Amazon and Shopify sellers often receive less money in their business bank account than the total value of the sales they generated. The difference may include marketplace commissions, payment processing fees, fulfilment charges, advertising costs, refunds, subscription charges and other platform deductions.
This creates a bookkeeping issue that is easy to underestimate.
A seller who records only the amount deposited into the bank account may understate sales and fail to record the associated marketplace costs correctly. The result can be inaccurate turnover figures, incorrect profit calculations, incomplete VAT records and difficult bank reconciliations.
For UK businesses, the correct approach is generally to record the underlying sales separately from the fees and other deductions, rather than treating the net payout as the total sale.
For example, if an Amazon seller makes £10,000 of sales during a settlement period and Amazon deducts £1,500 of fees before paying £8,500 into the business bank account, the accounting records should normally show the relevant gross sales and the £1,500 of platform costs separately. The £8,500 bank receipt is the settlement amount, not the original sales figure.
The same principle applies to Shopify businesses, although the bookkeeping structure can differ because Shopify is primarily an e-commerce platform rather than a marketplace in the same way as Amazon. Shopify sellers may also use Shopify Payments, PayPal, Stripe or another payment provider, creating separate transaction and fee flows.
This guide explains how Amazon and Shopify sellers should record marketplace and platform fees, how to reconcile gross sales with settlement deposits, how VAT can affect the treatment, what records should be retained, and how an e-commerce bookkeeping system can be structured for accurate UK accounts.
Why Marketplace Fees Need Separate Accounting
Marketplace fees are business costs incurred in connection with selling products through a platform.
They should not normally be hidden inside the bank deposit.
Consider a simple Amazon transaction:
- Customer sales: £10,000
- Amazon selling and fulfilment fees: £1,200
- Amazon advertising: £300
- Refunds: £200
- Amount transferred to bank: £8,300
If the seller records only the £8,300 bank receipt as sales, the accounts may show turnover of £8,300 rather than the underlying sales figure of £10,000.
That affects more than bookkeeping.
Turnover can influence VAT registration requirements, tax calculations, management reporting and other business decisions. Expenses can also become understated because the £1,500 of platform charges has effectively disappeared into the net settlement.
The correct bookkeeping structure should therefore explain how the gross customer transactions became the final amount received in the bank.
This is particularly important for businesses with high transaction volumes. A manual process that works for 20 sales a month can become unreliable when a seller processes hundreds or thousands of transactions.
Gross Sales Versus Net Marketplace Payouts
The most important concept for Amazon and Shopify sellers is the difference between gross sales and net payouts.
A marketplace or payment provider may collect money from customers and then deduct fees before transferring the remaining amount to the seller.
The bank statement therefore shows the net settlement.
The accounting records need to capture the components behind that settlement.
A simplified example looks like this:
| Transaction | Amount |
| Gross customer sales | £12,000 |
| Customer refunds | (£500) |
| Marketplace commission | (£1,200) |
| Fulfilment fees | (£800) |
| Advertising fees | (£300) |
| Other platform charges | (£200) |
| Net settlement | £9,000 |
| The exact accounting treatment depends on the seller’s circumstances, VAT status and the nature of each charge. | |
| However, the key principle is that the £9,000 bank receipt should be capable of being reconciled to the underlying transactions. | |
| The seller should not simply enter £9,000 as sales and ignore the deductions. |
How Amazon Marketplace Fees Should Be Recorded
Amazon sellers can incur several different types of charges. The exact fees depend on the seller’s account, products, fulfilment arrangements and services used.
Common categories include:
- Referral fees
- Fulfilment fees
- Monthly subscription fees
- Storage fees
- Advertising costs
- Refund administration fees
- Removal or disposal fees
- Shipping-related charges
- Other seller account fees
Each category should be identified in the bookkeeping records.
For example, a seller using Fulfilment by Amazon may have inventory storage and fulfilment costs that should not be combined with advertising expenditure.
Separating the categories gives the business better management information and makes it easier to identify which costs are affecting margins.
An Amazon settlement report can provide the information needed to reconcile the sales, refunds, fees and final payment.
A typical accounting workflow is:
- Export the relevant Amazon settlement or transaction report.
