E-Commerce Accounting 101: Tips, Tricks, and Mistakes to Avoid

Episode Summary

In this episode of The Free to Grow CFO Podcast, Jon Blair sits down with AJ Stockwell, founder of Climb CFO and e-commerce accounting expert, to tackle one of the biggest challenges DTC brand founders face: keeping clean, accurate financials. Together, they dive into the essentials of bookkeeping for e-commerce brands, from spotting red flags to optimizing margins and ensuring financial clarity. Jon and AJ highlight a critical yet often overlooked mistake—misclassifying sales tax as revenue or expenses on the P&L statement. As AJ explains, sales tax is actually a liability, and including it on the P&L can seriously distort your brand’s financial health, impacting decisions around pricing, ad spend, and growth strategy. This episode is packed with insights to help founders maintain accurate records that drive smarter decisions.

Topics Covered in Episode:

-Biggest Red Flags in DTC Financials: Common errors in e-commerce bookkeeping that signal trouble.

-Holiday Cash Flow Management: Why December’s slower sales and post-holiday tax liabilities require extra planning.

-Landed Cost Accounting: Why it’s challenging for DTC brands and how to stay ahead with smart tracking of freight, duties, and fees.

Episode Links:

Jon Blair - https://www.linkedin.com/in/jonathon-albert-blair/

AJ Stockwell- https://www.linkedin.com/in/ajstockwell/

Free to Grow CFO - https://freetogrowcfo.com/

Meet AJ Stockwell

AJ Stockwell spent a decade as the CFO and Controller of numerous e-commerce brands, both in-house and on a fractional basis through his firm Climb CFO. More recently, he has shifted his firm's focus to accounting education and helping businesses clean up their books rather than providing ongoing CFO support.

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00:00 Introduction

03:50 AJ Stockwell’s background

05:51 The Importance of Accurate Bookkeeping

12:01 Red Flags in Financial Statements

30:22 Navigating Financial Complexity in E-Commerce

36:43 The Importance of Accurate Costing Methods

39:45 The Challenges of Landed Cost Accounting

45:27 The Significance of Contribution Margin in Profitability

50:21 Closing Thoughts