What accounting records do I need for online businesses?

Understanding why accounting records matter for online businesses

Running an online business often feels lighter and faster than running a traditional one. You can sell from your kitchen table, ship through a fulfilment partner, take payments automatically, and advertise with a few clicks. But the accounting side is not “automatic” in the same way. Money might land in your bank account daily, yet the story behind those deposits can be complicated: platform fees, refunds, VAT or sales tax, shipping charges, currency conversions, chargebacks, affiliate commissions, discounts, and inventory costs. Accounting records are how you translate all of that activity into something you can understand, manage, and report.

Good records help you answer practical questions: Are you actually profitable after fees? Which products are making money? How much cash do you need to restock? How much can you afford to spend on ads? They also support compliance: taxes, VAT/sales tax, payroll if you have staff, and any reporting you’re required to do based on your business structure or location.

This article explains the core accounting records most online businesses need, plus extra records that become important as you grow. Think of it as a checklist you can adapt to your specific model, whether you sell products, services, subscriptions, digital downloads, or a mix.

Start with the basics: a simple record-keeping framework

Before diving into specific documents, it helps to understand the basic framework most online businesses use. At a minimum, you need records that show: what you earned, what you spent, what you owe, what you own, and what you paid yourself. In accounting terms, that means revenue, expenses, liabilities, assets, and equity. You do not need to be an accountant to keep these records, but you do need a consistent system.

A practical approach is to keep records in two layers. The first layer is your “source documents” (invoices, receipts, statements, platform reports, contracts). The second layer is your “accounting summary” (your bookkeeping system, spreadsheet, or accounting software) where you categorize and reconcile those source documents. If you keep source documents but never summarize them, you’ll struggle to understand performance. If you summarize without keeping the underlying evidence, you’ll struggle to prove or defend your numbers.

Business setup records you should keep from day one

Even before your first sale, you’ll accumulate records that matter later. Keep these in a dedicated “Business admin” folder (digital is fine) and back it up.

Business registration and legal structure documents

Keep your formation documents, registration certificates, partnership agreements, shareholder agreements, and any filings that prove your business structure. These documents affect how you report income, how you pay yourself, and what taxes apply. They also matter for bank accounts, payment processors, and lenders.

Tax registration and identification details

Store any tax IDs, VAT registration confirmation, sales tax permits, and correspondence related to tax accounts. You may need these when setting up marketplaces, invoicing business customers, or configuring your checkout tax settings. If you operate internationally, keep proof of registrations in each region where you must register.

Banking and payment processor onboarding records

Keep copies of the emails, agreements, or onboarding confirmations for your business bank account and payment processors (for example, Stripe, PayPal, Shopify Payments, or marketplace payment services). If there’s ever a dispute or account hold, these records help you show what terms you agreed to and when.

Sales and revenue records: proving what you earned

Revenue records are the backbone of your accounting. Online sales can be messy because the amount the customer pays is not always the amount you receive, and the timing can differ. You need records that allow you to reconstruct every sale and connect it to the cash you actually received.

Sales invoices or order confirmations

If you invoice customers (common in services, wholesale, B2B, and some digital products), keep copies of all invoices you issue, including invoice numbers, dates, customer details, and itemized descriptions. If you sell through an ecommerce store where customers receive order confirmations rather than “invoices,” those order records serve a similar purpose. Make sure you can export them with details such as item price, discounts, shipping, and tax.

Receipts and proof of payment

For each sale, keep proof of payment. In many online businesses, this is a transaction record in your payment processor or marketplace dashboard. You want to be able to show the gross amount paid by the customer, the fees withheld, and the net amount settled to your bank. If you accept multiple methods (card, PayPal, bank transfer, buy-now-pay-later), you need records for each channel.

Daily settlement or payout reports from platforms

Marketplaces and platforms often pay you in batches rather than one transaction per order. Keep payout reports that show which orders were included in each payout and what deductions were taken. This is crucial for reconciling deposits. Without payout reports, your bank statement will show a lump sum that’s hard to explain.

Sales returns, refunds, and chargebacks

Refunds and chargebacks reduce revenue, but they often appear as separate transactions. Keep records of refunds issued, return authorizations, and chargeback notices. You also want to track the reason for refunds and chargebacks, because this can reveal product issues, shipping problems, or fraud patterns.

Discounts, coupons, gift cards, and store credit

Discounts are not just marketing; they are part of your revenue story. Keep records of discount codes, campaigns, and how they are applied. Gift cards and store credit can create timing differences because you may receive cash when the gift card is sold, but you may not deliver goods until it is redeemed. Track gift card liability (amounts outstanding) so you understand what you “owe” customers in future products or services.