- Identify the gross sales for the settlement period.
- Identify refunds and adjustments.
- Identify Amazon fees.
- Separate fulfilment, advertising and other significant expense categories.
- Identify VAT included in relevant charges where applicable.
- Calculate the expected net settlement.
- Match the net settlement to the bank transaction.
- Investigate differences.
- Post the accounting entries to the bookkeeping system.
The frequency can depend on transaction volume and the accounting system being used, but regular reconciliation is preferable to allowing several months of settlements to accumulate.
Amazon Referral Fees
Referral fees are charges Amazon applies to sellers for selling products through its marketplace.
For bookkeeping purposes, they should be recorded as a business expense rather than deducted from sales without explanation.
For example:
Gross sales: £5,000
Amazon referral fees: £750
Net amount before other deductions: £4,250
The accounts should show the relevant £5,000 sales and £750 expense, subject to the correct accounting and VAT treatment.
The exact fee structure varies by product category and seller arrangement, so sellers should use their Amazon statements rather than estimating fees from a standard percentage.
Estimates can cause small differences that accumulate over hundreds of transactions.
Amazon Fulfilment Fees
Sellers using Amazon’s fulfilment services may incur charges for picking, packing, shipping and other fulfilment activities.
These are separate from the product sale itself.
The bookkeeping system should therefore identify fulfilment costs separately where practical.
For management reporting, this can be useful because a seller can then calculate:
Sales
minus cost of goods
minus marketplace fees
minus fulfilment costs
minus advertising
equals contribution before other overheads.
This gives a more meaningful view of product profitability than looking at the amount deposited into the bank.
Amazon Advertising Costs
Amazon sellers may also spend money on sponsored product campaigns, sponsored brand campaigns and other advertising services.
Advertising costs should normally be recorded separately from marketplace commissions.
This allows the seller to calculate advertising performance and understand how much of the gross margin is being consumed by customer acquisition.
For example, a seller may have:
- £50,000 gross sales
- £6,000 Amazon referral fees
- £7,000 fulfilment costs
- £4,000 advertising
The business has very different economics from another seller with £50,000 sales and £1,000 advertising expenditure.
Combining all Amazon costs into one unexplained figure makes this analysis harder.
How Shopify Fees Should Be Recorded
Shopify requires a slightly different approach.
Shopify provides the online storefront and can provide payment functionality through Shopify Payments, while sellers may also connect third-party payment processors.
A Shopify seller may therefore have:
- Product sales
- Discounts
- Refunds
- Shopify subscription charges
- Shopify Payments processing fees
- Third-party payment fees
- App subscriptions
- Shipping costs
- Advertising costs
- Other operating expenses
The accounting system should distinguish between these transactions.
For example, suppose a Shopify store generates £20,000 of customer sales. Shopify Payments deducts £500 in processing fees and transfers £19,500 to the bank.
The accounting records should generally be capable of showing the £20,000 sales and the relevant £500 processing cost separately, rather than recording £19,500 as sales.
If PayPal or Stripe is used alongside Shopify Payments, each payment channel should be reconciled separately.
This is one of the main differences between basic bookkeeping and e-commerce bookkeeping: the bank account is only one part of the transaction flow.
Shopify Subscription Fees
A Shopify store may incur recurring platform subscription charges.
These are operating expenses associated with running the online store.
The seller should retain the relevant Shopify invoices or account statements and record the expense using the appropriate accounting category.
If the business is VAT registered, the VAT treatment should be established from the supplier invoice and the applicable rules rather than assumed.
The expense should also be separated from payment processing fees where practical.
This allows the seller to distinguish fixed platform costs from transaction-based costs.
Shopify Payment Processing Fees
Shopify Payments and third-party payment providers can deduct transaction fees before transferring money to the business bank account.
This creates the same gross-versus-net issue found with Amazon.
Suppose:
Gross Shopify sales = £8,000
Payment processing fees = £160
Bank settlement = £7,840
Recording £7,840 as sales would hide the £160 payment-processing cost.
A better accounting process records the gross sales and the relevant fee separately, then reconciles the £7,840 settlement to the bank.
The exact treatment of VAT on payment services depends on the supplier, location, invoice and applicable VAT rules.
