Bookkeeping for Online Sellers: Platform Payouts

Good online seller bookkeeping means recording every sale at its full price and every platform fee, refund and postage cost separately, rather than just noting the payout that reaches your bank. A payout is a net figure, and if you only record payouts your income and expenses will both be wrong. This guide shows how to turn platform payouts into clean records, and what the digital platform reporting rules mean for you.

Key takeaways

• A payout is sales minus fees, refunds and other deductions, not your income.
• Record gross sales as income and fees as an expense.
• Platforms report many sellers' income to HMRC each year.
• Reconcile each payout to the platform's transaction report.
• Selling your own unwanted belongings is not usually trading.

What is a platform payout?

A platform payout is the amount a marketplace or selling app transfers to your bank account after it has collected payments from customers and taken its own deductions. Those deductions can include selling fees, payment processing fees, advertising charges, postage labels bought through the platform and refunds to customers. Payouts often bundle many sales together and can arrive daily, weekly or on request.

That is why a payout does not match any single sale. If you sold ten items for £400 in total and the platform kept £52 in fees and refunded one customer £30, your payout would be £318. Your turnover is still £400.

Digital platform reporting

Since January 2024, digital platforms have had to collect and report information about sellers to HMRC, with reports made each year. GOV.UK's guidance on reporting rules for digital platforms says platforms do not need to report sellers receiving 2,000 euros or less for fewer than 30 sales of goods in a year. These rules do not create a new tax. They simply mean HMRC can compare platform data with what sellers declare, so your own records need to line up with the platform's figures.

Whether you owe tax depends on whether you are trading. Buying goods to resell or making items to sell is usually trading. If your total gross trading income is £1,000 or less in a tax year, the trading allowance may mean you do not need to tell HMRC; our guide to the £1,000 trading allowance explains the conditions.

Recording payouts: gross versus net

Turnover matters beyond your tax return. It is gross income that counts towards the VAT registration threshold and towards the qualifying income test for Making Tax Digital for Income Tax, so understating it with net payouts can hide the fact that you have crossed a threshold. See our guides to the VAT registration threshold and MTD qualifying income.

Step-by-step: turning a payout into bookkeeping entries

1. Download the platform report. Most platforms offer a transaction or payout report showing each sale, fee and refund.
2. Record gross sales. Post the total sale value for the period as income.
3. Record fees and charges. Post selling, payment and advertising fees as expenses.
4. Record refunds and postage. Post refunds against sales and postage labels as an expense.
5. Check the net figure. Sales minus fees, refunds and postage should equal the payout.
6. Match to the bank. Tick the payout off on your bank statement, as described in our bank reconciliation guide.
7. Record stock purchases. Keep receipts for goods bought for resale and count stock at your year end.

Worked example (illustrative example)

Illustrative example only, not a real business. Jordan sells refurbished cameras through two online marketplaces as a sole trader. In October, marketplace A pays out £2,140 and marketplace B pays out £860.

Jordan downloads both reports. Marketplace A shows sales of £2,600, selling fees of £280, a refund of £120 and postage labels of £60, which gives £2,140. Marketplace B shows sales of £1,000 and fees of £140, which gives £860. In the books, Jordan records £3,600 of sales, £420 of fees, £120 of refunds and £60 of postage. The bank only received £3,000, but turnover for the month is £3,600. If Jordan had recorded payouts only, turnover would have been understated by £600 in a single month.

Common mistakes

• Recording payouts as sales. This understates both income and expenses.
• Ignoring money left on the platform. Balances not yet paid out are still sales made in the period.
• Mixing personal and business sales. Use a separate account or label personal disposals clearly.
• Losing stock receipts. Without them, you cannot claim the cost of what you sold.
• Leaving it to the year end. Platform reports can be harder to retrieve later, so download them monthly.

Monthly checklist for online sellers

• Download each platform's transaction report
• Record gross sales, fees, refunds and postage separately
• Match every payout to your bank statement
• File stock and packaging receipts
• Check your rolling turnover against VAT and MTD thresholds

How we can help

Our bookkeeping service starts from £150 per month on a fixed fee, and we can set up a simple monthly routine that turns marketplace payouts into accurate records. See our bookkeeping service, read bookkeeping basics for sole traders, check our pricing, or contact us to talk through your selling business.