Subscription billing and deferred revenue records

If you sell subscriptions, memberships, or pre-paid service packages, keep detailed subscription billing reports. Depending on your accounting approach and any applicable rules, you may need to recognize revenue over time rather than all at once. Even if you keep things simple, you still need records of subscription start dates, renewals, cancellations, and plan changes.

International sales and currency conversion details

If you sell globally, you may have payments in multiple currencies. Keep records showing the exchange rate used and any conversion fees. Otherwise, your bank deposits may not match the amounts shown in your store. Many processors provide a “balance transaction” view that includes exchange rates and fees—export it and store it.

Expense records: proving what you spent

Expenses are where online businesses can leak profit quietly. Small monthly subscriptions, app fees, and advertising spend can add up. For taxes and decision-making, you need a clear record of each expense, what it was for, and how it relates to your business.

Receipts for purchases and subscriptions

Keep receipts for everything you buy for the business: software subscriptions, stock photos, apps, plugins, office supplies, packaging, and equipment. Many online tools email receipts automatically; file those emails or download PDFs. For recurring subscriptions, keep the invoices or receipts for each billing period.

Supplier invoices and bills

If you buy inventory, materials, or services from suppliers, keep supplier invoices and any purchase orders. Make sure the invoice includes quantities, unit costs, shipping charges, and taxes. These records help you track cost of goods sold (COGS) and inventory values.

Advertising and marketing spend reports

Advertising is often the largest expense for online businesses. Keep monthly statements or transaction exports from ad platforms such as Google Ads, Meta, TikTok, Pinterest, or influencer networks. Store the reports that show spend by date and campaign. This is not only helpful for taxes but essential for measuring performance and profitability.

Shipping, postage, and fulfilment costs

If you ship products, keep records of postage purchases, courier invoices, fulfilment centre bills, and packing slip data. If you use a third-party logistics provider (3PL), you’ll often have fees for storage, picking, packing, inserts, returns handling, and disposal. These costs can materially affect margins, so the records should be detailed enough to allocate costs to orders or product lines if needed.

Platform fees and transaction costs

Marketplaces and payment processors charge fees, and those fees may be deducted before you receive cash. Keep fee reports and statements: marketplace commissions, payment processing fees, listing fees, and subscription plan charges. These are necessary to reconcile payouts and to understand the true net revenue from each channel.

Professional services and contractor invoices

If you hire freelancers, agencies, or consultants (designers, developers, accountants, virtual assistants, copywriters), keep contracts, invoices, and proof of payment. You should also track what the work was for, because different services may be treated differently for tax purposes and budgeting decisions.

Travel, meals, and mixed-use expenses

Many online business owners have expenses that are partly personal and partly business (home internet, phone, travel, meals). Keep records that help you separate business use from personal use. A simple note on the receipt or a monthly allocation in your bookkeeping can prevent confusion later. The key is consistency and a clear basis for any split.

Banking records: the anchor for accuracy

Your bank and card statements are the anchor that keeps your bookkeeping grounded in reality. Almost every accounting error becomes obvious when you reconcile (match) your records to bank and payment accounts. For online businesses with multiple payment channels, reconciliation is especially important.

Business bank statements

Download and store monthly bank statements. Even if your bank provides online access, keeping your own copy ensures you can retrieve statements if accounts change or access is lost. Bank statements support deposits, withdrawals, interest, bank fees, and transfers.

Business credit card statements

If you use a business credit card, keep statements and make sure each line item has a receipt when relevant. Credit cards are common for online subscriptions and ad spend, so they often contain large volumes of transactions. Reconciliation helps you spot duplicate charges, forgotten subscriptions, and unauthorized activity.

Payment processor statements and balance activity

Payment processors often function like mini-banks with their own balances, holds, and reserves. Keep monthly statements and transaction exports showing gross sales, refunds, disputes, fees, and payouts. If your processor holds reserves or delays payouts, you need those records to understand cash flow timing.

Marketplace settlement statements

For marketplaces, keep settlement statements and order-level exports. These often show complex deductions: referral fees, fulfilment fees, advertising charges, returns, and reimbursements. Accurate bookkeeping depends on these reports more than on the bank deposit itself.

Tax records: getting ready for filing without panic

Tax compliance is one of the biggest reasons to keep accounting records. The specific taxes vary by location and business model, but the underlying record types are similar: documents that support income, expenses, and tax collected or paid.

VAT or sales tax records

If you collect VAT or sales tax, you need records showing how much you collected, from whom, and in which jurisdiction. Keep reports from your ecommerce platform or tax calculation tool showing tax collected by region and period. Also keep records of any VAT you pay on business purchases if you reclaim it (where applicable). If you sell through marketplaces that collect and remit taxes on your behalf, keep the statements that show what they remitted and under which rules.

