E-Commerce businesses have a much lower rate of success than traditional businesses. It’s still very early for this business model and the landscape somewhat resembles the Wild Wild West. Yes, there are playbooks on how to win, yet the path to scaling fast, keeping healthy cash flow in the business, and building towards an exit…are still an unnecessary mystery to most that try their hand at building a brand.
I recently had a conversation with Jason Munckton from ECOM CPA, a firm that exclusively serves e-commerce businesses. We talked about the biggest financial challenges e-commerce businesses face, why outsourced accounting can be a game-changer, and when you should actually bring on a CFO/Controller.
Let’s get into it!
Why You Shouldn’t Treat Financial Operations as an Afterthought
One of the biggest surprises?
Even $40M+ revenue businesses often don’t know where they stand financially. Jason shared,“The number one thing people say to me in the thousands of meetings I’ve had is, ‘I don’t know where my business is at.’”
This lack of financial clarity is one of the most common challenges he sees among e-commerce founders.
For e-commerce brands, growth can be unpredictable. Between supplier costs, competition, margin compression, the proper ad strategy and inventory management, many founders run their business by checking their bank balance—but that’s not sustainable. A strong e-commerce accountant helps you:
- Track cash flow in real-time.
- Plan for inventory purchases.
- Optimize for tax savings BEFORE tax season.
- Prepare financials for a potential exit.
Without this, business owners often realize too late that they’re overpaying in taxes or miscalculating profits.
When Should an E-commerce Entrepreneur Hire a Specialized Accountant?
Here’s what Jason recommends:
- From Day 1:
- Do your own bookkeeping or outsource it. Jason noted that neglecting financial records can become an expensive problem.
- “If an 8 figure brand comes to ECOM CPAand they're like, ‘I've been neglecting things for two years,’ it's probably gonna bewell over $20,000to clean it up, potentially much more if they haven’t kept up with compliance.”
💡The underpayment penalty for estimated tax payments at the Federal level is 8%
- At Profitability ($200K+ Net Income):
- Upgrade to a specialized e-commerce tax accountantto optimize tax strategy. A good accountant can cut your tax bill significantly.
- At Scale ($1M+ Revenue):
- Consider outsourced fractional CFO services—but only if you have clean financials and need strategic financial guidance.
💡Jason also shared the story of a husband-and-wife team running an e-commerce business. They had ignored their financials and tax compliance for years. When they finally sought help, it took 2.5 years to untangle the mess and cost them a lot of their profit they had made to right the ship. After cleaning up the financial records and catching up on tax filings, they are now in a position to keep all the money they could have if they took the right approach from the start. This is why many accountants require year-round services before handling tax prep—it keeps financials clean and ensures they have a full picture before tax season.
If you're looking for an accountant who specializes in e-commerce, check outtop-rated accountants on Sam’s List.
Outsourced Accounting vs. Hiring In-House
Many founders assume they need to hire an in-house accountant as they grow. But it can be argued that outsourcing is often the better choice, no matter where your business is located. Here’s why:
Hiring In-House:
- High salary + benefits costs (can exceed $100K/year)
- Limited e-commerce expertise
- Risk of turnover, which means losing financial knowledge
- One person managing everything
Outsourcing to a Specialist:
- Fractional cost with access to a team of experts
- Industry-specialized accountants with deep e-commerce knowledge
- Consistent, reliable support
- A full team covering taxes, bookkeeping, CFO insights
If you want to explore outsourcing options, browse accountants on Sam’s Listwho specialize in e-commerce businesses.
Thinking About Selling Your E-commerce Business?
Many e-commerce brands are built with an exit in mind, and Jason highlighted a study from Accenture that found engaging a CFO can increase EBITDA compound annual growth rate (CAGR) up to 6.9% over a three year period, leading to an increased multiple. This is because a CFO helps ensure intellectual property is captured through a story told by the financials, reducing surprises during due diligence.
Jason shared a case study of one of his clients, an e-commerce brand that wanted to sell.
“When they came to us, their books were a mess. Their numbers didn’t tell a true story of their business’s potential. By restructuring their financials, they increased their valuation significantly and made the business far more attractive to buyers.”
Want expert financial guidance before selling your business?Find a specialized accountant on Sam’s List.
Debunking the “E-commerce is Easy” Myth
E-commerce gets a bad reputation. Some people think it’s all “TikTok dropshipping” and cheap products, but that’s far from reality.
Jason shared a success story from one of his clients: A pair of bio engineering PhDs who developed a unique product and turned it into an e-commerce brand.“They knew nothing about e-commerce, but they understood the science behind the product. With their knowledge of health and beauty science and ability to run the business with accurate financials, they will be able to scale very quickly in the saturated category that they are competing in.”
E-commerce isn’t just about selling products—it’s a powerful business model that can build wealth when done right.
Final Thoughts: Partnering with the Right E-commerce CPA
Accounting isn’t just about tracking numbers—it’s about using financial data to make better decisions. If you’re running an e-commerce business and:
- Feel like you don’t know where your money is going
- Are scaling fast but struggling with cash flow
- Want to sell in the next 1-3 years
Then it’s time to work with an e-commerce-focused accounting firm.
Looking for the right financial expert for your e-commerce business? Check outSam’s Listto find specialized accountants, bookkeepers, and fractional CFOswho actually understand your business.
Frequently Asked Questions (FAQ)
What’s the biggest accounting mistake e-commerce businesses make?
Not knowing their real cash position. Many founders check their bank balance instead of tracking inventory, expenses, and taxes accurately.
How do I know if I need a fractional CFO?
If you can’t answer basic financial planning questions like “How much inventory will I need next quarter?”—you need at least a controller before a CFO.
When should I outsource accounting for my e-commerce business?
From Day 1 for bookkeeping, at $200K+ profit for tax strategy, and at $1M+ revenue for CFO insights.
What are the tax benefits of working with a specialized e-commerce tax accountant?
They help structure your business correctly before tax season, reducing tax liability and ensuring compliance.
Wanna meet Jason and the ECOM CPA team?
If you made it this far, thanks for reading! If you’re an e-commerce business doing $1M+ in revenue, you can reach out to Jason and the ECOM CPA team directly here. They’d love to meet you!
Author: Kimi, Co-founder of Sam’s List
Kimi writes about what she's learning while building Sam’s List and shares honest takeaways from her conversations with accountants and financial advisors across the country. None of this is financial advice—just the stuff most people wish someone told them sooner.