For a UK VAT-registered business, the VAT treatment should be checked against the supporting invoice or statement.
Shopify Apps and Other Platform Costs
Shopify sellers often use third-party apps for:
- Email marketing
- Inventory management
- Customer reviews
- Subscription products
- Accounting
- Shipping
- Product sourcing
- Customer support
- Automation
Each app can create a separate business expense.
Where possible, these costs should be categorised consistently.
For example:
Software subscriptions
Advertising
Payment processing
Shipping
Professional services
Marketplace fees
This produces cleaner management accounts and makes it easier to identify unnecessary recurring costs.
A seller with 15 different apps could be paying hundreds of pounds per month without realising how much the total software overhead has grown.
Regular bookkeeping can identify those costs.
VAT Treatment of Marketplace Fees
VAT is one of the areas where Amazon and Shopify sellers need particular care.
The correct treatment depends on the seller’s VAT registration status, the supplier’s location, the nature of the service, the place of supply and the documentation provided.
UK VAT rules also differ depending on whether goods are sold through a marketplace, where the goods are located when sold and whether the seller is established in the UK. HMRC provides specific guidance for businesses selling goods through online marketplaces.
For UK sellers, the marketplace fee should not automatically be assumed to carry UK VAT simply because the seller operates in the UK.
The supplier invoice or statement should be examined to determine what VAT, if any, has been charged and whether a reverse-charge treatment is relevant.
This is particularly important for international platform charges.
A seller should avoid applying a blanket 20% VAT rule to every Amazon, Shopify, payment processor or software charge.
Marketplace Fees From Overseas Suppliers
Many e-commerce platforms and technology providers operate internationally.
A UK business may therefore receive invoices for services supplied by businesses outside the UK.
This can create additional VAT considerations.
For example, a platform service may be supplied by an overseas entity, while the UK seller is the customer.
The correct VAT treatment may involve the reverse charge, depending on the nature and place of supply and the customer’s circumstances.
The seller should review:
- Supplier legal entity
- Supplier country
- VAT number where shown
- Invoice date
- Service description
- VAT amount
- Currency
- Exchange rate
- Applicable VAT treatment
The correct treatment should be established from the actual documentation.
HMRC’s VAT guidance explains that VAT treatment depends on the circumstances of the supply, and online marketplace VAT rules can also depend on whether the seller is established in the UK and where the goods are located.
Why Net Payout Accounting Can Create VAT Problems
Recording only net marketplace deposits can distort the VAT records.
Consider:
Gross taxable sales = £10,000
Platform fees = £1,500
Net bank payout = £8,500
If the business records £8,500 as sales, it may understate the value of its supplies.
The platform fees are separate costs and should not automatically reduce the gross sales figure.
HMRC’s VAT guidance explains that commission paid to an agent does not necessarily reduce the value of the underlying supply. Its VAT manual gives an example where commission is deducted from money collected, but the full sales and commission amounts still need to be considered separately.
The precise treatment depends on the contractual arrangements and the nature of the marketplace.
This is why sellers should not build their bookkeeping around bank deposits alone.
Amazon Marketplace VAT and UK Sales
Amazon sellers should also understand that the VAT treatment of the customer’s sale is separate from the VAT treatment of Amazon’s fees.
HMRC states that online marketplace VAT rules can make the marketplace responsible for VAT on certain sales involving overseas sellers, including particular situations involving goods located in the UK or goods outside the UK with consignments of £135 or less.
This does not mean that every Amazon seller can assume Amazon handles all VAT.
The seller’s establishment, inventory location, customer location, VAT registration status and nature of the transaction all matter.
UK sellers should therefore distinguish between:
- VAT on customer sales.
- VAT on Amazon’s services.
- Import VAT.
- VAT on other business costs.
- VAT handled by the marketplace under specific rules.
These should not be collapsed into one generic “Amazon VAT” figure.
Shopify Sales and VAT
Shopify sellers generally have more direct control over the customer transaction than sellers using a third-party marketplace.
The seller is responsible for understanding the VAT treatment of its own sales, subject to the specific circumstances of the transaction.
This can become more complex when Shopify stores sell internationally.
