E-COMMERCE & ONLINE SELLER ACCOUNTANTS
Marketplace settlement reports are not bookkeeping records, and treating them as though they are is where most e-commerce accounts go wrong.A single Amazon or Shopify payout nets off gross sales, refunds, marketplace commission, advertising spend, FBA and fulfilment fees, shipping and sometimes VAT collected by the platform. Recorded as one line of income, it understates turnover, hides the true margin and produces a VAT return that will not stand up. Recorded properly, it tells you which products actually make money.
TaxDigit works with online sellers on Amazon, eBay, Etsy, Shopify and their own storefronts, both UK-based and selling into the UK from overseas. We deal with the accounting, the VAT and the corporation tax, and we set the bookkeeping up so the numbers mean something.
What e-commerce sellers need from an accountant
Different from a normal trading business in four specific ways.
- Settlement-level bookkeeping — decomposing marketplace payouts into gross sales, fees, refunds and VAT rather than booking the net figure.
- VAT done properly — registration, the deemed-supplier rules for marketplace sales, imports and postponed VAT accounting, and whether the Flat Rate Scheme helps or hurts.
- Stock and cost of sales — closing stock valuation, landed cost including duty and freight, and margin by product line rather than in aggregate.
- Multi-currency — foreign currency payouts, exchange differences, and the reconciliation of platform balances that never quite match the bank.
Where online sellers most often go wrong
These four errors account for most of the problems we are asked to fix.
- Booking net platform payouts as turnover, which understates sales and distorts the VAT return.
- Missing the VAT registration point because turnover is measured on the net figure rather than gross sales.
- Ignoring closing stock, which overstates cost of sales and understates profit — and therefore corporation tax.
- Assuming the marketplace has handled all the VAT. Sometimes it has, sometimes it has not, and the liability does not always sit where sellers assume.
Compliance points that catch online sellers
Three areas where the rules differ from an ordinary trading company.
Marketplace VAT
Since January 2021 online marketplaces are treated as the deemed supplier for many sales, particularly by overseas sellers and for imported consignments. Who accounts for the VAT depends on where the goods and the seller are, not on who took the payment.
Imports
Postponed VAT accounting lets you account for import VAT on the return rather than paying it at the border. It has to be claimed correctly and reconciled to the monthly statement, which is a step many sellers skip.
Corporation tax
25% main rate, 19% on profits up to £50,000, with marginal relief between £50,000 and £250,000 giving an effective 26.5% in the band. Those limits are divided between associated companies — relevant if you run more than one store through separate entities.
Who we help
- Amazon FBA and Seller Fulfilled Prime sellers.
- eBay, Etsy and marketplace traders.
- Shopify, WooCommerce and direct-to-consumer brands.
- Dropshippers and print-on-demand businesses.
- Overseas sellers with UK VAT obligations.
- Wholesalers moving into direct online retail.
Frequently asked questions
When do I need to register for VAT as an online seller?
When your taxable turnover passes the registration threshold on a rolling twelve-month basis, or when you expect to pass it within the next thirty days. The critical point is that turnover means gross sales, not the net amount the marketplace pays you. Sellers who measure it on payouts frequently register late.
Does Amazon handle my VAT for me?
Partly, and only in defined circumstances. Since January 2021 marketplaces are the deemed supplier for many transactions, especially where the seller is overseas or the goods are imported in low-value consignments. Plenty of sales fall outside those rules and remain your responsibility. Assuming the platform has covered everything is a common and expensive mistake.
How should I value my stock at year end?
At the lower of cost and net realisable value, with cost including what it took to get the goods to you — purchase price, freight and import duty. Ignoring closing stock overstates your cost of sales, understates your profit and produces a corporation tax figure that will not survive review.
I sell into the UK from overseas. What do I need?
Usually a UK VAT registration, and often a UK company depending on how you trade. Non-UK residents can be directors and shareholders of a UK company, but identity verification at Companies House is now mandatory. We can act as your authorised corporate service provider and verify you from outside the UK.
Which accounting software works best for e-commerce?
Xero or QuickBooks with a settlement-level integration such as A2X or Link My Books. The integration matters more than the ledger — it is what turns a marketplace payout into a correct set of accounting entries instead of a single mystery deposit.
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