Income tax and business tax filing records

Keep copies of tax returns you file and any supporting schedules. Store correspondence with tax authorities and confirmations of payment. These records provide continuity year to year and make it easier to respond if questions arise later.

Payroll and employment tax records

If you have employees, keep payroll reports, payslips, employment contracts, benefits documentation, and filings related to payroll taxes. Even if you use a payroll service, you should store exports and confirmations. Payroll mistakes can be costly, so reliable records are important.

Contractor payment records and required forms

If you pay contractors, keep their invoices and payment records. Depending on your jurisdiction, you may need to collect certain information from them and issue forms or reports. Organize contractor records by person or vendor and by tax year so you can quickly see total payments.

Inventory and cost of goods sold: essential for product-based businesses

If you sell physical products, you need records that track inventory and the costs associated with producing or purchasing it. Without inventory records, profit can look better or worse than reality, and cash flow surprises become common.

Purchase orders and supplier confirmations

Purchase orders help you track what you intended to buy and compare it to what you were billed for and what you received. Keep supplier confirmations, pro forma invoices, and final invoices together. This is particularly important if you import goods and the final cost changes due to shipping or duties.

Goods received notes and delivery confirmations

When inventory arrives, record what was received and when. This can be a formal goods received note, a warehouse receiving report, or a confirmation from your 3PL. This record helps you reconcile supplier invoices and spot missing or damaged items.

Inventory counts and stock adjustments

Keep records of stock counts (cycle counts or full counts), along with any adjustments for shrinkage, damage, or write-offs. Online businesses often discover discrepancies due to returns, warehouse errors, or lost shipments. Adjustments should be documented, with reasons, so you can improve operations and maintain accurate financial statements.

Bill of materials and production records for handmade or manufactured goods

If you make products, keep bills of materials (BOMs), production logs, and cost sheets. Even basic records that estimate material and labour costs can help you price properly. As you scale, these records become more important for analyzing margins and planning production.

Import duties, customs paperwork, and landed cost calculations

If you import, keep customs declarations, duty invoices, broker fees, and shipping documentation. These costs are part of the landed cost of your inventory. Without capturing them, product profitability will be understated or misrepresented.

Accounts receivable and accounts payable: who owes what

Many online businesses are paid immediately, but not all. If you do B2B sales, wholesale, or services, you may send invoices and wait to be paid. Similarly, you may buy from suppliers on payment terms. To stay in control, keep clear records of what you are owed and what you owe.

Accounts receivable ledger

This is a list of unpaid customer invoices, showing invoice dates, due dates, amounts, and payment status. Even a simple spreadsheet works at the start. Without it, overdue payments slip through the cracks and cash flow becomes unpredictable.

Accounts payable ledger

Track supplier invoices you have received but not yet paid. Include due dates and any early payment discounts. This helps you manage cash flow and maintain good supplier relationships.

Customer and supplier communications about billing

Keep key emails or messages about billing disputes, agreed discounts, payment plans, and refunds. You don’t need to archive every conversation, but you should store anything that changes the financial terms of a transaction.

Fixed assets: equipment, computers, and long-term tools

Online businesses often buy laptops, cameras, lighting, phones, printers, and other equipment. These are not just expenses; some items may be treated as assets depending on cost and applicable rules. Good records help you track ownership, warranties, and any depreciation or allowances that apply.

Asset purchase receipts and invoices

Keep invoices that show the item purchased, serial number (if applicable), date, and cost. Store warranty documents and proof of payment. If you later sell or dispose of the asset, keep records of the sale price and date.

Asset register

An asset register is a list of long-term items your business owns, along with purchase dates, costs, and disposal details. For a small business, it can be a spreadsheet. This register helps you understand what you own and supports tax calculations if needed.

Payroll, owner pay, and drawings: keeping personal and business clean

Many online business owners blur the line between business and personal money, especially early on. That makes record-keeping harder and can create tax complications. Even if your business is small, keep clean records of how you pay yourself and what money moves between you and the business.

Owner draws, dividends, or salary records

Track each payment to yourself: date, amount, method, and purpose. If you take owner draws, record them consistently. If you pay a salary, keep payroll records. If you pay dividends, keep the paperwork and board minutes or approvals required for your structure. The right method depends on your jurisdiction and business type, but the record-keeping principle is the same: document what happened.

