Bookkeeping for Amazon, Shopify and Etsy sellers: reconciling payouts to the bank

Every online seller hits the same wall in their first year of bookkeeping. The shop dashboard says £12,400 of sales this month. The bank statement shows three deposits totalling £9,870. Both are right, and if you book the bank deposits as sales you'll understate your turnover by a fifth, misstate your fees to zero, and give your accountant a reconciliation that can't be done.

The fix is one extra account and one extra report. Here's the method, channel by channel.

Why the deposit is never the sales figure

Marketplaces and payment processors pay out net. Between a customer paying and the money reaching your bank, the platform deducts its fees, nets off refunds and chargebacks, sometimes nets off advertising, and sometimes holds back a reserve. What arrives is a single number that bundles all of it.

• Amazon settles roughly every two weeks. Each settlement nets referral fees, FBA fees, refunds, and any balance from advertising or storage charges, and may hold part of the balance as an unavailable reserve.
• Shopify Payments pays out daily, weekly or monthly by your choice, net of processing fees and refunds. Sales through other gateways (PayPal, Klarna) arrive separately, from those providers.
• Etsy accumulates sales in a payment account, deducts listing, transaction and processing fees plus Etsy Ads, and deposits the balance on your schedule.
• PayPal and Stripe hold balances and pay out net of fees; PayPal in particular behaves like a second bank account, with its own statement.

None of this is hidden. Each platform produces a settlement or payout report that itemises exactly what was deducted. The bookkeeping problem is only that the bank statement and the payout report describe the same money at two different levels, and you need both.

The clearing account

Create one account per channel in your books — "Amazon clearing", "Shopify clearing", "Etsy clearing". In accounting software it's a current asset; in a spreadsheet it's a tab. It represents money the platform owes you that hasn't reached the bank yet.

Each payout report becomes one entry into the clearing account:

Then the bank deposit is not income. It's a transfer from the clearing account to the bank. Gross sales are recorded once, at the right figure; fees appear as the expense they are; and the clearing account's balance at any moment is the reserve plus whatever is in transit. Over a year it hovers near zero, which is the reconciliation: if clearing drifts upward, you've booked sales you haven't been paid for; if it goes negative, you've booked deposits you never explained.

The bank side

The bank statement is the other half, and it's the half that's easy to get right with the right tool. Convert each month's statement with NoRekey — it verifies every conversion against the statement's opening and closing balances, so the list of deposits is provably complete — and tag each marketplace deposit with its channel. Every deposit should match a net payout figure exactly. When one doesn't, it's almost always a payout that straddles the month end, or two payouts landing as one deposit; the payout report dates resolve it in seconds.

PayPal deserves its own treatment: it holds a balance, pays fees, and transfers to the bank on its own schedule, so treat the PayPal account as a bank account in its own right. Its statements convert the same way as any other — PayPal statements to CSV.

In a spreadsheet

If you're not using accounting software yet, the same logic fits in three tabs:

1. Payouts — one row per settlement: date, channel, gross sales, refunds, fees, ads, reserve change, net. Copied from each platform's report.
2. Bank — the converted statement rows, with a channel tag on each marketplace deposit.
3. Reconcile — net payouts by channel by month against tagged deposits by channel by month. The difference column should read zero.

Turnover for the year is the sum of gross sales on the Payouts tab. Fees are the sum of the fee columns. Your accountant will ask for exactly these two numbers and the reconciliation tab that proves them.

Things that go wrong

Booking deposits as sales. Covered above; the most common error and the most expensive, because it understates turnover — which affects VAT registration thresholds and, in some places, whether you're required to register at all.

Double-counting refunds. A refund reduces the payout and appears as a separate transaction in most reports. Record it once, from the payout report, not again from the order list.

Forgetting the reserve. Amazon's unavailable balance is still your money; it sits in clearing until released. If you write it off as a fee, you'll "find" it as unexplained income later.

Mixed accounts. A personal card used for Facebook ads, a personal PayPal used for one-off sales. Separate accounts per business, or at least a rule that every business transaction runs through one bank account and one card.

Inventory. Stock purchases aren't an expense when you pay for them; cost of sales is recognised when the stock sells. That's a separate topic, but the clearing method above gives you the gross sales figure it depends on.

Sales tax and VAT

Marketplaces increasingly collect and remit sales tax or VAT on your behalf — most US states' marketplace-facilitator rules and the UK and EU's rules for overseas sellers work this way — and the payout report shows what was collected and withheld. Whether you have obligations of your own depends on where you and your customers are; that's an accountant's question. What the reconciliation gives them is the clean gross figure and the withheld tax by period, which is where that conversation starts.

Set up the clearing accounts this month, reconcile the last payout to the last deposit, and the year-end becomes a sum of a column rather than an archaeology project.