Selling on two channels doubles your orders. It should not double your bookkeeping.
The problem most multichannel sellers hit is not effort, it's structure. Shopify pays you a net lump sum every few days. Amazon pays you a different net lump sum on its own schedule, after deducting fees, refunds, FBA charges and sometimes VAT it has already collected. Drop both lots of money into one bank feed and call it "sales", and your accounts will overstate or understate revenue, hide your real margin, and put the wrong number in Box 1 of your VAT return.
This guide shows you how to keep one accurate set of UK accounts across Shopify and Amazon: how the money actually flows, who accounts for VAT on which sale, how to reconcile a payout properly, and a worked VAT-return walkthrough you can copy. It's written for UK sole traders and limited companies selling on both platforms.
If you want the channel-specific detail too, we cover the platform mechanics on our pages for Shopify sellers and Amazon FBA sellers.
Can you really keep one set of accounts for Shopify and Amazon?
Yes. You should treat each channel as a sales source feeding one set of books, not as a separate business. The work is in recording gross sales, fees and VAT per channel, then reconciling each payout to the bank so nothing is double-counted or missed.
A single set of accounts is not optional, by the way. If you trade through one legal entity (one sole trader, or one limited company), HMRC expects one set of records covering everything that entity does. You file one Self Assessment or one set of company accounts, and one VAT return that combines both channels.
The mistake we see most often is treating the bank deposit as the sale. It isn't. The deposit is what's left after the platform has taken its cut, and the gap between gross sales and the deposit is where your margin, your fees and your VAT live.
Why does the payout never match your sales?
Because a payout is a net figure, and your accounts need the gross figure broken into its parts.
Take a single Shopify payout. The money that lands in your bank is your gross sales for the period, minus refunds, minus Shopify Payments processing fees, sometimes minus a chargeback or a reserve. Amazon is worse: a settlement can bundle product sales, shipping charged to customers, promo rebates, referral fees, FBA fulfilment fees, storage fees, refunds, reimbursements and any VAT Amazon collected on your behalf.
If you post the net deposit as revenue, three things break:
- Your turnover is understated, which matters for the VAT registration threshold of £90,000 (current from 1 April 2024). Turnover is measured on gross sales, not on what hits your bank.
- Your fees disappear, so you lose a legitimate deductible expense and overstate your profit.
- Your VAT is wrong, because output VAT is due on the sale value, not the payout value.
The fix is a consistent monthly routine: record gross sales by channel, record platform fees as an expense, record refunds against sales, then reconcile the net of all that to the actual bank deposit. Get the routine right once and it repeats cleanly every month.
Who accounts for VAT on each sale?
This is where multichannel sellers get caught out, because the answer is not the same on every sale. On some transactions you account for the VAT. On others, the marketplace does. Getting this wrong means either paying VAT twice or under-declaring it.
The rules below assume you're a VAT-registered UK business. The driver is where the goods are at the point of sale, the value of the consignment, and whether the seller is UK-established or overseas.
When does the marketplace account for the VAT, not you?
For goods that are located outside the UK at the point of sale, in a consignment valued at £135 or less, sold through an online marketplace to a UK customer, the online marketplace is liable for the supply VAT and charges it at the point of sale (gov.uk: VAT and overseas goods sold to customers in the UK using online marketplaces).
There's also a deemed-supply rule for overseas sellers. Where an overseas seller's goods are already in the UK at the point of sale and sold through a marketplace, the marketplace accounts for the supply VAT to the customer, and the overseas seller is treated as making a zero-rated "deemed supply" of those goods to the marketplace (same gov.uk guidance). This is why an Amazon settlement for a seller in that position can show VAT that Amazon has already handled.
In practice, if you're a UK-established seller holding your own stock in the UK and selling it through Amazon or Shopify, the deemed-reseller rules for overseas sellers don't turn your domestic sales into the marketplace's responsibility in the same way. You still need to confirm your own position, because the treatment hinges on establishment and where the goods sit. If you're not certain which category you fall into, that's worth a conversation before you file.
What about the £135 rule on goods you import?
For consignments imported into the UK with a value of £135 or less sold directly to UK consumers (for example through your own Shopify store rather than a marketplace), UK supply VAT is charged at the point of sale rather than as import VAT at the border (gov.uk guidance above).
Once a consignment goes above £135, the simplified treatment stops and normal import VAT and customs duty rules apply at the border.
How do you handle import VAT with Postponed VAT Accounting?
If you import stock (common for Amazon FBA sellers bringing goods in from overseas suppliers), Postponed VAT Accounting (PVA) lets you declare and recover import VAT on the same VAT return instead of paying it up front at the border (gov.uk: complete your VAT Return to account for import VAT).
