Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
Book them gross, not net. Record the full sale as revenue, processor or marketplace fees as an expense, refunds and chargebacks separately, and each payout as a transfer from a clearing account to the bank. One clearing account per platform lets the balance be reconciled to the platform's own report, and keeps revenue consistent with the gross amounts processors and marketplaces report on Form 1099-K.
Key takeaways
- A Stripe, PayPal or Amazon payout is a net figure after fees, refunds, reserves and adjustments; recording the payout as revenue understates sales and hides costs.
- Each platform needs its own clearing account whose balance equals the funds the platform is still holding, including any reserve.
- Form 1099-K reports the gross amount of payment transactions, unadjusted for fees, refunds or chargebacks. After 2025 legislation, platforms generally issue it only above $20,000 and 200 transactions a year, but all income is reportable either way.
- Sales tax that a marketplace collects and remits as a marketplace facilitator is not the seller's revenue and should not be booked as such.
- Multi-currency balances held on a platform need conversion tracking, or exchange differences surface as unexplained reconciliation gaps.
Why the payout is not the revenue
Suppose a US e-commerce company sells USD 10,000 of goods through Stripe in a week. Stripe deducts its fees, refunds two orders and holds part of the balance as a rolling reserve:
| Component | Amount (USD) |
|---|---|
| Gross sales | 10,000 |
| Processing fees | (320) |
| Refunds issued | (400) |
| Reserve held by processor | (500) |
| Payout to bank | 8,780 |
If the bookkeeper records the 8,780 deposit as sales, revenue is understated by 1,220, fees and refunds disappear from the reports, and the 500 the company is still owed is missing from the balance sheet. Gross margin, refund rates and the true cost of payments all become invisible — and the books no longer agree with the gross figure the platform reports to the IRS.
The clearing-account method
Treat each platform like a bank account the company holds with that provider. Using the example above:
- Record sales: debit Stripe clearing 10,000; credit revenue 10,000.
- Record fees: debit payment processing fees (cost of revenue) 320; credit Stripe clearing 320.
- Record refunds: debit refunds and returns (a contra-revenue account) 400; credit Stripe clearing 400.
- Record the payout: debit bank 8,780; credit Stripe clearing 8,780.
The clearing account is left with a 500 balance — exactly the reserve the processor still holds. Some companies move that into a separate processor reserve asset account for visibility. At month-end the clearing balance should equal the available plus pending plus reserved balance on the platform's own report. If it does not, something is missing.
Entries can be posted per transaction, per day or per payout using summary reports, depending on volume. Summary posting is usually fine as long as the summaries tie to the platform's reports.
Platform-specific details that trip up the books
- Stripe: the balance and payout reconciliation reports show which charges, fees, refunds and disputes make up each payout. Dispute fees are charged separately from the disputed amount and should be expensed on their own.
- PayPal: the account behaves like a wallet; money can sit there, be spent directly, or be held in several currencies. Personal-style transfers between friends or family should never pass through a business account, because they are hard to distinguish from sales.
- Amazon and other marketplaces: settlement reports net sales against referral fees, fulfillment fees, storage fees, advertising charges, reimbursements for lost inventory and promotional rebates. Each needs its own account. Inventory sitting in a fulfillment center remains the seller's asset until sold.
- Shopify Payments, Etsy, eBay and similar platforms: the same gross-versus-net principle applies; use the platform's payout or settlement report, not just the bank deposit.
Settlement periods often cross month-end, so a payout received on the 3rd may contain sales from the prior month. Accrual-basis books record those sales in the month they occurred.
Form 1099-K and reconciling to it
Payment settlement entities — card processors, payment apps and marketplaces — report sellers' gross payment transactions to the IRS on Form 1099-K. Following the 2025 tax legislation, the federal reporting threshold for third-party settlement organizations reverted to more than USD 20,000 in gross payments and more than 200 transactions in a calendar year. Some states set their own lower thresholds for state reporting.
The 1099-K amount is not taxable income. It is unadjusted for refunds, chargebacks, fees, shipping or sales tax, and it can include amounts that are not sales at all. The books should be able to show a reconciliation from the 1099-K gross figure to recorded revenue — refunds, sales tax collected, timing differences and non-sales transfers — so the tax preparer can explain any difference on the return.
Sales tax collected by marketplaces versus your own store
Every US state with a general sales tax now requires large marketplaces to collect and remit sales tax on sales they facilitate. When Amazon or a similar marketplace does this, the tax it collects should be excluded from the seller's revenue or recorded and immediately offset, rather than booked as income and then expensed.
Sales made through the company's own website using Stripe or PayPal are different: the seller is generally responsible for collecting sales tax where it has nexus, and the books need a sales tax payable account for it. Keeping marketplace and direct-channel sales in separate revenue accounts makes nexus analysis and sales tax filings much easier.
Common mistakes to avoid
- Recording each Stripe or Amazon deposit as sales revenue.
- Booking marketplace-collected sales tax as income and then expensing it, inflating both revenue and costs.
- Ignoring the rolling reserve, so the clearing account never reconciles to the platform balance.
- Treating the 1099-K figure as taxable income without accounting for refunds, fees and non-sales transfers.
- Running personal transfers through the same PayPal account used for business sales.
- Netting Amazon advertising and fulfillment fees against sales, so ad spend and gross margin cannot be analyzed.
NYBACS 360° support
How NYBACS helps
- Sets up clearing accounts for each platform and currency, with account mapping for fees, refunds, disputes, advertising and reimbursements.
- Imports settlement and payout reports monthly and reconciles each clearing account to the platform's balance.
- Reconciles Form 1099-K gross amounts to recorded revenue and documents the differences for your tax preparer.
- Separates marketplace-facilitated sales from direct-channel sales to support sales tax nexus reviews.
- Tracks inventory held at fulfillment centers so cost of goods sold is recorded when items actually sell.
Frequently Asked Questions
Do I still report income if I did not receive a Form 1099-K?
Yes. The 1099-K is an information return issued above a reporting threshold; it does not determine what is taxable. All business income is reportable whether or not a form is issued.
What if my Form 1099-K is higher than my recorded revenue?
That is common, because the form shows unadjusted gross amounts including refunds, sales tax and sometimes non-sales payments. Reconcile the difference item by item and keep the reconciliation with your tax records.
Should Stripe or PayPal be set up as a bank account in the accounting software?
Usually yes, as a bank-type or clearing account. That allows it to be reconciled monthly like any other cash account.
How often should Amazon settlements be reconciled?
Each settlement period, or at least monthly. Waiting until year-end makes it much harder to trace reimbursements, chargebacks and fee adjustments.
Does Amazon collecting sales tax mean I have no sales tax obligations?
Not necessarily. Marketplace collection covers sales made through that marketplace. Sales through your own website or other channels may still require registration and filing in states where you have nexus.
