Where online sellers books go wrong
Marketplaces net out referral fees, fulfillment fees, ads, refunds and reserves before paying you. Booking the deposit as sales hides both revenue and costs.
Inventory bought in one quarter sells in another. Without a count and a cost of goods sold figure, a big inventory order looks like a loss and a sell-through month looks like a windfall.
Sales tax collected by a marketplace and sales tax you collect on your own site follow different paths and should not land in revenue.
Accounts we set up for online sellers
Your chart of accounts is reviewed during onboarding. These are the lines that usually matter most in this kind of business:
| Account | Why it is separate |
|---|---|
| Gross sales, by channel | Amazon, Etsy, eBay, your own store, each on its own line |
| Refunds and returns | kept visible, not netted away |
| Marketplace and payment fees | referral, fulfillment, listing and processing |
| Advertising on platforms | sponsored listings and ads billed through the marketplace |
| Inventory asset | stock on hand at cost |
| Cost of goods sold | inventory that sold this month |
| Shipping labels and packaging | the cost to get orders out the door |
Records the IRS describes
Publication 1099 says payment platforms and marketplaces must report on Form 1099-K when payments are over $20,000 and transactions are over 200 in a year. The IRS says you may still receive one below that, and that all income is reportable whether or not a form arrives. Source: IRS Publication 1099, General Instructions for Certain Information Returns.
The IRS lists the 1099-K as a record to use alongside your own records when figuring income. Gross sales on the form will be higher than your payouts, because fees and refunds have not come off. Source: IRS: Understanding your Form 1099-K.
Purchase invoices and proof of payment for inventory are among the records the IRS lists for purchases. Source: IRS: What kind of records should I keep.
How long to keep them: the IRS says three years in most cases, longer in some situations, and at least four years for employment tax records (IRS: How long should I keep records?).
Cash through the year
Many sellers earn a large share of the year in the fourth quarter and pay for that inventory in the third. Marketplaces may also hold reserves. The monthly report shows inventory on hand and cash together, so a stocking-up month is read correctly.
January brings returns from holiday orders. Keeping refunds visible on their own line shows whether a product's return rate is eating its margin.
Contractors, employees and year-end forms
Most small sellers have no employees but pay virtual assistants, photographers or a prep center. Collect a W-9 from each one, and keep their invoices; Publication 1099 sets a $2,000 reporting threshold for tax years beginning after 2025.
Sales tax registration and collection are set by each state. We do not decide where you must collect. Our state threshold table and sales tax bookkeeping page cover how the records are kept.
What the monthly service includes
Every month, the same close the bookkeeping page describes: transactions categorized, bank, card and loan balances reconciled to statements, a profit and loss and balance sheet delivered, and a short list of questions instead of guesses. The books stay ready for your tax preparer at year end. For online sellers, that close also covers:
- Each payout rebuilt from gross sales, refunds, fees, ads and shipping
- Inventory and cost of goods sold updated from your count or inventory report
- Margin shown by channel
Need more than the books? The service levels page describes a monthly review and CFO-style planning on top of the same close.
How remote onboarding works
- Tell us about your books. The short form asks what your books live in today, how many transactions you have a month, how many bank, card and loan accounts, how far behind the books are and what you need. You can ask for a 15-minute call instead of an email reply.
- Written quote and engagement letter. We review what you sent and reply with the scope and monthly price in writing before any work starts.
- Access, without passwords. QuickBooks Online: you invite us as an accountant user. Xero: you invite us with the Advisor role. Excel or Google Sheets: you share the workbook and we send a folder for statements. Nothing yet: we recommend QuickBooks Online or Xero and set it up in your name. You keep ownership and can remove our access.
- Opening balances and a close day. We confirm your accounts, collect recent statements and your prior-year return or financial statements, check opening balances, and agree the day each month's books are delivered.
What helps most for online sellers:
- Settlement or payout reports from each marketplace
- Your inventory count or inventory app export
- Supplier invoices for recent stock purchases
Price
These are the starting prices the quote form uses. Your written scope sets the final price before any work begins.
| Transactions a month | Monthly bookkeeping | Catch-up |
|---|---|---|
| Up to 100 transactions a month | From $450 a month | $300 per month behind |
| 100 to 300 transactions a month | From $750 a month | $450 per month behind |
| 300 to 600 transactions a month | From $1,200 a month | $700 per month behind |
| Over 600 transactions a month | Custom quote | Custom quote |
- 2 bank, card or loan accounts are included; each additional account is $35 a month.
- Books kept in Excel or Google Sheets add $100 a month; starting from nothing adds a one-time $400 software setup.
- A monthly financial report and KPI summary is $125 a month on top of current books.
Prices shown are starting estimates, not quotes.