PVA needs no approval, it's available to any UK VAT-registered importer, and you take the figures from your monthly postponed import VAT statement on the Customs Declaration Service. On the return:
- Box 1: the import VAT due in the period under PVA.
- Box 4: the import VAT reclaimed in the period under PVA (subject to normal input tax rules).
- Box 7: the total value of imported goods in the period, excluding VAT.
Because the same figure goes into Box 1 and Box 4 when the goods are fully for taxable business use, PVA is usually VAT-neutral and just improves your cash flow. Keep the monthly statement, and keep any C79 import VAT certificate in its original form (gov.uk: Record keeping VAT Notice 700/21).
What about selling to EU customers after Brexit?
If you sell low-value goods (consignments of £135 or less) imported from outside the EU to consumers in the EU or Northern Ireland, you can register for the UK's VAT Import One Stop Shop (IOSS) scheme. It lets you charge the destination VAT at the point of sale and report it on a single monthly IOSS return rather than VAT being collected at import in each country (gov.uk: check if you can register for the VAT Import One Stop Shop scheme).
IOSS records must be kept for 10 years and be available to HMRC electronically on request (same gov.uk guidance). For higher-value EU sales or where you hold stock inside the EU, you may have separate EU VAT obligations, which sit outside UK VAT and are worth specific advice.
How do you reconcile a Shopify or Amazon payout?
The core skill in multichannel bookkeeping is turning one net deposit into the right set of journal lines. Here's the method, applied to both platforms.
For a Shopify Payments payout, the deposit equals: gross sales, less customer refunds, less Shopify processing fees, plus or minus any adjustments. So you record gross sales as income, refunds against income, fees as an expense, and the resulting net must equal the bank deposit.
For an Amazon settlement, the deposit equals: product sales and shipping charged to buyers, less refunds, less referral fees, less FBA and storage fees, less any other Amazon charges, and adjusted for any VAT Amazon collected. You record each component to its own account so the net ties back to the bank.
The principle for both is identical: never let a single "Amazon income" line absorb the fees. Split it.
An illustrative reconciliation
Illustrative example. A Shopify Payments payout of £4,250 lands in the bank for a two-week period. Behind it sits £5,000 of gross sales, £300 of customer refunds, and £450 of Shopify processing fees.
| Line | Account | Amount |
|---|---|---|
| Gross sales | Sales (income) | £5,000 |
| Customer refunds | Sales / refunds (contra income) | (£300) |
| Processing fees | Bank/merchant fees (expense) | (£450) |
| Net to bank | Bank deposit | £4,250 |
Check: 5,000 − 300 − 450 = £4,250, which matches the deposit. Every figure has a home, the fees are captured as a deductible cost, and turnover is recorded at the full £5,000, not the £4,250 that hit the bank.
Do the same for each Amazon settlement, splitting product sales, shipping income, refunds and each fee type onto its own line. Most ecommerce-aware bookkeeping software will fetch these summaries automatically once it's connected to each channel, which removes the manual typing but not the need to understand the structure.
Should you use cash basis or traditional accounting?
For unincorporated sellers (sole traders and most partnerships), cash basis is now the default method from the 2024/25 tax year onwards. You record income when you actually receive it and expenses when you actually pay them, and you must opt out if you'd rather use traditional accruals accounting (gov.uk: cash basis overview).
Cash basis suits a lot of multichannel sellers because it's simple and you're not taxed on money you haven't received yet. But it has a real downside for product businesses: under cash basis you generally can't carry stock on the balance sheet in the same way, and the timing of large stock purchases can distort your profit. If you hold significant inventory, traditional accounting often gives a truer picture of margin.
Limited companies don't get this choice. Companies prepare accounts on the accruals basis under company law, so a multichannel limited company always matches sales to the period they were earned and stock to when it's sold.
There's no single right answer. It depends on your stock levels, your structure and how you want to read your numbers. If you're unsure, our bookkeeping team can model both for your figures.
What records must you keep, and for how long?
If you're VAT-registered, you must keep VAT records for at least 6 years, and Making Tax Digital for VAT requires you to keep certain records digitally and file through compatible software (gov.uk: Record keeping VAT Notice 700/21). MTD for VAT is mandatory for all VAT-registered businesses (gov.uk: Making Tax Digital for VAT).
For a multichannel seller, "records" means more than the bank statement. Keep the Shopify payout reports, the Amazon settlement reports, your fee breakdowns, your import documents (including any C79 in its original form) and your monthly PVA statements. These are the evidence behind every figure on your VAT return.
Looking ahead, Making Tax Digital for Income Tax starts to apply to sole traders and landlords with qualifying income over £50,000 from 6 April 2026 (based on 2024/25 income), then over £30,000 from 6 April 2027 (gov.uk: check when to sign up for Making Tax Digital for Income Tax). If you trade as a sole trader across Shopify and Amazon, your combined turnover can cross those lines quickly, so it's worth getting your digital records in shape now.
