Ecommerce accounting in Australia: the complete guide

Reviewed by Reuben Bergola, CA, Managing Partner, New Wave Accounting. Last reviewed 27 October 2026.

Ecommerce accounting is the work of turning platform payouts, fees, refunds, stock movements and GST into books that show what your online store actually sold, spent and earned. In Australia that means recording gross sales rather than the net payout, running each sales channel through a clearing account, valuing trading stock at year end and reporting GST correctly on your BAS. This ecommerce accounting guide walks through each piece, then gives you a monthly close checklist and the KPIs worth watching.

Why ecommerce accounting is different

A cafe takes money at the counter and banks it. An online store does not work that way. Accounting for an ecommerce business has to deal with:

• Several sales channels at once, such as Shopify, Amazon, eBay and your own wholesale invoices, each with its own reports and payout timing.
• Payment gateways (Shopify Payments, PayPal, Stripe, Afterpay and others) that collect the money, keep their fees and pay you the rest later.
• Platform and marketplace fees for listings, transactions, advertising and fulfilment, often deducted before you ever see the cash.
• Refunds, returns and chargebacks that reverse sales weeks after the original order.
• International customers and suppliers, which bring foreign currency and different GST outcomes.
• Inventory that moves in real time across one or more warehouses or fulfilment centres.

None of this is hard on its own. The problem is volume. A store doing a few hundred orders a week creates thousands of small transactions, and if the system is not set up properly, figures slip through the cracks or end up skewed across platforms. That is why ecommerce bookkeeping needs a different setup to a service business.

Cash vs accrual, and why payouts are not revenue

A common mistake in accounting for online sellers is recording the bank deposit from Shopify or Amazon as “sales”. A payout is not revenue. It is what is left after the platform has taken its fees, processed refunds and settled any disputes. Shopify’s own help centre confirms that refunds, chargebacks and dispute fees are deducted from your next payout.

Here is a simple illustration (figures are made up for the example):

If you record $10,150 as sales, your profit and loss understates sales, hides $850 of refunds and fees, and gives you a gross margin that is not real. You would also be working out GST on the wrong figure. The right approach records gross sales, records refunds and fees as their own lines, and lets the payout simply clear the difference.

Cash or accrual? Cash accounting records income and expenses when money moves. Accrual accounting records them when the sale or cost happens, regardless of when the cash arrives. For management reporting, an online store almost always needs accrual style books, because sales, payouts and supplier bills rarely land in the same week.

GST is a separate choice. The ATO lets businesses with an aggregated turnover under $10 million choose to account for GST on a cash basis or a non-cash (accruals) basis. On a cash basis you report GST in the period you receive or make payment; on a non-cash basis you report it in the period you issue or receive an invoice or any payment is made, whichever comes first. Your accountant can help you pick the method that suits your cash flow, but your management accounts should still show the full picture.

Sales channels and clearing accounts

A clearing account is a holding account in Xero (or similar software) that sits between your sales platform and your bank. Each sale, fee and refund is posted into it, and each payout is taken out of it. When everything matches, the clearing account balance goes back to zero. If it does not, you know something is missing.

How it works in practice:

1. A connector app such as A2X reads each Shopify, Amazon, eBay or PayPal settlement and breaks it into sales, fees, refunds, GST and other items.
2. It posts that summary into Xero against the right accounts, with the balance sitting in the clearing account.
3. When the payout hits your bank feed, you reconcile the deposit against the clearing account in one match.

Set up one clearing account per channel or gateway. This lets you track sales from each channel separately, which matters because each platform has different fees, customers and margins. If one marketplace brings in a big share of revenue but a much smaller share of profit, you want to see that in your reports rather than guess at it.

For the full setup, see our Shopify and Xero integration guide.

Fees, refunds and chargebacks

Fees are where online retail margins quietly disappear. Amazon is the clearest example, with separate charges for selling, fulfilment, storage and advertising, but every platform has its own schedule. Record each type of fee in its own expense account so you can see what each channel really costs. Our article on the hidden profit leaks in ecommerce goes deeper on this.

