How to record eBay fees in your books, with a worked example

Don't record the smaller payout as your sales. Record the full sale as revenue and each eBay fee as its own expense. The simplest way to make that balance is an eBay Receivable account, sometimes called a clearing account. Sales go into it at the full amount, fees and shipping labels come out of it, and when eBay pays you, the payout moves from that account to your bank.

Your profit comes out the same either way. What changes is that your books now show what you really sold and what eBay really cost you. Below, one order is followed from sale to bank, with every entry shown and the receivable checked back to zero. It works the same in QuickBooks, Xero, Wave or a spreadsheet, because it's accounting, not a software setting.

Why not just record the payout?

Because a payout has already had the fees taken out. If you book $79.14 as "sales", the fees vanish from your books, and so does any way of seeing them. Here is one order recorded both ways (the full example follows below):

The profit is identical. But only the gross version has a sales line you can compare with eBay's own reports and with the Form 1099-K eBay may send you, which reports gross payments. And only the gross version shows you a fee rate creeping up over a year. The netted version just looks like slightly weaker sales. Where marketplace fees belong covers the general case.

What fees does eBay actually charge?

eBay's selling fees page lists several kinds. They behave differently, which is why it's worth keeping them apart:

Two details catch people out. First, eBay's percentage fees are calculated on the total amount of the sale, which eBay defines as the item price, handling, shipping the buyer paid, sales tax and other applicable fees. Second, the general campaign strategy page says the Promoted Listings ad fee is also a percentage of the total sale amount, including shipping and taxes.

You don't need a dozen accounts. Final value fees, ad fees, store subscription, "other eBay fees" and shipping is a sensible minimum for most sellers. As how to add an account puts it, most people need fewer accounts than they think. Split further only when you'd act on the number.

How do you record one eBay order, start to finish?

Here's the order. It uses the most-categories final value fee, rounded to the cent. Sales tax is a flat 8% for simplicity.

• Item $100.00, buyer-paid shipping $10.00, sales tax 8% ($8.80). The buyer paid $118.80.
• Final value fee: 13.6% × $118.80 = $16.16, plus the $0.40 per-order fee = $16.56.
• Promoted Listings, at an ad rate you chose of 4%: 4% × $118.80 = $4.75.
• A shipping label bought through eBay: $9.20.
• An insertion fee on a listing beyond your free monthly allowance: $0.35.

If debits and credits are new to you, debits and credits explained is a five-minute read. The only rule you need here is that each entry's two columns must be equal.

Entry 1: the sale. The $8.80 of sales tax isn't in your books at all. eBay collected it from the buyer and remits it to the state, so it was never your money.

Sales are credited at the full $110.00. The fees are debited to their own expense accounts. The receivable holds the $88.69 eBay now owes you for this order.

Entry 2: the shipping label.

Entry 3: the insertion fee. This charge has no sale attached, which is exactly why it can't be "netted" into one.

Entry 4: the payout.

Now check the receivable: $88.69 − $9.20 − $0.35 − $79.14 = $0.00. Every dollar of the sale is either in your bank or in an expense account. Fees add up to $16.56 + $4.75 + $0.35 = $21.66, which is 19.69% of $110.00. That's the 19.7% in the table at the top.

One more thing the numbers show. About $1.20 of the final value fee (13.6% of the $8.80 tax) and $0.35 of the ad fee were charged on sales tax you never kept. It's still a fee you paid, and still an expense. Record it with the rest of the fee, not against the tax.

Why every entry has two sides at all is covered in what is double-entry bookkeeping.

What is an eBay receivable account, and how do you know it's right?

It's a running balance of what eBay owes you. Sales add to it. Fees, labels and refunds take away from it. Payouts move money out of it and into your bank. In this example it went back to exactly zero because the whole order was paid out.

In real life it almost never sits at zero, because new sales are always still processing. That's fine. The test is whether your balance equals what eBay says it's holding for you: the Processing and Available amounts on the Payments tab in Seller Hub (plus On hold, unless you track held funds separately). If the two agree, nothing is missing. If they don't, the difference points you at the entry you skipped. Why your eBay payout is less than your sales walks a full week through that check.

Keeping fees in named accounts is also what makes your reports useful. What is a chart of accounts explains why the way you split accounts decides what your reports can show. At tax time, the IRS Schedule C instructions have a line for commissions and fees. You can only report fees you recorded, and a netted payout hides them. This is general information, not tax advice. Check with your accountant.

What about doing this for hundreds of orders?

By hand, this is a monthly job. eBay's Payments tab lets you download a transaction report and a payout report from its Reports section. From the transaction report you total each fee type for the month, post one summary entry per type through the receivable, post each payout, and then check the receivable against Seller Hub. It's tedious but doable for a small shop, and far better than recording deposits as sales.

How SalesImporter handles this

SalesImporter connects to eBay today. It records each eBay sale gross in eBay Sales, and posts eBay's fees to separate expense accounts by type under an eBay Fees heading: Final Value Fee (including the per-order fee), Insertion Fee (including listing upgrades such as bold, subtitle and reserve price), Store Subscription Fee, Promoted Listings Fee, International Fee, Regulatory Operating Fee, and Other eBay Fees for anything else. It creates those accounts itself as it syncs, so nobody categorizes fees by hand. Shipping labels bought through eBay go to eBay Shipping Expense, attached to their order. Sales, fees, labels, refunds and payouts run through an eBay Receivable account, and after each sync SalesImporter compares that balance with the balance eBay reports and shows any difference. See connect your eBay account.