Ecommerce Bookkeeping: Reconcile Marketplace Payouts

The number that lands in your bank account from Amazon, eBay or Shopify is not your sales figure. It never has been.

By the time a marketplace pays you, it has already netted off referral fees, fulfilment fees, storage, advertising, refunds and a chunk held back in reserve. Post that single payout as "sales" and your accounts will be wrong from day one: understated turnover, missing costs, and a VAT return that does not reflect what you actually sold.

This guide shows you how proper ecommerce bookkeeping works, why the payout-to-sales gap matters for your VAT, and a clear month-end routine to keep your books and your tax returns honest. It is written for UK sellers on the major marketplaces who want their numbers to mean something.

Why doesn't my payout match my sales?

Marketplaces pay you on a cycle, not per order. Amazon, for example, typically settles every 14 days, bundling hundreds or thousands of underlying transactions into one bank transfer.

That single transfer is a net figure. It is gross sales, minus the marketplace's fees, minus refunds you've issued, plus or minus any reserve the platform is holding or releasing. The bank feed only ever shows you the answer, never the sum.

So if you post the payout straight to a "Sales" account, three things break at once. Your turnover is understated because the fees have been stripped out before you see the money. Your costs are invisible because those fees never hit an expense account. And your VAT is wrong, because output VAT is due on what you sold, not on what the marketplace happened to wire you.

A settlement can also straddle two months. The payout might land on 3 June but include sales made on 29 and 30 May. The date the cash arrives is not the date the sale happened, and for both your profit and loss and your VAT, the sale date is what counts.

What's actually inside a marketplace settlement?

Every major marketplace gives you a settlement or payout report that breaks the transfer down. The labels differ but the building blocks are the same.

The reserve line is the one sellers most often get wrong. A reserve is not a cost and it is not lost income. It is your money, held back temporarily. It belongs on the balance sheet as a current asset and gets cleared when the platform releases it, not booked as an expense.

How do I reconcile a payout to real sales? (worked example)

Reconciliation means decomposing the net payout back into its parts, posting each part to the right account, and proving that the parts add back up to the bank transfer.

Illustrative example. Aisha runs a homeware shop and sells through a UK marketplace. She's VAT-registered. Her latest 14-day settlement statement shows the following (all sales are standard-rated UK sales to UK consumers):

Here's how Aisha reconciles it.

Step 1, split the VAT out of sales. Her net sales after refunds are £12,000 minus £400, which is £11,600 VAT-inclusive. At the standard rate of 20%, the VAT fraction is one-sixth. So output VAT is £11,600 divided by 6, which is £1,933.33, leaving net sales of £9,666.67.

Step 2, post the fees as costs. Referral, fulfilment, storage and advertising total £1,800 + £900 + £150 + £600 = £3,450. These are business expenses. If the marketplace charges UK VAT on its fees, the VAT element is input VAT she can reclaim, so post the fees net and the VAT separately.

Step 3, park the reserve. The £500 reserve is not a cost. It goes to a balance-sheet "marketplace reserve" account and is released back to her in a later settlement.

Step 4, prove it back to the bank. Net sales after refunds £11,600, minus fees £3,450, minus reserve £500, equals £7,650. That matches the bank transfer exactly. The reconciliation balances.

Notice what would have happened if Aisha had simply posted £7,650 as sales. Her turnover would have been understated by £4,350, she'd have claimed none of the fees as costs, and her output VAT would have been calculated on the wrong base. Multiply that across a year of fortnightly payouts and the error is no longer small.

If you sell through your own Shopify store as well as a marketplace, the same discipline applies to your payment processor statements: the deposit is net of processing fees, so you split the fee out rather than treating the deposit as your sales figure.

How does this affect my VAT return?

VAT is due by reference to the time of supply, which for most ecommerce sales is when you sell the goods, not when the marketplace pays you. That single fact is why payout-based bookkeeping quietly corrupts a VAT return.

If your VAT quarter ends on 31 May but a payout covering late-May sales doesn't arrive until June, those sales still belong in the May quarter. Reconcile by sale date, not payout date, and your VAT return lines up with reality.

