax within the US. If you’re located in the EU and you’re selling to customers in the EU, sales tax isn’t too complicated. The rate itself will vary depending on your revenue for the year and distance selling thresholds based on where your customer is. Knowing your accounts balance out each day, week, and month is crucial for the smooth operation of your business. Receive prepared balance sheets and properly structured charts of accounts.

E-Commerce Business?

You’ll be guided step by step – reviewing cleared ecommerce accountant, outstanding transactions, real-time account balances, and any discrepancies. Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your books and taxes are in order when it’s time to raise another round of venture financing. Your net profit is going to feed into both your balance sheet and your cash flow statement. Looking at the top of your income statement and scrolling to the bottom— you first subtract from revenue your cost of goods sold.

Stripeis usually offered in geographies that don’t have Shopify payments. So whether you realize it or now, you’re using Stripe when buying through Shopify’s default payment. And the numbers behind the business are critically important, helping founders avoid cash crunches, unwanted excess inventory, unexpected return ratios and more. This startup financial model is used to negotiate the size of the option pool needed at a venture round.