Bookkeeping for online sellers

business.gov.au describes several ways to sell online: an online store on your own website, which it says is simplest to add with an ecommerce platform or plug-in that handles payment; an online marketplace with products from many sellers; and a store on a social media account, which generally doesn't handle payments and sends customers to your own online store to pay.

In each case someone else usually collects the customer's money first. business.gov.au notes that ecommerce platforms usually have subscription costs and may charge a fee for each transaction, and that marketplaces charge fees as well. It also explains that a buy now, pay later provider pays the business the full amount at the time of purchase, less a fee. What reaches your bank is a payout: many sales, less fees, refunds and any amounts held back, paid as one figure.

business.gov.au adds that in most online sales the receipt doubles as the invoice, because payment happens at the time of sale. The order records in the platform are therefore your main record of each sale.

If only the payout is entered as income, sales look smaller than they were and the cost of selling online disappears from the books. Instead, use the payout report to record each part on its own line.

A common way to do this is a clearing account for each platform. Sales and shipping go in, refunds and fees come out, and the payout is recorded as a transfer from the clearing account to the bank. Once a payout has been recorded, the clearing account should hold only amounts the platform hasn't paid out yet, such as recent sales or money it is holding back, which makes a missing or doubled entry easy to spot.

The ATO's record-keeping tips suggest reconciling cash and EFTPOS sales regularly, by making sure the payments you have recorded match external records, daily, weekly or monthly depending on the business. Platform payouts call for the same check. For each one:

1. Download the platform's payout or settlement report for the period it covers.
2. Check its sales total against the orders recorded for the same period.
3. Check the fees against the platform's fee statement.
4. Confirm the payout figure matches the deposit on the bank statement.
5. List anything left over, such as sales made near the end of a period that will be paid out in the next one, and look into anything you can't explain.

If you sell through your own store and one or more marketplaces, record sales and fees for each channel in its own accounts or under its own tracking code. Then the profit and loss statement shows what each channel brings in and what it costs to sell there, rather than one blended figure.

business.gov.au points out that selling online lets you reach customers anywhere, including overseas. If a platform pays in another currency, keep its report of the original amounts with the bank statement showing what arrived in Australian dollars, and ask your accountant how to record the sale and any difference.

• Record each refund against sales, from the platform's refund report, rather than netting it into the next payout without a trace.
• When goods come back in a condition to resell, put them back into your stock records.
• When a customer disputes a payment and the platform takes the money back, record it with the order number, and keep the evidence you sent in reply.
• Keep the order history for each refund, so the original sale and the refund can be matched later.

business.gov.au describes two ways to track stock: a periodic system, where you count stock by hand and update spreadsheet or paper records, and a perpetual system, where software or a point-of-sale system updates the records with every purchase and sale. Either way, it says to capture every sale and return.

Selling the same products through several channels makes this harder, because each channel's orders draw on one pool of stock. Regular stocktakes, which business.gov.au says show whether the stock on hand matches your records, catch the differences that slip through.

business.gov.au lists records of all income and sales transactions among the records to keep, and suggests backing up digital records, with a secure off-site copy if possible. A platform account can be closed or its history shortened, so keep your own copy as well.

• Download order exports and payout reports at the end of every month.
• Keep the platforms' fee invoices and statements with your supplier bills.
• Store them in your own backed-up storage, named by platform and period.

These files hold customer details too. business.gov.au's tips for selling online include protecting customers' personal information, so limit who can open them.