The seller may have customers in:
- England
- Wales
- Scotland
- Northern Ireland
- European Union countries
- United States
- Other international markets
VAT and sales-tax obligations can vary depending on the destination, goods, customer status and fulfilment arrangement.
The Shopify platform does not remove the seller’s responsibility to understand its tax obligations.
A UK seller expanding internationally should therefore review the tax position before assuming that Shopify’s automated tax settings represent the complete accounting treatment.
Currency Conversion and Marketplace Fees
International Amazon and Shopify sellers may receive payments in currencies other than pounds sterling.
The bookkeeping records should preserve the original transaction information and apply an appropriate exchange rate when transactions are translated into the business’s functional currency.
Currency differences can occur between:
- Customer transaction date
- Marketplace settlement date
- Bank receipt date
- Supplier invoice date
- Actual conversion date
These differences can create foreign exchange gains or losses.
For example, an Amazon seller may generate US dollar sales and receive a later dollar settlement into a foreign currency account. The sterling value of the sales and the sterling value of the eventual bank movement may not be identical.
The accounting system should be designed to reconcile those movements rather than treating the difference as an unexplained marketplace fee.
Amazon and Shopify Refunds
Refunds need to be recorded correctly.
A customer refund is not simply another marketplace fee.
For example:
Gross sales = £10,000
Customer refunds = £500
Marketplace fees = £1,200
Net settlement = £8,300
The accounts need to distinguish the £500 customer refund from the £1,200 marketplace cost.
This distinction matters for turnover, product profitability and VAT.
The accounting system should also reconcile refunds against the original customer transaction where the software allows it.
Sellers should review:
- Full refunds
- Partial refunds
- Return shipping refunds
- Promotional refunds
- Marketplace adjustments
- Chargebacks
Each can affect the final settlement.
Amazon and Shopify Settlement Reconciliation
Settlement reconciliation is the central bookkeeping process for marketplace sellers.
The objective is to prove that:
Gross sales
+/- refunds and adjustments
- marketplace fees
- payment processing fees
- other deductions
= settlement received.
The exact formula will depend on the platform and the seller’s account.
A reconciliation should identify any difference between the expected settlement and the amount actually received.
Differences may arise from: - Timing
- Currency conversion
- Refunds
- Chargebacks
- Fees
- Reserve balances
- Previous-period adjustments
- Failed payments
- Tax deductions
- Manual adjustments
An unexplained difference should not simply be posted to miscellaneous expenses.
The cause should be investigated.
A Monthly Amazon Bookkeeping Process
A practical Amazon bookkeeping process can be structured as follows.
Step 1: Download settlement reports
Obtain the relevant Amazon settlement reports for the accounting period.
Step 2: Capture gross sales
Record the sales information using the appropriate sales categories.
Step 3: Record refunds
Record customer refunds and other sales adjustments separately.
Step 4: Record Amazon fees
Separate referral, fulfilment, advertising and other significant charges.
Step 5: Review VAT
Check the VAT treatment of sales and Amazon service charges.
Step 6: Reconcile settlement
Match the calculated settlement to the bank receipt.
Step 7: Investigate variances
Research any difference rather than posting an unexplained adjustment.
Step 8: Reconcile inventory
Where appropriate, compare sales and fulfilment information with inventory records.
Step 9: Review profitability
Analyse product-level or category-level margins.
Step 10: File supporting records
Retain settlement reports, invoices and other evidence.
This process can be performed monthly or more frequently depending on sales volume.
A Monthly Shopify Bookkeeping Process
Shopify sellers can use a similar structure.
Step 1: Export Shopify sales data
Capture the relevant order, refund and adjustment information.
Step 2: Identify payment channels
Separate Shopify Payments, PayPal, Stripe and other processors where applicable.
Step 3: Record gross sales
Post the underlying customer sales.
Step 4: Record refunds and discounts
Identify reductions in sales separately.
Step 5: Record payment fees
Post processing charges as relevant expenses.
Step 6: Record Shopify subscription costs
Enter the platform subscription using the appropriate expense category.
Step 7: Record app costs
Capture recurring and transaction-based app charges.
Step 8: Reconcile payment settlements
Match payment-provider payouts to bank transactions.
