In e-commerce, money rarely comes directly from the customer. Marketplaces make bulk payments, payment service providers deduct fees, and returns are processed with a time lag. If you rely solely on bank statements for bookkeeping, you’ll lose track of things. Here, we’ll show you how to set up clean bookkeeping for an online store.
Why a bank statement isn’t enough
In a traditional business, every incoming payment is accompanied by an invoice. In e-commerce, it’s different. A marketplace like Amazon aggregates sales from a given period, deducts sales fees, shipping costs, advertising expenses, refunds, and sometimes reserves, and then transfers the remainder. A single amount appears in the bank account, but behind it lie hundreds of transactions.
If you record only this amount as revenue, both revenue and expenses will be incorrect: Revenue is too low, fees are missing, and the VAT is wrong. That is why bookkeeping is based not on the bank statements, but on the settlement reports from marketplaces and payment services.
Posting marketplace settlements correctly
A separate clearing account for each marketplace works well. Sales, fees, and refunds from the settlement report are posted to this account. The payout to the bank account is then simply a transfer from the clearing account to the bank. At the end of each settlement period, the clearing account must show exactly the amount that the marketplace still owes or is withholding.
It is important to use gross figures: sales and fees are recorded separately and are not offset against each other. This is the only way the report will show what the platform actually costs, and the only way the VAT figures will be correct.
The marketplace usually invoices the fees separately. If the marketplace operator is based in another EU country, these invoices are often subject to the reverse charge. This means you owe the VAT on the fees yourself and, under certain conditions, can deduct it as input VAT. The tax advisor handles the classification; we make sure that the fee invoices are complete.
Treating payment services as bank accounts
From an accounting perspective, PayPal, Stripe, Klarna, Mollie, and similar services are considered separate accounts. Customers make payments into these accounts; the service deducts fees, converts currencies, processes chargebacks, and eventually transfers funds to your bank account. Every transaction must be recorded, and at the end of the month, the balance in your accounting records must match the balance in the service’s account.
Most services offer monthly reports for download for this purpose. Be sure to always use the same report in the same format. If personal payments are also processed through a payment service account, things can get confusing; therefore, having a separate business account with the payment service is strongly recommended.
Returns and refunds
Returns are a normal part of online retail. From an accounting perspective, a refund means that previously recorded revenue is reduced, and with it, the VAT. The refund must therefore be assigned to the correct tax rate and, for international sales, the correct country.
In addition, there are partial refunds, credit card chargebacks, and refunds without returns. If merchandise is returned, it is added back to inventory or, if damaged, written off. Especially with high return rates, it’s worth taking a look at the monthly report: Which products are returned particularly often, and what does that cost in shipping and fees?
Invoices to customers
Even in e-commerce, customers need proper invoices. Most shop systems and marketplaces generate them automatically, with a sequential number, date, tax rate, and tax amount. Check once during setup that all required details are correct, especially your address, your tax number or VAT ID, and the delivery date.
If you sell to business customers, for example through the marketplaces’ business programs, additional details are required. For deliveries to businesses in other EU countries, the VAT IDs of both parties must appear on the invoice, and you need proof that the goods have left the country. Invoices up to 250 euros count as small-amount invoices, with simplified requirements. And for invoices to domestic business customers, the rules for e-invoicing also apply: from 2027 for businesses with prior-year revenue above 800,000 euros, from 2028 for all.
Sales to other EU countries
Anyone selling to private customers in other EU countries must keep an eye on the threshold for distance sales. Since July 2021, an EU-wide threshold of 10,000 euros a year has applied to all such sales combined. If it is exceeded, the VAT of the country where the customer is located generally applies. Through the EU’s OSS reporting procedure, these sales can be reported centrally to the Federal Central Tax Office without registering in each individual country.
If goods are stored in warehouses abroad, for example in a marketplace’s fulfillment program, registration in that country may be required. Transferring goods to a foreign warehouse may also have VAT implications.
Assessing foreign sales, warehouses abroad, and registration requirements is the responsibility of the tax advisor. Bookkeeping provides the tax advisor with sales figures by country and tax rate, as reported by the platforms.
What the platforms report to the tax office
Since 2023, marketplaces and platforms have been required to report data about their sellers and their sales to the tax authorities. In addition, marketplaces must record certain information about their merchants and may be held liable for VAT their merchants have not paid; this is why they ask for your tax number and VAT ID.
For you, this means the tax office already knows your platform sales. This makes it all the more important to maintain accounting records whose figures match the platforms’ reports. Otherwise, discrepancies will lead to queries.
Purchasing, imports, and inventory
Many online retailers buy goods in large quantities, often from abroad. In addition to the purchase price, the landed cost also includes freight, insurance, and customs duties. Import VAT is usually settled through a freight forwarder or customs broker and, under certain conditions, can be deducted as input VAT. More on the import and export page.
Because merchandise is often purchased months before it is sold, large purchases can skew monthly reports. Reconciling these figures with inventory data from the inventory management system or from the fulfillment service provider’s warehouse reports provides clarity. At the end of the year, the tax advisor will need an inventory list, including merchandise stored in third-party warehouses.
Common bookkeeping mistakes in online stores
- Recording only payouts: revenue, fees, and VAT are then wrong
- Offsetting fees against revenue: the report does not show what the platform costs
- Personal payments through the business account with the payment service: reconciliation becomes detective work
- Forgetting marketplace reserves: withheld amounts are then missing from the clearing account
- Ignoring foreign currencies: sales in other currencies are posted at the wrong exchange rate
- Not reconciling inventory: large purchases distort the monthly results
Each of these errors can be corrected retroactively, but it requires considerable effort. It’s easier to base your bookkeeping on reports rather than bank statements from the very beginning.
The monthly routine for online retailers
With a set routine, bookkeeping remains manageable even with a high volume of sales. These documents should be available every month:
- Marketplaces: settlement reports for all periods of the month
- Payment services: monthly reports with all transactions and the closing balance
- Shop system: export of orders and invoices from Shopify, WooCommerce, Shopware, or JTL
- Purchasing: supplier invoices, freight and customs statements
- Service providers: invoices from shipping carriers, fulfillment providers, and advertising platforms
- Inventory: end-of-month inventory report if you use an inventory management system
If these reports are available by the 5th of the following month, the month is posted and reconciled within the first few days afterward. You can find out how we organize this for online retailers on the e-commerce page.
Sources
Laws and bodies named in the article. The legal texts link to gesetze-im-internet.de, in German.
This article is for general informational purposes only and does not constitute tax or legal advice in specific cases. A tax advisor is responsible for tax-related questions.