E-commerce accounting: invoicing, VAT, software... follow our guide to comply!
How do you manage e-commerce accounting? If you want to create an e-commerce site or have already launched your online shop, this is a question you'll be asking yourself.
Yes, you want to do things right, and accounting is an important part of your business. From a legal point of view, there are legal obligations to be met, such as opening a bank account, issuing invoices to customers, and keeping accounts for certain businesses.
Let's take a look at some of the points you need to bear in mind if you want to manage your e-commerce accounts properly.
Opening a bank account
This is the starting point for selling online. All companies are obliged to open a bank account for their business. This is because you will need to receive payment for the orders your customers place with you.
Now, are you obliged to open a business bank account ? This will depend on the status of your business:
- for companies with share capital, it is compulsory;
- for self-employed entrepreneurs and sole traders, a standard bank account is sufficient as long as it is dedicated to their business and separate from their personal accounts.
Managing invoicing
Invoicing: an essential step
Invoices form the basis of your e-commerce accounting. The law is very clear:
"Any purchase of products or provision of services for a professional activity must be invoiced" Art. L441-3 of the French Commercial Code.
Your online shop is no exception to the rule! What's more, in e-commerce, the invoice must be issued when the order is dispatched, and not when payment is received.
"The seller is obliged to issue the invoice as soon as the sale is completed or the service provided" - Art. L441-3 of the French Commercial Code.
It must include all the mandatory information required.
To meet this obligation, you can :
- generate an electronic invoice when the order is placed, which your customers will receive by e-mail in PDF format and/or via their customer area;
- generate and print the invoice to include in the parcel when it is dispatched;
- or opt for both, as long as the two invoices are strictly identical.
If you'd like to automate the issuing of invoices to save time and avoid human error:
- check whether your e-commerce platform or marketplace on which you sell allows you to manage this natively or via additional modules;
- use invoicing software that interfaces with your e-commerce platform.
💡 Download customer invoices on a regular basis (weekly or monthly) in order to gather supporting documents for your accounts, if your solution doesn't manage this automatically.
Issuing a credit note
In online sales, customers have 14 days to retract their order, whatever the reason. You will inevitably be faced with this situation at some point.
In this case, you can offer your customer a credit note, which they can decide to accept or not. You will then need to generate a credit note invoice, which will correct the first invoice they received.
💡 Here again, you can automate the issue of a credit note invoice using your invoicing software or via your e-commerce platform if it allows you to manage this directly.
VAT management
VAT invoicing and collection: who is affected?
VAT, or value added tax, is a tax payable by almost all businesses.
In fact, some businesses are automatically exempt from VAT, while others can opt for this under certain conditions:
- with auto-entrepreneur status, VAT exemption applies automatically ;
- sole proprietorships (EI, EIRL, etc.) may opt for the micro-enterprise scheme and therefore the VAT exemption;
- all businesses with a turnover not exceeding €85,800 from the sale of goods can also opt for the exemption.
In this case, you will not need to invoice your customers for VAT, but will need to issue an invoice without VAT, clearly stating "VAT not applicable, art. 293 B of the General Tax Code".
VAT on sales within France
If you are liable for VAT, you will need to add it to the sale price so that you can collect it and redistribute it to the tax authorities. The rate varies according to the type of goods sold.
The general rate applicable in France is 20%, whether you are selling on a B2B or B2C basis. Reduced VAT rates of 10%, 5.5% and even 2.1% apply to certain types of product, such as :
- books
- foodstuffs
- pet food
- medicines
- works of art
- equipment for the disabled, etc.
To find out more, see the full list of the different VAT rates in force in 2024.
💡 So don't forget to set the right VAT rate for each of your products in your e-commerce solution.
VAT for e-commerce sales in the EU
The previously very complex intra-Community VAT system has been simplified from 1 July 2021.
Here's the rule: if you sell goods worth more than €10,000 (excluding VAT) in an EU country, then you are liable for VAT according to the rules in force in the recipient country.
To pay the amount due, go to the one-stop VAT shop (OSS).
Here's an illustrated example to help you find your way around:
A French company sells swimwear on its online shop and has to collect VAT. It delivers only to France and Spain, where its customers are located. In 2024, it generated sales of €45,000 excluding VAT in Spain, and exceeded the €10,000 threshold on 1 July.
It must therefore :
- invoice, collect and pay French VAT at 20% on the €10,000 turnover in Spain,
- invoice, collect and pay Spanish VAT at 21% (at the one-stop shop) on the 35,000 euros above the threshold.
VAT on sales in the UK
As you know, from 1 January 2021, the United Kingdom will no longer be part of the European Union. As a result, every sale through your e-commerce site is now an export, and comes with its own set of formalities.
You'll need to obtain an EORI number, and make sure you register with HMRC to declare and pay UK VAT.
Here are the formalities:
- if your sale does not exceed £135: you must pay UK VAT directly;
- if your sale exceeds £135: no VAT to pay, in the same way as exports outside the EU.
💡 Check that your e-commerce platform takes account of this UK specificity, or whether a plug-in, module or software can do so.
Equip yourself with e-commerce accounting software
You can, of course, manage your invoices and accounts with an Excel file. This is perfect when you're just starting up your business and sales are still low. But as soon as the pace of orders picks up (which is all the bad news we wish you), carrying out these tasks manually can quickly become time-consuming.
Many e-commerce solutions allow you to produce invoices and credit notes, and possibly export your sales, but they don't allow you to record the financial flows of your business in your accounts.
It is therefore highly recommended that you turn to sales management software that includes an accounting module, such as Lundi Matin Business, or professional accounting software.
As well as saving you time, they allow you to :
- automate workflows
- avoid re-entries and human errors,
- comply with legislation,
- track your expenses to control your cash flow and profitability.
Is it compulsory to use a chartered accountant?
Is it compulsory to use a chartered accountant to do the accounting for your e-commerce site? The answer is no.
Often, because of a lack of cash at the start of your business, you may be reluctant to outsource your accounting. This is understandable, but you should know that it is often a profitable investment for a number of reasons (sound advice on optimising costs, saving time, avoiding fines for non-compliance with tax legislation, etc.).
We therefore recommend that, as soon as you have sufficient cash and a large enough volume of sales, you call in a chartered accountant to take your e-commerce site to the next level.