Step 9: Review VAT
Check VAT on customer sales and platform/service charges.
Step 10: Reconcile the accounting system
Confirm that sales, refunds, fees and payouts agree with the platform reports.
What Records Should E-Commerce Sellers Keep?
A seller should retain sufficient records to explain its transactions and support the figures included in the accounts and tax returns.
Useful records include:
- Amazon settlement reports
- Amazon fee invoices
- Shopify order reports
- Shopify Payments reports
- PayPal statements
- Stripe statements
- Bank statements
- Customer invoices where applicable
- Supplier invoices
- Credit notes
- Refund reports
- Advertising invoices
- Fulfilment statements
- Shipping records
- Import documentation
- VAT invoices
- Currency conversion records
The exact retention requirements depend on the tax and accounting obligations involved.
Digital storage can make retrieval easier, particularly where transaction volumes are high.
A structured folder system can use:
Year → Month → Platform → Reports → Invoices.
For example:
2026 → August → Amazon → Settlement Reports.
This can make an accountant’s year-end review considerably more efficient.
Why Bank Feeds Are Not Enough for Amazon and Shopify
Bank feeds are useful but incomplete for e-commerce accounting.
A bank feed may show:
AMAZON PAYMENTS £8,500
or
SHOPIFY PAYMENTS £19,500
It does not necessarily explain:
- Gross sales
- Refunds
- Platform fees
- Payment processing fees
- Advertising
- Fulfilment
- Tax
- Currency adjustments
The platform report contains the transaction detail needed to explain the settlement.
The bank feed then provides confirmation that the settlement reached the business account.
Both sources serve different purposes.
The bank statement confirms cash movement.
The marketplace report explains the settlement.
The bookkeeping system connects the two.
Common Mistakes Amazon and Shopify Sellers Make
Recording net payouts as sales
This is one of the most common errors.
Posting all platform costs to one generic expense
This reduces the usefulness of management accounts.
Ignoring VAT on platform services
International services can require specific VAT treatment.
Using estimated marketplace fees
Actual settlement reports should be used where available.
Failing to reconcile refunds
Refunds can create significant differences between sales and cash received.
Treating every deduction as a fee
Some deductions may relate to refunds, tax, reserves, fulfilment or other adjustments.
Mixing personal and business accounts
This makes reconciliation more difficult.
Ignoring currency differences
International sales require appropriate exchange-rate treatment.
Reconciling only at year-end
Large transaction volumes make year-end reconstruction inefficient and increase the risk of errors.
Failing to keep platform reports
If the accounting records cannot be supported by platform reports, resolving discrepancies later can be difficult.
How Marketplace Fees Affect Profit Margins
Marketplace fees should not only be recorded for tax compliance.
They are essential for understanding whether products are profitable.
Consider a product sold for £40:
- Selling price: £40
- Cost of goods: £15
- Amazon referral fee: £6
- Fulfilment: £5
- Advertising allocation: £4
- Other selling costs: £2
Contribution before overheads: £8
Without recording the marketplace fees separately, the seller may believe the product produces a £25 margin after stock costs.
That would not reflect the actual economics of selling through the platform.
Accurate fee accounting allows sellers to calculate: - Gross margin
- Contribution margin
- Advertising cost ratio
- Marketplace cost percentage
- Fulfilment cost per order
- Net profit per product
- Net profit per sales channel
This information can influence pricing and inventory decisions.
Should Amazon and Shopify Fees Be Combined?
They can be grouped at a high level for financial statements, but keeping useful internal categories is generally better for management reporting.
A business could use categories such as:
Amazon
- Amazon referral fees
- Amazon fulfilment
- Amazon storage
- Amazon advertising
- Amazon subscription
Shopify - Shopify subscription
- Shopify Payments fees
- Shopify apps
Other - PayPal fees
- Stripe fees
- Advertising
- Shipping
The appropriate chart of accounts depends on the size and complexity of the business.
A small seller may need fewer categories.
A larger e-commerce operation may benefit from detailed channel-level reporting.
How AccountancyNet Can Help E-Commerce Sellers
AccountancyNet Ltd is a UK-based accountancy practice serving businesses across England and Wales.