Refunds and returns. A refund reverses a sale, so record it against sales (or a sales returns account), not as a general expense. Returns also affect stock: an item that comes back in saleable condition goes back into inventory, while a damaged item may need to be written off. Decide on a rule and apply it consistently so stock is not counted twice.

For GST, a refund usually creates a decreasing adjustment, which reduces the GST you owe. The ATO says you generally need a valid adjustment note before you can claim it, unless the GST involved is $75 or less.

Chargebacks. A chargeback is when a customer disputes a payment through their bank or card provider. The platform pulls the money back, often with a dispute fee. Track chargebacks separately from refunds so you can spot fraud patterns and see the true cost of disputes.

Foreign currency. If you sell or buy in foreign currencies, compare the exchange rate your payment processor uses with the mid-market rate. Processor rates often include a margin that never shows up as a fee. Use accounting software that handles multiple currencies so exchange gains and losses are recorded properly.

GST basics for online sellers

This is a summary only. Our full guide to GST for online sellers in Australia covers the detail.

• Registration. You must register for GST when your GST turnover is $75,000 or more, based on either the current month plus the previous 11 months, or the current month plus the next 11 months.
• Exports. Goods you export are generally GST-free if you export them within 60 days of receiving any payment or issuing an invoice, whichever comes first. You can still claim GST credits on the costs of making those sales.
• Imports. Overseas sellers and marketplaces collect GST on low value goods (A$1,000 or less) sold to Australian consumers. For consignments over A$1,000, GST and duty are charged to the importer at the border.
• GST credits. You need a tax invoice to claim a GST credit, except for purchases of $82.50 or less. Check each platform, app and fee invoice to see whether GST has been charged.
• Reporting. GST is reported on your BAS. Businesses with GST turnover under $10 million generally use Simpler BAS.

Inventory and cost of goods sold

Cost of goods sold (COGS) is the direct cost of the products you sold in a period. Get it wrong and every margin figure in your business is wrong too. This is a summary; our guide to ecommerce inventory accounting and landed cost has the worked detail.

Key points:

• Landed cost. The true cost of stock includes more than the supplier’s invoice. The ATO’s cost price method includes all costs of bringing stock to its current condition and location, which can include freight, insurance, customs and excise duties, and delivery charges.
• Exclude GST. If you are entitled to GST credits, you generally leave the GST component out of your stock values.
• Year-end valuation. For tax, you value each item of trading stock at cost, market selling value or replacement value, and you can choose a different method for different items each year.
• Cost flow. If you cannot identify the cost of each item, first in, first out (FIFO) or weighted average cost are the usual approaches. The ATO does not accept last in, first out (LIFO).
• Simplified rules. Small businesses with aggregated turnover under $10 million (and, from 1 July 2021, businesses under $50 million that would otherwise qualify) may not need to account for the change in stock value if they reasonably estimate it changed by $5,000 or less over the year. Most stores turning over $1M or more will move well past that, so plan for a proper stocktake.
• Multiple locations. If you hold stock in more than one warehouse or with a third-party logistics provider, track quantities and values by location.

Inventory also ties up cash. Keep an eye on what you pay suppliers and when, forecast demand ahead of peak periods, and avoid holding more stock than you can sell in a reasonable time.

Your ecommerce accounting software stack

Most growing Australian online stores run a version of this stack. Our article on the ecommerce accounting software stack compares the options.

• Accounting software: Xero is a common choice for Australian ecommerce businesses. As a Xero Platinum Partner, our Xero accountants set up the chart of accounts, tracking categories and bank feeds.
• Connector: A2X summarises each payout from Shopify, Amazon, eBay, Etsy and PayPal and posts it to Xero, ready for one-click reconciliation.
• Inventory system: an inventory or order management tool (such as Cin7, or Shopify’s built-in inventory for simpler stores) that tracks quantities, costs and locations.
• Payment gateway feeds: direct feeds for PayPal, Stripe and similar so every gateway reconciles.
• Receipt capture: a tool that pulls supplier bills and receipts into Xero so GST credits are supported by tax invoices.