Reimbursements for personal payments made on behalf of the business

If you occasionally pay for business expenses with a personal card, keep the receipt and create a record showing the business reimbursed you (or that the expense is treated as money you contributed). Regularly mixing personal and business spending can become chaotic, so try to keep it rare and well documented.

Loans, financing, and investor records: documenting obligations

As you grow, you might use a loan, a line of credit, revenue-based financing, or investment. Financing can add complexity because repayments include principal and interest, and agreements often contain fees and conditions.

Loan agreements and repayment schedules

Keep signed loan agreements, repayment schedules, and statements from the lender. Store records of each repayment and break out interest and fees where possible. If you refinance or change terms, keep the updated agreements.

Investor documents and cap table records

If you take on investors, maintain a cap table (ownership record), subscription agreements, share certificates, SAFE notes, or other instruments, and any board or shareholder resolutions. These records matter for reporting, due diligence, and future fundraising.

Ecommerce and digital platform records: the online-specific essentials

Online businesses rely heavily on platforms that produce data. Some of that data is operational (orders and shipping), and some is financial (fees, taxes, payouts). Your accounting records should incorporate platform exports and reports in a way that supports your books.

Ecommerce platform order exports

Whether you use Shopify, WooCommerce, Squarespace, Wix, BigCommerce, or another system, make sure you can export order data regularly. The export should include order number, date, customer location, items, discounts, shipping, tax, and payment status. Even if you do not export daily, a monthly export can be a valuable backup.

Marketplace reports for each channel

If you sell on multiple marketplaces, keep separate reports for each channel. Different platforms treat fees, taxes, and refunds differently. Channel-by-channel records make it easier to measure profitability per platform and to spot issues like excessive returns on one marketplace.

Affiliate and influencer program statements

If you pay affiliate commissions or influencer fees based on sales, keep program statements showing commissions earned, payment dates, and related transactions. This supports your expense records and helps you evaluate marketing partners objectively.

Digital product delivery records

If you sell digital downloads, courses, or software access, keep records of what was delivered and when: access logs, license keys issued, download confirmations, and refund policies. These records can help in customer disputes and chargeback cases, and they can support revenue recognition if you deliver over time.

Reconciliation records: the habit that prevents headaches

Reconciliation is the process of matching your accounting records to your bank statements, payment processor balances, and platform payouts. Keep records of reconciliations or at least maintain a consistent routine that leaves an audit trail. Many accounting tools store reconciliation history automatically; if you use spreadsheets, keep a monthly file with your reconciliation checks.

A simple reconciliation record might include: the month, the ending bank balance, the list of deposits and withdrawals matched, and any differences explained (for example, pending payouts or uncleared refunds). This discipline is one of the biggest predictors of accurate accounting.

Financial statements and internal reports: turning records into insight

Source documents and bookkeeping entries are the raw material. Financial statements are the useful outputs. Even if you are not required to produce formal statements, generating them regularly can help you make better decisions.

Profit and loss statement

This summarizes revenue minus expenses for a period. For online businesses, it’s helpful to break out categories such as platform fees, shipping, advertising, software, and cost of goods sold. A clear profit and loss statement helps you understand whether growth is healthy or just expensive.

Balance sheet

This shows what you own and owe at a point in time. Online businesses often have key balance sheet items like inventory, accounts receivable, VAT/sales tax payable, payment processor balances, and loans. Reviewing the balance sheet helps you catch issues like growing tax liabilities or inventory that is not turning.

Cash flow tracking

Profit does not always equal cash. An online business can be profitable but still run out of cash due to inventory purchases, ad spend timing, or delayed payouts. Keep cash flow records such as weekly cash forecasts, expected supplier payments, and upcoming tax payments. Even a basic cash tracker can reduce stress and prevent emergencies.

How long should you keep accounting records?

Record retention rules vary by jurisdiction and tax authority, but the safe approach is to keep records for multiple years, including filed returns and supporting documents. Since rules differ, choose a retention period that satisfies your local requirements and the needs of your business. Many businesses keep core tax and accounting records for at least several years. If you are unsure, ask a qualified accountant in your jurisdiction and then apply the chosen policy consistently.

Also remember that retention is not only about taxes. If you sell products, records may be useful for warranty claims, supplier disputes, or customer chargebacks. If you plan to sell the business, potential buyers will want historical financial records. Good retention practices protect you and increase business value.

Digital record-keeping best practices for online businesses

Because online businesses are already digital, it makes sense to keep records digitally too. The goal is to make it easy to find what you need quickly and to ensure nothing disappears if an account is closed or a service changes.

Use a consistent folder structure

Create folders by year and month, and within each month create subfolders like “Sales,” “Expenses,” “Bank,” “Tax,” and “Contracts.” Store PDFs of statements and key exports there. Consistency matters more than perfection. If you can find a document in under a minute, your system is working.

