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How to account for transactions made via Etsy

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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!

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Scalloway Castle
By scalloway
16th May 2019 15:26

Given what you say I would set up Etsy as a bank account.

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By ireallyshouldknowthisbut
16th May 2019 15:43

Would you create invoices for every sale in bricks and mortar shop?

I would just create "week" books, showing gross income and fees. All the detail is online if you need it, albeit I would ensure it is downloads at least annually for your records.

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blue sheep
16th May 2019 21:34

Yep the way we do it is to treat as a bank account, you will need to get your client disciplined to provide the correct reports to you each month in csv

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By Duggimon
17th May 2019 09:05

I have a client selling via Etsy, I use the CSV downloads to allocate the sales, postage receipts, postage costs and other Etsy transaction fees, the balancing figure that pops out is the bank payment received.

It takes a bit of work to set up initially because they have a million tiny fees but if you can use formulas to allocate them automatically then it becomes pretty quick and simple to generate a summary after that.

Of course, the easy way would be to record the gross sales, the amounts received and lump a balancing figure in as "Etsy fees", it wouldn't be quite as useful to the seller for analysis but it would get you the enough to know gross income, profits and square the bank without having to muck about with complicated spreadsheets. I think mine runs to about eighty columns but it turns the CSV output into a nice P&L and I'm quite pleased with it.

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