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E-commerce bookkeeping

E-commerce books have to connect storefront sales, processor settlements, refunds, fees, sales tax, inventory, and bank deposits without treating deposits as revenue.

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CLOSE FILE · ILLUSTRATIVE USD EXAMPLE

Rebuild the payout before posting revenue

  1. Product sales before refunds$10,000
  2. Customer refunds, excluding tax−$500
  3. Net tax collected after refunds+$760
  4. Processor fees−$290
  5. Bank settlement$9,970

Assume all of these orders settle in one batch, with no reserve, chargeback or opening balance. Net sales are $9,500—not the $9,970 deposit. The $760 tax is a liability in this example and the $290 fee is an expense.

Prove the clearing account

$10,800 customer charges − $540 customer refunds − $290 fees − $9,970 payout = $0 remaining. Charges include $800 tax; refunds include $40 returned tax, leaving the $760 net tax above.

In a live file, match order IDs and payout IDs before expecting zero. Unsettled orders at month-end can leave a supported clearing balance. Marketplace-facilitator tax handling may change the bridge; use the actual settlement statement.

Then reconcile the bank side →

What the monthly close has to prove

  • Reconcile gross orders to refunds, discounts, tax, fees, and net processor deposits.
  • Use clearing accounts so settlement timing does not distort sales.
  • Separate inventory purchases, cost of goods sold, shipping, and operating expenses.
  • Review chargebacks, reserves, gift cards, and sales-tax liabilities.

Documents to collect

  • Storefront sales summary
  • Processor settlement report
  • Bank and card statements
  • Inventory or purchase records
  • Refund and chargeback detail
  • Payroll reports

Common failure points

  • Net deposits recorded as revenue
  • Processor fees omitted
  • Transfers between processors and banks duplicated
  • Inventory purchases expensed inconsistently
  • Sales tax included in revenue

Example

A $9,200 Shopify payout may represent $10,500 of orders less refunds, fees, and tax activity. The deposit alone cannot support the revenue entry.

Sources

Keep learning

RevenueRevenue is income earned from a business's ordinary activities before subtracting expenses.Cash receivedCash received is money deposited or otherwise collected, regardless of whether it is current-period revenue.Bank reconciliationBank reconciliation explains the difference between the book balance and an external bank statement for the same date.Gross profitGross profit is revenue minus the direct cost of producing the goods or services sold.AssetAn asset is a resource controlled by the business that is expected to provide future economic benefit.

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.