eCommerce bookkeeping presents unique challenges that traditional bookkeeping doesn't address. When you sell on platforms like Etsy or Shopify, matching platform sales to bank deposits becomes crucial for accurate financial reporting.
The Problem: Timing Differences
When a customer buys from your Etsy shop on Monday, you might not see the money in your bank account until Wednesday or later. Meanwhile, Etsy has: • Deducted their fees • Held funds for processing • Possibly combined multiple sales into one deposit
This creates a bookkeeping puzzle that trips up many business owners.
Understanding Platform Fee Structures
Before you can reconcile properly, understand what each platform charges:
Etsy Fees: • Listing fee: $0.20 per item • Transaction fee: 6.5% of sale price + shipping • Payment processing: 3% + $0.25 • Advertising fees (if using Etsy Ads)
Shopify Fees: • Monthly subscription: $29-$299 • Transaction fees: 2.9% + 30¢ (varies by plan) • Additional app fees • Payment gateway fees (if not using Shopify Payments)
The Right Way to Record Sales
Many people make the mistake of only recording bank deposits. Here's the correct approach:
1. Record the Full Sale Amount When you make a $100 sale, record $100 in revenue immediately, not the $94 that eventually hits your bank account.
2. Record Fees as Expenses Create separate expense accounts for: • Platform fees (Etsy fees, Shopify subscription) • Payment processing fees • Advertising costs
3. Use Clearing Accounts Set up a 'Platform Clearing Account' in your chart of accounts. This temporary account helps match sales to deposits.
Step-by-Step Reconciliation Process
For Each Sale: 1. Debit: Accounts Receivable (or Platform Clearing) - Full sale amount 2. Credit: Sales Revenue - Full sale amount 3. Debit: Platform Fees - Fee amount 4. Credit: Platform Clearing - Fee amount
For Each Deposit: 1. Debit: Bank Account - Deposit amount 2. Credit: Platform Clearing - Deposit amount
Using QuickBooks for eCommerce
QuickBooks Online can connect directly to Shopify, making reconciliation easier:
• Sales import automatically • Fees are categorized correctly • Deposits match to sales • Inventory tracking syncs
For Etsy, you'll need to: • Export sales data monthly • Import using CSV files • Match deposits manually • Track inventory separately
Tax Implications
Proper reconciliation affects your taxes: • Revenue is recognized when earned (sale date), not when received • Fees are deductible business expenses • Inventory tracking affects cost of goods sold • Sales tax must be tracked by state
Common Mistakes to Avoid
1. Recording net deposits instead of gross sales 2. Missing advertising fees 3. Not tracking sales tax properly 4. Mixing personal and business PayPal accounts 5. Ignoring inventory adjustments
Monthly Reconciliation Checklist
□ Export sales data from each platform □ Match total sales to platform reports □ Verify all fees are recorded □ Reconcile platform clearing accounts to zero □ Check bank deposits match net amounts □ Update inventory quantities □ Review sales tax collected
The Bottom Line
Proper eCommerce reconciliation takes time to set up but saves hours during tax season. When your bookkeeper or CPA can see clean, organized records, your tax prep costs drop significantly.
Need help setting up your eCommerce bookkeeping? We specialize in helping online sellers create systems that actually work.