My client is a sole trader who has recently started a small business selling hand crafted items via Etsy and other websites such as Ebay. I have experience of clients using Ebay but Etsy is new to me. Etsy seem to manage the seller's account differently to other trading platforms that I am used to. Etsy receive the income from my client's sales and then deduct any listing fees and other direct costs as well as non direct costs such as promotional fees and a subscription fee from the sales income. The balance on the seller account is then paid to my client's bank account weekly.
I am struggling to decide how to account for these transactions and the net payment in my client's books. Normally I would create invoices for each sale and then create expenses for each fee transaction but the problem arises in how to allocate the net payment that is received. Do I artificially create payments coming in for the sales so that each invoice is paid and then artificially create payments going out so that each expense is paid and the net result in the bank account is the same as having the net payment coming in? Or do I treat Etsy like a bank account in itself and have all the sales income and expenses flowing through that account and then do a payment transfer to the actual bank account each week? Or am I missing something and is there a different way to account for it all?
Any help gratefully received!