For Amazon and Shopify sellers, bookkeeping requires more than entering bank transactions. Platform settlements need to be reconciled with gross sales, refunds, fees and payment-provider deductions.
AccountancyNet provides accounting support including accounts preparation, tax returns, Self Assessment, VAT filing, payroll and Making Tax Digital compliance.
Its e-commerce bookkeeping experience includes businesses selling through platforms such as Amazon, Shopify, eBay and Etsy. The practice can support digital transaction capture, bank-feed processes and reconciliation of platform data.
For sellers whose bookkeeping has become difficult to manage, AccountancyNet’s company accounts service can provide professional support with maintaining and preparing business financial records.
Professional bookkeeping can be particularly useful when:
- Amazon and Shopify are both used.
- Multiple payment processors are connected.
- Sales occur in multiple currencies.
- The business is VAT registered.
- FBA or third-party fulfilment is used.
- The seller has high transaction volumes.
- The business sells internationally.
- Several Shopify apps generate recurring charges.
- Platform reports do not currently reconcile with bank deposits.
- The owner is spending significant time on manual bookkeeping.
Example: Amazon Seller Accounting
Consider a UK VAT-registered Amazon seller with the following monthly activity:
Gross sales: £30,000
Customer refunds: £1,000
Amazon referral fees: £4,000
FBA fulfilment fees: £3,000
Amazon advertising: £2,000
Other Amazon charges: £500
Net settlement: £19,500
The seller should not simply record £19,500 as turnover.
Instead, the accounting records should be structured so that the underlying sales and relevant deductions can be identified and reconciled.
The VAT treatment must then be determined based on the seller’s transactions and the documentation available.
The example is simplified. Actual Amazon reports can contain additional transaction types and adjustments.
Example: Shopify Seller Accounting
Now consider a Shopify seller:
Gross sales: £25,000
Refunds: £750
Shopify Payments fees: £500
Shopify subscription: £80
Apps: £220
Other payment fees: £150
Bank settlement after payment deductions: £24,250
Again, the bank receipt should not automatically be treated as the sales figure.
The seller needs a reconciliation between the Shopify sales information, refunds, payment fees and bank settlement.
Subscription and app costs should also be recorded separately.
The VAT treatment of each charge should be checked against the supplier’s documentation.
What Changes When a Seller Uses Both Amazon and Shopify?
Many growing e-commerce businesses use multiple sales channels.
For example:
Amazon sales: £40,000
Shopify sales: £25,000
Total sales: £65,000
Amazon fees: £8,000
Shopify/payment fees: £1,500
The bookkeeping system should be capable of identifying the source of the sales and costs.
Channel-level reporting can answer important questions:
Which channel generates the highest margin?
Which platform has the highest fees?
Which products perform best on Amazon?
Does Shopify generate a better contribution margin?
How much is being spent on customer acquisition?
Are platform costs increasing faster than revenue?
A single “e-commerce sales” figure may be sufficient for some statutory reporting, but detailed internal records provide much more useful information for business decisions.
What If Amazon or Shopify Charges Are in Another Currency?
International platform charges should be recorded in accordance with the business’s accounting and tax requirements.
The transaction currency, amount and applicable sterling conversion should be retained.
If the platform statement is in US dollars but the business’s accounts are in pounds, the bookkeeping system needs to apply the relevant exchange-rate treatment.
Currency movements can also create differences between:
- Original charge
- Settlement amount
- Bank conversion
- Accounting value
These should not automatically be classified as additional marketplace fees.
They may represent foreign exchange differences.
A seller operating internationally should therefore make currency reconciliation part of its regular bookkeeping process.
How Often Should Marketplace Fees Be Reconciled?
There is no single frequency that suits every seller.
A business processing 30 orders per month may reconcile monthly.
A seller processing several thousand orders may need more frequent automated reconciliation.
The appropriate frequency depends on:
- Transaction volume
- Number of sales channels
- Number of payment processors
- VAT reporting frequency
- Accounting software
- Cash-flow requirements
- Staffing
- Level of automation
At minimum, records should be kept sufficiently current to support accurate VAT, tax and management reporting.
Monthly reconciliation is a practical baseline for many small and medium-sized e-commerce businesses.