A worked VAT-return walkthrough (illustrative example)
Illustrative example. Northgate Goods Ltd is a UK-established, VAT-registered limited company selling on both Shopify and Amazon at the standard rate of 20% (gov.uk: VAT rates). For one quarter in the 2025/26 tax year, after combining both channels and reconciling every payout, the figures are:
- Shopify net sales of standard-rated goods to UK customers: £40,000 (excluding VAT).
- Amazon net sales of standard-rated goods to UK customers: £60,000 (excluding VAT).
- Imported a stock consignment using Postponed VAT Accounting, goods value £20,000, import VAT £4,000, all for taxable use.
- Recoverable input VAT on platform fees, software and other UK costs: £3,500.
Step 1, output VAT on sales. Combined UK sales are £40,000 + £60,000 = £100,000. Output VAT at 20% is £100,000 x 0.20 = £20,000.
Step 2, add the PVA import VAT to output tax. Box 1 includes the £20,000 of sales VAT plus the £4,000 of postponed import VAT, so Box 1 = £24,000.
Step 3, input VAT. Recoverable VAT on costs is £3,500, plus the £4,000 of import VAT reclaimed under PVA, so Box 4 = £7,500.
Step 4, the headline boxes ([gov.uk: how to fill in and submit your VAT Return(https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012)):
| VAT return box | What it holds | Amount |
|---|---|---|
| Box 1 | Output VAT on sales (£20,000) plus PVA import VAT (£4,000) | £24,000 |
| Box 4 | Input VAT on costs (£3,500) plus PVA import VAT reclaimed (£4,000) | £7,500 |
| Box 5 | Net VAT due to HMRC (Box 1 minus Box 4) | £16,500 |
| Box 6 | Total value of sales excluding VAT | £100,000 |
| Box 7 | Total value of purchases excluding VAT, including the £20,000 import | (your purchases) |
Check: Box 1 of £24,000 minus Box 4 of £7,500 gives Box 5 of £16,500 payable. Notice the £4,000 of import VAT washes through Box 1 and Box 4 with no net cost, which is exactly the PVA cash-flow benefit. The point of combining channels first is that you reach one correct set of boxes, rather than filing as if you ran two businesses.
This is simplified for illustration. Real returns also handle zero-rated and reduced-rated lines, EU and export sales, refunds, and any VAT the marketplace already accounted for under the rules above. The method is the same: combine the channels, classify each line, then complete one return.
Key takeaways
- Treat Shopify and Amazon as two sales sources feeding one set of books, not two businesses.
- The bank deposit is never the sale. Record gross sales, split out fees and refunds, then reconcile the net to the bank.
- VAT responsibility shifts depending on goods location, the £135 consignment value, and whether the seller is UK-established or overseas. Confirm which sales are yours to account for.
- Use Postponed VAT Accounting for imports to keep import VAT cash-flow neutral, taking figures from your monthly CDS statement.
- Combine both channels first, then complete one VAT return and one set of year-end accounts.
Want one clean set of accounts across Shopify and Amazon, with the VAT handled correctly on every channel? Book a free 20-minute call with a Zmartly accountant and we'll map your setup.
FAQs
Do Shopify and Amazon sales count together for the VAT threshold?
Yes. If you trade through one legal entity, all your taxable sales across both channels count towards the £90,000 VAT registration threshold (current from 1 April 2024). The threshold is measured on gross taxable turnover, not on the net amount that reaches your bank.
Why is my Amazon payout lower than my sales?
Because the payout is a net figure. Amazon deducts referral fees, FBA fulfilment and storage fees, refunds and sometimes VAT it has already collected, then pays you what's left. Your accounts should record the gross sales and each deduction separately so the net ties back to the deposit.
What is Postponed VAT Accounting and should I use it?
Postponed VAT Accounting lets a VAT-registered importer declare and recover import VAT on the same VAT return instead of paying it at the border. It needs no approval and usually makes import VAT cash-flow neutral, so most importing sellers benefit. You take the figures from your monthly postponed import VAT statement and enter them in Box 1, Box 4 and Box 7.
Who pays the VAT when I sell low-value imported goods through a marketplace?
For goods located outside the UK at the point of sale, in a consignment of £135 or less, sold through an online marketplace to a UK customer, the marketplace is liable for the supply VAT and charges it at the point of sale. Higher-value consignments fall under normal import VAT and customs duty rules at the border.
Can I use cash basis accounting for my ecommerce business?
If you're a sole trader or an eligible partnership, cash basis is the default from the 2024/25 tax year and you record income and expenses when money moves. It's simple, but if you hold significant stock, traditional accruals accounting often shows your real margin more accurately. Limited companies must use accruals accounting.