Name files clearly

File names should be sortable and searchable. A simple format is “YYYY-MM-DD Vendor Amount Description.” For example: “2026-01-10 MetaAds 250.00 January campaign invoice.” This makes it easier to locate a record without opening every file.

Back up your records

Use at least one backup in a separate system, such as cloud storage plus a local encrypted drive. Online businesses depend on accounts that can be suspended or closed. If your only copy of key statements is inside a platform dashboard, you are vulnerable.

Keep records tied to transactions

Whenever possible, link receipts and invoices to the corresponding transaction in your bookkeeping system. Many accounting tools let you attach files directly. If you are using spreadsheets, include a column with the file name or a link to the stored document. This creates a clear trail from summary numbers back to evidence.

Common record-keeping mistakes online businesses make

Knowing what to avoid can be as helpful as knowing what to keep. Here are frequent issues that cause confusion, tax problems, or poor decision-making.

Relying only on bank deposits

If you only look at bank deposits, you miss the detail: fees, refunds, taxes, and timing differences. Two businesses with the same bank deposits might have very different profitability. Always keep platform and processor reports to explain what happened behind the deposit.

Not tracking refunds and chargebacks properly

Refunds and chargebacks can quietly distort revenue if you do not record them consistently. They can also create cash flow shocks. Keep detailed refund records and review them regularly to spot operational problems.

Ignoring small recurring subscriptions

Small recurring expenses like apps, tools, and plugins add up. Keep subscription receipts and review them quarterly. Cancel anything you no longer use. This simple habit can meaningfully improve margins.

Mixing personal and business spending

Mixed spending makes bookkeeping slower and increases the risk of errors. Use a separate business bank account and business card where possible. When mixing happens, document it clearly and reimburse or classify it consistently.

Not keeping evidence for major deductions

If you claim significant business expenses, you need supporting documents. This is especially important for higher-value equipment, travel, and contractor payments. Keep invoices, receipts, and a short note about the business purpose when it is not obvious.

Record checklist by online business type

Different online models have different record priorities. Use the lists below to focus on what matters most for your situation.

Ecommerce (physical products)

Keep: order exports, payout statements, payment processor activity, supplier invoices, inventory receiving records, shipping and fulfilment invoices, return records, and inventory counts. Pay special attention to cost of goods sold and platform fees, because they determine true margin.

Digital products and courses

Keep: sales records, payment processor reports, platform fees, refund and chargeback records, affiliate commission statements, and delivery/access logs. If you deliver content over time, keep subscription and access change history.

Services and freelancing

Keep: client contracts, proposals, invoices, proof of payment, expense receipts, and time or project logs if you bill by hours or milestones. Accounts receivable tracking is often more important here than for ecommerce.

Subscription businesses

Keep: subscriber lists, billing reports, churn and cancellation records, refunds, and payment failures. Track outstanding obligations such as prepaid periods, and keep clear records of plan changes and proration.

Marketplace-first sellers

Keep: settlement statements, order-level exports, fee breakdowns, advertising charges, reimbursement reports, and returns data. Marketplaces can be complex; your platform reports are often the only way to fully explain net payouts.

Putting it all together: a practical monthly routine

Records become manageable when you follow a routine. A monthly workflow keeps your books current and reduces year-end stress.

First, download and file all monthly statements: bank, credit card, payment processors, and marketplace settlements. Second, export key reports from your ecommerce platform and advertising accounts. Third, gather receipts for all expenses that are missing documentation. Fourth, reconcile bank and payment accounts so you know the numbers match reality. Fifth, review a basic profit and loss statement and ask a few questions: Did advertising spend increase? Did refunds spike? Did fees rise? Are margins healthy? Finally, set aside money for taxes based on your expected liability so you are not surprised later.

This routine is not about bureaucracy. It’s about giving yourself clarity. When you know your numbers, you can make decisions quickly, negotiate with suppliers confidently, scale ads responsibly, and sleep better.

Final thoughts: the records you need are the records that tell the full story

The accounting records you need for an online business are the ones that let you reconstruct the full story of every transaction: what the customer paid, what fees were deducted, what taxes were involved, what you delivered, what it cost you, and what cash you actually received. Start with the essentials—sales records, expense receipts, bank and processor statements, and tax-related documents—then add complexity as your business grows, especially around inventory, subscriptions, and multi-channel selling.

If you build a consistent record-keeping habit early, you’ll spend less time untangling problems and more time running your business. Your records become a tool, not a chore: a reliable way to understand performance, plan growth, and meet your obligations confidently.