Do not post every order into Xero one by one. It clutters the file and makes reconciling payouts much harder. Summarised postings through a connector are cleaner and easier to check.

Amazon seller accounting

Amazon deserves its own mention because its settlement reports are more complex than most. A single settlement can include sales, refunds, referral fees, FBA fulfilment fees, storage fees, advertising charges, reimbursements and reserve holds, and the period it covers rarely lines up with a calendar month. Treat each settlement like any other payout: post the full breakdown to a clearing account and reconcile the deposit against it.

Watch for reimbursements for lost or damaged FBA stock, which affect both income and inventory, and for GST on Amazon’s fees. Our guide to Amazon seller accounting in Australia covers the detail.

The monthly close checklist for an online store

A monthly close is the routine that turns raw transactions into reports you can trust. Here is a checklist you can adapt for your store.

If you want this done for you, our ecommerce bookkeeping service runs this close every month.

KPIs that matter for an online store

Revenue is the number everyone watches and the least useful on its own. These three tell you more:

• Gross margin. Sales minus COGS, divided by sales. It shows what you keep after paying for the product itself. It only works if COGS includes landed costs.
• Contribution margin after ads and fulfilment. Sales minus COGS, minus the costs that rise with every order: platform and payment fees, pick, pack and shipping costs, and advertising. This is the money each order contributes to your fixed costs and profit. Measure it by channel and, where possible, by product.
• Cash conversion cycle. The number of days between paying for stock and getting paid for it. Work it out as days of inventory on hand, plus days to receive payouts, minus days you take to pay suppliers. A shorter cycle means less cash tied up.

We have deliberately not given target percentages. The right numbers depend on your products, channels and pricing, and generic benchmarks can mislead. Track your own trend month by month.

Tax planning and structure

This section is high level only, because the right answer depends on your circumstances.

• Structure. Online stores run as sole traders, partnerships, companies or trusts. Each is taxed differently and offers different levels of asset protection. A company that is a base rate entity (aggregated turnover under $50 million, plus a passive income test) pays tax at 25 per cent; other companies pay 30 per cent. Structure decisions are best made before you scale, not after.
• Plan before 30 June. Tax planning works when it happens before the year ends, with accurate management accounts and a reasonable estimate of closing stock.
• PAYG instalments. Once you are in the system, you prepay tax on your business income during the year, usually quarterly. Building this into your cash flow avoids a large bill at tax time.
• Records. Keep most business records for five years, including platform reports and payout summaries.
• Separate your finances. Use a dedicated business bank account and card. It simplifies bookkeeping and makes your records easier to defend.

Signs you need an ecommerce accountant

You may have outgrown a DIY or generalist setup if:

• Your books do not match what Shopify or Amazon is reporting.
• You are not sure how platform fees, discounts or ads are affecting your margins.
• You have never reconciled your payment gateways.
• Your clearing accounts carry balances nobody can explain.
• You are close to the $75,000 GST threshold and have not registered.
• Your BAS is often rushed or you are not confident it is right.
• Stock values in Xero are a guess.

One of our clients, an online retailer selling internationally, came to us because their margins did not add up. We connected A2X to Xero, rebuilt the chart of accounts, set up monthly inventory tracking and corrected the GST treatment. The owner now gets reliable monthly figures and accurate margins.

New Wave Accounting is a firm of Chartered Accountants and a registered tax agent (25483393), a Xero Platinum Partner and A2X certified. We work with online sellers across Australia from Mermaid Beach on the Gold Coast. Tax returns, BAS, tax planning and ASIC compliance sit in a monthly fee agreed up front, and everything else (bookkeeping, A2X setup, clean-ups, reporting) is quoted upfront in writing. Learn more about how we work as ecommerce accountants.

