The number that lands in your bank from a marketplace or processor has already had a dozen things taken out of it — fees, refunds, chargebacks, advertising, sometimes sales tax. Recording the deposit as revenue understates both revenue and expenses simultaneously.
A payout of $8,412.66 hits your account on Tuesday. If your books record $8,412.66 of revenue, they are wrong in at least four directions at once — and the error is invisible, because the bank agrees with the books perfectly.
That deposit is a net figure. Underneath it sits something closer to:
- Gross sales of $10,240.00
- Less platform and referral fees of $1,024.00
- Less payment processing of $312.34
- Less refunds of $418.00
- Less a chargeback of $73.00
Record only the net and you have understated revenue by roughly $1,800 and recorded none of the costs. Your top line shrinks. Your expense categories stay empty. Your gross margin becomes a number with no relationship to reality.
Why it matters more than it sounds
The obvious problem is that revenue is wrong. The subtler and more damaging problem is that you have lost the ability to see your own cost structure.
Platform fees are usually one of the largest expenses an online seller has. Booked net, they never appear as an expense at all — so nobody notices when a fee tier changes, or when a particular channel is taking 18% while another takes 8%. You cannot manage a cost you cannot see.
Refunds have the same issue. A refund rate creeping from 3% to 9% is a signal about a product, a listing, or a supplier. Netted into the deposit, it registers as "sales were a bit soft."
Getting it right
Each payout gets broken back out into its components, and the reconstructed pieces must tie back to the deposit exactly. Every platform provides a settlement report with this breakdown. It is tedious to do by hand and entirely mechanical once set up properly, which is why it should be a monthly routine rather than a heroic annual effort.
Two wrinkles worth knowing about:
Settlement periods rarely align with months. A payout on 2 April may cover sales from 26 March to 1 April. Assigning that entire deposit to April smears revenue across the month boundary. For businesses where the month-end figure matters, the settlement needs splitting at the period line.
Reserves and holds. Some processors hold a rolling reserve. That money is yours, it is simply not available yet — an asset, not a reduction in sales. Treated as a fee, it permanently understates revenue for money you eventually receive.
Sales tax sits inside this too
If the platform is a marketplace facilitator, it generally collects and remits sales tax on transactions made through it. That tax was never yours and should not touch your revenue.
But sales through your own website are a different matter — there, the tax you collect is a liability you hold and remit yourself. When both streams are lumped together in the books, you cannot produce a return that ties to what you actually collected, and the difference accrues silently.
Keeping the two channels distinct in the books is what makes the return match reality. We cover the state-by-state side of that under e-commerce bookkeeping and sales tax filing support.
The test
Pull last month's P&L. If gross sales roughly match what your platform dashboards say you sold, and platform fees appear as their own meaningful expense line, the books are being done properly. If revenue matches your bank deposits instead, they are not — and every margin number you have been working from needs revisiting.
Common questions
- Is my Shopify or Amazon deposit my revenue?
- No. It is net of fees, refunds, chargebacks and sometimes advertising and sales tax. Recording it as revenue misstates both revenue and expenses.
- How should marketplace deposits be recorded?
- From the settlement report, splitting gross sales, fees, refunds and any tax collected into their own accounts, with the deposit as the net result.
- Why does it matter if profit is the same?
- Because revenue, margin and expense ratios are all wrong, and so is any sales tax figure derived from them.
- Does this affect sales tax?
- Substantially. Marketplace facilitator rules mean the platform may collect and remit, and your books need to show that rather than treating it as your liability.
- How often should settlements be reconciled?
- Every deposit period. Waiting until year end means reconstructing dozens of settlements at once.
Behind on Your Books?
We handle your bookkeeping end-to-end — categorization, reconciliation, month-end close, and clean financial statements, so your books stay current and CPA-ready.