Why generic accountants cost eCommerce sellers thousands
In short
Generic accountants often treat marketplace payouts like ordinary bank receipts, which can misstate revenue, fees, stock, VAT and import VAT. The errors are rarely visible on a tax return but they distort margin, VAT and tax decisions. This guide explains the six most common mistakes, the questions to ask an ecommerce accountant, and how changing accountants works.
Most generic accountants are perfectly good at what they were trained for: a business that invoices customers and gets paid into the bank. Online selling does not work like that. Amazon, Shopify, eBay, Etsy and TikTok Shop pay you a net settlement that has already had fees, refunds, advertising and sometimes VAT taken out of it.
When an accountant who does not work with marketplaces every week posts those settlements as if they were simple sales, the errors compound. They rarely show on a tax return, but they distort your margin, your VAT position and every decision you make from the numbers. This is where a specialist ecommerce accountant earns their fee.
Below are the six errors we see most often, each with an illustrative example. The figures are invented to show the effect, not taken from a client.
The six most common errors
1. Gross settlements posted as revenue
The most common error is treating each marketplace payout as the sales figure. A payout is sales minus fees, refunds, ads and reserves, so revenue is understated and costs disappear.
Illustrative example: a seller makes £100,000 of sales on Amazon in a year. Fees and advertising come to £30,000, so £70,000 is paid out. If the accountant records £70,000 as turnover, revenue is understated by £30,000 and £30,000 of costs never appear. The profit figure might be right, but the margin analysis is wrong.
It can matter for VAT too. VAT registration is based on taxable turnover over a rolling 12 months, with a threshold of £90,000 according to GOV.UK. In this example, the business looks to be under the threshold on payouts, when its sales are over it.
2. Marketplace fees in one lump
Even when gross sales are recorded, fees are often posted as a single “Amazon fees” or “selling costs” line. That hides the difference between referral fees, fulfilment fees, storage, advertising and subscription charges.
Illustrative example: a seller with £18,000 of “Amazon fees” in their accounts cannot tell whether the problem is FBA fees on bulky products, long-term storage, or sponsored ads. Each needs a different fix. Split by type and by channel, the same £18,000 tells you exactly where margin is going.
3. Refunds and chargebacks netted off
Refunds that are netted inside the payout disappear from the accounts. You lose sight of return rates by product, and VAT on refunded sales may not be adjusted correctly.
Illustrative example: £5,000 of refunds netted against sales means revenue is £5,000 lower than reality and refunds show as zero. A product with a 15% return rate looks no different from one with 2%.
4. Stock not valued at the year end
Many generic accountants post every stock purchase straight to cost of sales and never take a closing stock figure. In a growing business, this understates profit in one year and overstates it in the next.
Illustrative example: a seller ends the year holding £20,000 of stock at cost. If that is ignored, profit for the year is £20,000 too low. When the stock sells next year, profit is £20,000 too high. Tax planning, lending applications and pricing decisions are all made on the wrong figure.
Proper stock valuation starts with an accurate landed cost per unit, including freight and duty. Our guide on calculating UK import duty shows how that is built.
5. Marketplace VAT handled wrongly
Online marketplaces are responsible for VAT on some sales but not others. Under the current rules, GOV.UK explains that marketplaces account for VAT on imported consignments of £135 or less, and on goods in the UK sold by sellers who are not established in the UK. A UK-established seller generally accounts for VAT on its own sales.
Illustrative example: a UK VAT-registered seller assumes “Amazon handles the VAT” and leaves £60,000 of VAT-inclusive marketplace sales off their return. At the 20% standard rate, that is £10,000 of output VAT undeclared, plus potential penalties and interest when it is found. The reverse also happens: VAT declared on sales the marketplace has already accounted for.
6. Import VAT missed or double counted
For VAT-registered importers, import VAT is usually recoverable. Generic accountants often post it as a cost, miss it entirely, or claim it twice from both a C79 certificate and a postponed import VAT statement.
Illustrative example: a seller imports four containers a year with £2,500 of import VAT each. Posting that as cost of goods overstates costs by £10,000 and means £10,000 of VAT is never reclaimed. Claiming it twice creates a £10,000 VAT liability waiting to be found. Our guide to postponed VAT accounting explains how it should work.
What these errors have in common
Every error above comes from the same root cause: the accounts are built from bank deposits rather than from the marketplace’s own settlement data. The fix is reconciliation. Each settlement is broken down into sales, fees, refunds, VAT and reserves, then matched to the payout.
For Amazon, Shopify, eBay and Etsy, we use A2X to do this, with other channels connected through suitable integrations. You can see how it works on our multi-platform reconciliation service.
Why fixing it later costs more
These errors are cheaper to prevent than to unwind. Once a year of settlements has been posted as net payouts, correcting it means going back through every settlement report, rebuilding sales, fees and refunds by channel, and checking each VAT return that relied on the old figures. If a VAT return was wrong, the error may need correcting on a later return or disclosing to HMRC, depending on its size.
Stock is similar. Without a closing stock figure for prior years, opening balances have to be reconstructed from purchase records and inventory reports, which takes time and judgement. Getting the structure right from the first month avoids all of this.
Questions to ask an ecommerce accountant
Before you appoint anyone, ask these. The answers tell you quickly whether they work with online sellers every week.
| Question | What a good answer sounds like |
|---|---|
| How do you record Amazon or Shopify payouts? | Settlements are split into sales, fees, refunds and VAT, usually using a tool such as A2X, then reconciled to the bank. |
| How do you handle cost of goods? | By product category or SKU, using landed cost including freight and duty. |
| Do you value stock at the year end? | Yes, with a stock count or inventory report, valued at the lower of cost and net realisable value. |
| Who accounts for VAT on my marketplace sales? | A clear answer by channel and by where you are established, not “the marketplace handles it”. |
| How do you treat import VAT? | Recoverable for VAT-registered importers, evidenced by the PVA statement or C79, claimed once. |
| Which software do you use, and who pays for it? | A clear answer. At eCounts, Xero or QuickBooks is included in the fee. |
| Who will actually do my work? | A named person you can speak to. |
| What is the notice period? | Ideally short. Our agreements are rolling monthly with no minimum term. |
How to change accountants
Changing accountants is less disruptive than most sellers expect. Our step-by-step guide on how to switch accountants covers the full process; in short, the steps are:
- Appoint your new accountant and agree the scope and start date.
- Professional clearance. Your new accountant writes to the outgoing firm asking whether there is any professional reason not to act, and requesting handover information such as prior accounts, tax returns and working papers.
- HMRC authorisation. You authorise your new accountant to deal with HMRC on your behalf. GOV.UK explains that this is normally done online, with the paper 64-8 form used only where online authorisation is not possible.
- Bookkeeping file transfer. Your Xero or QuickBooks file is moved to the new accountant’s subscription, or they are given access to your existing one.
- Review and clean-up. The new accountant reviews the existing records, including the errors above, before the next VAT return or year end.
You do not need to wait for your year end to switch. It is usually simplest to change between VAT quarters so one firm owns each return. The most common delay is an unpaid final invoice with the outgoing firm, so settle or agree it early.
Choosing the right fit
A generalist is not always the wrong choice. If you sell a handful of items through one channel with no stock or imports, a simple setup may be enough. Once you have multiple channels, stock, imports or VAT registration, the cost of getting the numbers wrong usually outweighs the difference in fees.
At eCounts your accounts are led by an ICAEW chartered accountant, and the integrations are built and maintained in-house. You can read more about the team or compare our fixed monthly fees on the pricing page.
If you are thinking about changing accountants, book a discovery call and we will walk you through what the switch would involve for your business.