Most UK ecommerce businesses are now inside Making Tax Digital for VAT. Since 1 April 2022 it has applied to all VAT-registered businesses, who must keep digital records and file through compatible software (GOV.UK). A net payout posted as a lump sum does not give you the digital, transaction-level trail MTD expects.

You also need to watch the VAT registration threshold, which is £90,000 of taxable turnover (current, from 1 April 2024). The figure that counts towards it is your gross sales, not your net payout. A seller looking only at bank deposits can blow through the threshold without realising, because the deposits are always smaller than the sales that drive registration. Clean ecommerce bookkeeping is what tells you, in good time, that you need to register.

Who accounts for VAT, me or the marketplace?

This trips up a lot of sellers, especially those importing stock or selling cross-border. The short version: it depends on where the goods are and where the seller is established.

For goods that are located outside the UK at the point of sale and sold to a UK consumer in a consignment valued at £135 or less, the online marketplace is liable to charge and account for the UK supply VAT at the point of sale, rather than the seller (GOV.UK). The £135 limit applies to the total value of the consignment, not to each item.

Where goods are already in the UK at the point of sale and sold through a marketplace by a seller who is not established in the UK, the marketplace is again liable to account for the VAT on those sales (GOV.UK).

If you're a UK-established seller selling your own goods that are in the UK, none of that shifts the VAT to the marketplace. You account for the VAT on your sales in the normal way. The reason this matters for bookkeeping is that some settlement lines may show "marketplace facilitator VAT" or similar, where the platform has collected the VAT instead of you. You must not also declare output VAT on those same sales, or you'll pay twice. Identifying which sales are which is part of the reconciliation, not an afterthought.

This is genuinely fiddly, and getting it wrong cuts both ways: overpay and you've handed HMRC money you didn't owe; underpay and you have an error to correct. If you import or sell cross-border, it's worth having a bookkeeping service set the treatment up correctly once, rather than guessing every quarter.

What does a clean month-end routine look like?

You don't need anything elaborate. You need to do the same few things, every settlement, in the same order.

1. Pull every settlement report for the period from each marketplace and payment processor. Reconcile per payout if you can; monthly is the minimum so your bank and books agree.
2. Decompose each settlement into gross sales, refunds, fees by type, advertising and reserves, posting each to its own account.
3. Date sales to when they occurred, not when the cash arrived, splitting any settlement that straddles a month or VAT-quarter end.
4. Separate the VAT on both your sales and the marketplace's fees, and flag any sales where the platform accounted for the VAT.
5. Clear the reserve between the balance sheet and the bank as it's held and released.
6. Prove it back to the bank. Every reconciled settlement should tie out to the exact transfer that hit your account.

Tools that pull settlement data into accounting software automatically can save hours here, but the principle stands whether you do it by hand or with software: the payout is a summary, and your books need the detail underneath it.

Struggling to make your marketplace payouts tie back to your sales? Zmartly's ecommerce accountants reconcile Amazon, eBay and Shopify settlements to clean, MTD-ready books and accurate VAT. Talk to our bookkeeping team and we'll show you where your numbers are leaking.

For the bigger picture on sales tax, stock and channel profitability, see our guidance for ecommerce businesses and for Amazon FBA sellers, where fulfilment fees and storage make the payout-to-sales gap especially wide.

What records do I need to keep, and for how long?

VAT-registered businesses must keep their VAT records and a VAT account for at least 6 years (GOV.UK). For ecommerce, "records" means more than the bank statements.

Keep the full settlement and transaction reports from each marketplace, not just the payout totals. Those reports are your evidence of gross sales, fees and VAT, and they're what lets you, or an inspector, rebuild any figure on your return. If you're within Making Tax Digital, those records have to be held digitally in compatible software and linked through to your submissions.

In practice, the mistake we most often see is a seller who has tidy bank statements and no settlement reports. The bank balance reconciles, but there's nothing underneath it to support the VAT return. Download and store the settlement files every period, while you still can; some platforms only keep them available for a limited window.

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