Bookkeeping for eBay sellers

Why not just record payouts?

A payout is sales minus eBay's final value fees, promoted listing charges, shipping labels bought through eBay, refunds and holds. Recording only payouts hides both income and costs. Form 1099-K reports gross amounts, so payout-only books also fail to match it. See Form 1099-K.

Holds on payouts, for example for new sellers or disputed orders, delay cash further, so a month's deposits can belong to sales from an earlier month. Recording from eBay's report, not the bank, keeps sales in the right month.

How should each month be recorded?

What is the monthly routine?

1. Download the transaction report

   From the payments section of Seller Hub, for the month.

2. Post a summary journal

   Gross sales, refunds, fees, ads, labels and payouts, as in the table.

3. Match payouts to deposits

   Each payout should appear in the bank.

4. Record inventory purchases

   Stock bought for resale goes to inventory, not expenses.

5. Count or estimate inventory

   At least at year end, to work out cost of goods sold.

What does a monthly entry look like?

In March, eBay's report shows $8,400 of item sales and $600 of shipping charged, $350 of refunds, $1,120 of final value and other fees, $280 of promoted listings, $540 of shipping labels and $610 of sales tax collected and remitted by eBay. Payouts total $6,710. The journal records $9,000 of sales, $350 of refunds, $1,120 of fees, $280 of advertising and $540 of shipping expense, with $6,710 transferred to the bank. The $610 of sales tax is left out, because eBay remits it.

How does inventory work for eBay sellers?

Items bought for resale are inventory until sold. Cost of goods sold equals opening inventory plus purchases minus closing inventory. Resellers of thrift or estate finds should record what they paid for each lot. Items you owned personally and sell at a loss are generally not taxable and not a business deduction. See cost of goods sold for e-commerce.

What are the common mistakes?

• Recording payouts as sales, so income and fees are both understated.
• Counting sales tax collected by eBay as income.
• Expensing inventory purchases immediately instead of through cost of goods sold.
• Mixing personal items sold at a loss with business sales.
• Not reconciling to Form 1099-K before filing.

Refund and chargeback entries are covered in how to record refunds and chargebacks.

How do you reconcile to Form 1099-K?

Gross sales in your books for the year should match or reconcile to the 1099-K total, with differences explained by timing, refunds or sales tax. Keep the reconciliation with your records. See eBay seller taxes.

Should you use software?

Accounting software with an eBay connector, or a monthly summary entry from eBay's report, both work. Connectors that post every order can create clutter; a monthly summary from the report is often cleaner for small sellers. See bookkeeping basics.

Whichever you use, keep eBay's monthly reports with your records, since they are the source documents that support every summary entry.

If you sell on several marketplaces, keep a separate sales and fees account for each, so you can see which channel is actually profitable.

This guide is general information. It is not tax or legal advice for your situation.