A Practical Checklist for Amazon and Shopify Sellers
Before finalising a month of e-commerce bookkeeping, check:
- Gross sales have been recorded.
- Refunds have been identified.
- Discounts have been accounted for correctly.
- Amazon or Shopify fees have been recorded separately from sales.
- Payment processing fees have been recorded.
- Fulfilment costs have been recorded.
- Advertising costs have been recorded.
- Subscription charges have been recorded.
- App charges have been recorded.
- VAT treatment has been reviewed.
- International charges have been checked.
- Currency differences have been reconciled.
- Platform settlements match bank receipts.
- Unexplained differences have been investigated.
- Supporting reports have been retained.
- Business and personal transactions are separated.
- The accounting records agree with the platform data.
Frequently Asked Questions
Should Amazon fees be recorded as an expense?
In general, marketplace fees are business costs and should be recorded separately from the underlying sales rather than simply reducing turnover to the net amount received. The exact accounting and VAT treatment depends on the nature of the fee and the seller’s circumstances.
Should Shopify fees be recorded separately from sales?
Yes. Shopify subscription costs, payment processing charges, app fees and other platform costs should generally be identifiable separately from customer sales.
Can I record only the amount Amazon pays into my bank?
Doing so can understate gross sales and hide the associated Amazon costs. The underlying Amazon settlement should be reconciled so the accounts explain how gross transactions result in the final bank payment.
Are Amazon fees subject to VAT?
Not necessarily in every case. The VAT treatment depends on the supplier, service, location and documentation. Do not assume that every Amazon charge has UK VAT at 20%.
Are Shopify fees subject to VAT?
The VAT treatment depends on the supplier entity, the service and the applicable place-of-supply rules. The invoice or statement should be reviewed before determining the correct treatment.
Do marketplace fees reduce turnover?
A marketplace commission does not automatically reduce the value of the underlying customer sale for VAT or accounting purposes. HMRC’s guidance on agent commission illustrates why the gross transaction and commission may need to be considered separately.
How should refunds be recorded?
Refunds should be identifiable separately from platform fees. They reduce the relevant sales or create the appropriate adjustment according to the accounting and VAT treatment.
What reports should Amazon sellers keep?
Settlement reports, transaction reports, fee invoices, advertising reports, fulfilment statements and relevant VAT documentation should be retained as appropriate.
What reports should Shopify sellers keep?
Shopify order reports, Shopify Payments reports, payment-provider statements, invoices for subscriptions and apps, refund reports and other relevant supporting records should be retained.
Can bookkeeping software automate marketplace reconciliation?
Yes. Some accounting systems and specialist e-commerce integrations can import platform data and automate parts of the reconciliation process. However, automation still requires review to identify errors, unusual transactions and VAT issues.
Final Thoughts
Amazon and Shopify sellers should not build their bookkeeping around the amount of money that reaches the bank account.
The bank payout is the final result of several transactions.
A proper e-commerce bookkeeping process starts with the underlying customer sales, identifies refunds and adjustments, records marketplace and payment fees separately, accounts for relevant VAT, and reconciles the resulting settlement to the bank.
For Amazon sellers, this can involve referral fees, fulfilment charges, storage, advertising and other deductions. For Shopify sellers, the process can involve Shopify subscriptions, Shopify Payments fees, third-party payment processing, apps and other operating costs.
The accounting records should make it possible to move from gross sales to the final settlement without unexplained differences.
This approach produces more accurate turnover, clearer expense reporting, better VAT records and more useful profitability information.
HMRC’s guidance confirms that VAT obligations for businesses selling through online marketplaces depend on factors including whether the seller is established in the UK, where goods are located and the nature of the transaction.
For an Amazon or Shopify seller, the most effective bookkeeping system is one that is updated regularly and built around platform reports rather than reconstructed from bank statements at the end of the year.
AccountancyNet Ltd supports businesses across England and Wales with accounts preparation, tax returns, VAT filing, Self Assessment and Making Tax Digital compliance. For e-commerce businesses, professional bookkeeping can help keep marketplace settlements, fees, payment providers and tax records organised throughout the year.
For further information about UK VAT treatment of marketplace sales, refer to HMRC’s official online marketplace VAT guidance.