The Best Chart of Accounts Setup for Ecommerce Businesses Using Shopify & Xero

Why Your Chart of Accounts Matters in Ecommerce

Your chart of accounts is the foundation of your financial system. In ecommerce, you’re dealing with unique complexities — like high transaction volumes, multiple payment gateways, and platforms like Shopify and PayPal — that require more precision than a standard setup.

A well-structured chart of accounts:

• Makes it easy to reconcile data between Shopify, A2X, and Xero
• Gives you clean, accurate monthly reports
• Allows you to track performance by product or channel
• Helps calculate real cost of goods sold (COGS) and profit margins
• Keeps GST accurate and auditable

TL:DR

Can’t be bothered reading the below and doing it yourself? No worries, we’ve prepared a chart of accounts template customised for ecommerce brands which you can download here:

Download ecommerce chart of accounts

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Core Features of a Great Chart of Accounts for Shopify + Xero

When building your ecommerce chart of accounts, the goal is to create structure without overcomplicating things. Here’s what that looks like in practice:

• Logical grouping of accounts (Sales, COGS, Fees, Overheads)
• Channel-specific breakdowns (Shopify, Amazon, etc.)
• Dedicated clearing accounts for each payment processor
• Proper separation of GST from revenue
• Accounts for COGS that match how you account for inventory
• Marketing and ad spend split by platform

Let’s look at each section in more detail.

Recommended Chart of Accounts Structure

🔹 Revenue Accounts

Revenue should be split by platform or sales channel. Even if Shopify is your main sales engine, breaking out channels gives you better insights and simplifies reporting — especially if you’re running multiple stores, testing new marketplaces, or selling wholesale.

Here are some example accounts:

• Shopify Sales (Retail)
• Amazon Sales
• Wholesale Sales
• Other Marketplace Sales
• Shipping Income
• Refunds (as negative income)
• Discounts (as negative income)

Best Practice: Configure A2X to post sales to the correct account automatically. You can do this via the accounts mapping settings.

🔹 Cost of Goods Sold (COGS) Accounts

COGS accounts are critical in ecommerce — they give you your gross profit, which is arguably your most important metric.

Typical accounts include:

• Cost of Goods Sold (this is the total landed costs of your products)
• Postage
• Packaging Costs
• Merchant fees
• 3PL Storage & Fulfilment Costs
• Stock Adjustments

A2X can help automate COGS recognition based on the cost prices in your Shopify store.

🔹 Advertising & Marketing Spend

If you’re running ads (and you probably are), you should track spend by platform. This helps you calculate return on ad spend (ROAS) and optimise campaigns.

Suggested accounts:

• Facebook/Meta Ads
• Google Ads (Search, Shopping, YouTube)
• TikTok / Snapchat Ads
• Influencer Spend / Content Creation
• Marketing Platform Software (Klaviyo, etc.)
• Marketing Agency Fees

Want even more detail? Use Tracking Categories in Xero to monitor spend by brand, product category, or campaign.

🔹 Clearing Accounts for Payment Gateways

This is where most ecommerce businesses go wrong.

When gateways like PayPal or Afterpay processes your sales, they don’t instantly deposit the full amount. Fees are deducted first, and the net amount is deposited into your bank account. Without proper clearing accounts, reconciling these payments becomes a nightmare and you’re never sure if you’ve actually been paid what you’re owed.

Set up one clearing account per processor:

• Shopify Payments Clearing (for wholesale)

• PayPal Clearing

• Afterpay Clearing

• Zip, Klarna, etc. Clearing

These accounts work like holding accounts — A2X will post sales and fees to them, and then you match the final payout in Xero via bank feeds.

🔹 Operating Expenses

Use a simple but standardised list of operating expense accounts. Here are the basics we recommend:

• Software Subscriptions (e.g. Xero, Shopify Apps)
• Accounting & Bookkeeping
• Wages
• Superannuation Expense
• Office Rent
• Insurance
• Office Expenses / General Admin
• Travel & Accommodation (if relevant)
• Professional Development or Training

Keeping it clean helps you spot trends, control spending, and report easily to your accountant or investors.

Avoid These Common Chart of Accounts Mistakes

• Recording payment gateways payouts as income: This understates revenue because it misses refunds, discounts and merchant fees.
• No clearing accounts for payment gateways: Leads to unreconciled transactions and frustration during BAS or EOFY.
• No tracking of COGS or inventory: Without accurate COGS, your gross profit is meaningless.
• Overcomplicating the chart of accounts: Too many granular accounts create noise. Only break out categories you actually use for decisions. You can always dig into the transactional data if you need.

Final Thoughts: Why It Pays to Get This Right

A clean chart of accounts saves you hours each month — and gives you accurate, useful reports. It lets you answer questions like:

• What’s my true gross margin?
• How much am I spending on Facebook ads?
• How much am I losing to Afterpay fees?
• Is inventory being recorded correctly?
• Are my BAS and GST returns accurate?

If you’re planning to grow, raise capital, or even just make smarter decisions day-to-day, clean financials are non-negotiable.

At Day One Advisory, we work with ecommerce businesses across Australia to clean up their financial systems, integrate platforms like Shopify and Xero, and build a chart of accounts that makes sense for how you actually run your business.

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Want Help Getting Your Shopify Chart of Accounts Right?

We offer a full ecommerce bookkeeping setup and cleanup service — including Xero chart of accounts design, A2X setup, inventory mapping and monthly bookkeeping.

👉 Get in touch today for a no-obligation discovery call.
Let’s make your numbers work for you.