FAQ

What is ecommerce accounting?
Ecommerce accounting is bookkeeping, reporting and tax for businesses that sell online. It focuses on recording gross sales, fees and refunds from each platform, reconciling payouts through clearing accounts, tracking inventory and COGS, and getting GST right. Done well, it shows your true margin by channel.

Should I record my Shopify payouts as sales?
No. A payout is the net amount after fees, refunds and chargebacks, so recording it as sales understates revenue and hides costs. Record gross sales, fees and refunds separately, usually through a connector such as A2X and a clearing account, and reconcile the payout against that.

When does an online seller need to register for GST?
You must register when your GST turnover reaches $75,000 or more, looking at either the past 12 months or the next 12 months. You can register voluntarily below that. Once registered, you report GST on your BAS.

Do I charge GST on international sales?
Exported goods are generally GST-free if you export them within 60 days of receiving payment or issuing an invoice, whichever comes first. You can still claim GST credits on related costs. Digital products and services have their own rules, so check before you assume.

Do I need an accountant if I use Xero and A2X?
Software automates data entry, but someone still needs to set up the accounts correctly, check the GST coding, value stock and interpret the numbers. Many sellers find the software only works as well as the setup behind it.

Can I keep my existing bookkeeper?
Yes. An ecommerce accountant can work alongside your bookkeeper, tighten the processes and handle the tax and advisory side.

Talk to an ecommerce accountant

If your numbers do not line up with what your platforms report, or you want clean monthly figures you can make decisions on, talk to our ecommerce accountants. Your first call is free and takes 30 minutes. Book a FREE discovery call.

This is general information only and does not consider your circumstances. Talk to a registered tax agent before acting on it.

Sources

• ATO, Registering for GST: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst
• ATO, Choosing an accounting method for GST: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/accounting-for-gst-in-your-business/choosing-an-accounting-method
• ATO, GST reporting methods: https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas/goods-and-services-tax-gst/gst-reporting-methods
• ATO, Exports and GST: https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/australians-doing-business-overseas/exports-and-gst
• ATO, GST on low value imported goods: https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/gst-for-non-resident-businesses/gst-on-low-value-imported-goods
• ATO, Adjustment notes: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/completing-your-bas-for-gst/making-adjustments-on-your-activity-statements/adjustment-notes
• ATO, Valuing trading stock: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/accounting-for-trading-stock/valuing-trading-stock
• ATO, Simplified trading stock rules: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/accounting-for-trading-stock/simplified-trading-stock-rules
• ATO, IT 2350 Income tax: value of trading stock on hand at end of year: cost price: https://www.ato.gov.au/law/view/pdf?DocID=ITR%2FIT2350%2FNAT%2FATO%2F00001&filename=law/view/pdf/pbr/it2350.pdf&PiT=20190710000001
• ATO, Changes to company tax rates: https://www.ato.gov.au/tax-rates-and-codes/company-tax-rate-changes
• ATO, Starting PAYG instalments: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/starting-payg-instalments
• ATO, Overview of record-keeping rules for business: https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/record-keeping-for-business/overview-of-record-keeping-rules-for-business
• Shopify Help Center, Lower or missing payouts: https://help.shopify.com/en/manual/payments/shopify-payments/payouts/lower-or-missing-payouts
• Shopify Help Center, Shopify Payments refunds: https://help.shopify.com/en/manual/payments/shopify-payments/payouts/refunds
• A2X, Payout reconciliation for ecommerce brands: https://www.a2xaccounting.com/brands
• A2X Support, Reconciling A2X for Shopify PayPal payouts in Xero (clearing account method): https://support.a2xaccounting.com/en/articles/5352225-reconciling-a2x-for-shopify-paypal-payouts-in-xero-video-tutorial