Excite Tax's answer for Utah online sellers: record gross sales, not payouts, and match Form 1099-K; in Utah, marketplace facilitators collect and remit the sales tax (Utah Code).
Four records a store owner rarely gets from the bank alone: gross sales by channel, the fees and refunds each platform took before paying out, the sales tax collected, and the cost of the goods sold. The bank deposit is only what was left. Excite Tax books every payout through a clearing account for its channel, so each of those four figures has its own line. The six steps are below.
No. A payout is sales minus fees, refunds, reserves and sometimes tax, and the Form 1099-K gross amount is not adjusted for fees, credits, refunds, shipping, cash equivalents or discounts. Books kept from payouts understate sales and hide the fees, so they will never tie to the form. Record the gross, then the deductions, then the transfer to the bank.
Usually because the two are measuring different things: the store's report counts orders when they are placed, with shipping and sales tax inside the total, while books fed from the bank count net payouts on the day they land. Fees, refunds, a second payment provider and month-end timing make up most of the gap. The worked example is below.
From the settlement report, not the deposit: product sales, shipping credits, refunds, referral and fulfilment fees, advertising and any reserve held back each get a line. Tax the marketplace collects under Utah's facilitator rule is not yours to remit; the seller may not collect and remit it and is not liable for the facilitator's failure to. Details below.
The same way, at a smaller scale: book each monthly statement's sales at gross and each fee as an expense, and keep the stock you make or buy on its own record. A small shop may get no tax form at all, and that changes nothing: all income from selling goods must be reported, whatever the form shows. Details below.
One clearing account per channel, one summary entry per payout at gross, and one transfer from clearing to the bank that matches the deposit exactly. Let one sync tool post each channel, never two, and stop the bank feed from treating payouts as income. The setup is below.
Usually when it sells, not when it is bought. A small business that treats inventory as non-incidental materials and supplies deducts it in the year the inventory is provided to customers. Stock still on the shelf at year end waits for the year it ships. The example is below.
The marketplace, once it is large enough: a facilitator whose sales, its own plus the sellers it facilitates, exceed $100,000 in the previous or current calendar year collects and remits on each sale it facilitates. Sales on your own website are generally yours to collect on. The rules are in In Utah.
Pick a cut-off date, close out the old store's clearing account to zero, move stock at cost rather than retail, and carry open gift cards and store credit across as a liability. The steps are below.
E-commerce bookkeeping is ordinary bookkeeping with a middleman. Between the customer and the bank sits a platform that collects the price, keeps its fees, holds some money back, refunds some orders and pays out the rest on its own schedule. The books have to show every one of those steps, because the tax return starts from gross sales, not from deposits.
Nothing here needs special software. Publication 583 accepts any recordkeeping system that clearly shows income and expenses, and a seller with one channel and a few dozen orders a month can do all six steps in a spreadsheet. Once there are several channels, stock in more than one place, or a sync tool posting orders, the software choice matters more; see bookkeeping software for a small business.
Bookkeeping records the sales, fees, refunds and stock movements as they happen. Accounting decides what those records mean: the inventory method, whether the business has outgrown the cash method, and what the tax return reports. An online seller needs both, and the second is only as good as the first. The difference is set out in bookkeeping vs. accounting.
Because the store's sales report and the books answer different questions. The report totals the orders customers placed, including the shipping and the sales tax they paid. Books built from the bank feed total the payouts that arrived, after the platform took its fees and refunds. Neither figure is net sales, which is the number the return needs. The worked example below is one month of a small Utah store selling from its own website.
From the store's order total to the March bank deposits (IRS on the Form 1099-K gross amount)
| Line | Amount | Why it differs |
|---|---|---|
| Orders total on the store's sales report: products, shipping charged and sales tax | $25,000 | Sales tax collected from the buyer and turned over to the state is generally not income, so this total overstates sales |
| Less orders paid through a second payment provider, deposited to another account | −$900 | Each platform that takes payments can send its own Form 1099-K |
| Less refunds issued in March | −$1,200 | Refunds cut the payout, but the Form 1099-K gross is not adjusted for them |
| Less card-processing fees withheld | −$740 | Nor is it adjusted for fees |
| Less orders placed March 30 and 31, paid out in April | −$500 | March income, though the cash lands in April |
| Plus late-February orders paid out in March | +$420 | February income, already in February's books |
| Deposits to the bank in March | $22,080 | What the books show if payouts are booked as sales (IRS, What to do with Form 1099-K) |
What the books should record for the same March (Publication 334 on gross and net receipts)
| Account | Amount | Why |
|---|---|---|
| Gross receipts: products $22,500 and shipping charged $1,000 | $23,500 | Gross receipts are line 1 of Schedule C |
| Returns and allowances | −$1,200 | Refunds to customers are subtracted as returns and allowances (line 2) |
| Net sales | $22,300 | Net receipts, line 3 |
| Sales tax payable, a liability | $1,500 | Owed to the state, not income |
| Card-processing fees, an expense | $740 | Deducted from the gross, not netted out of sales |
| Store clearing account at March 31 | $500 | Collected for you, not yet paid out |
So the store says $25,000, the bank says $22,080, and net sales are $22,300: gross receipts less returns and allowances. Each number is right about something different. The clearing account is what makes them agree: it opened March with $420 of February orders still to be paid out, took in the store's orders, gave out refunds, fees and payouts, and closed the month holding $500, all of it income when the platform, as your agent, received it.
Timing is the part owners find hardest to accept. A platform that collects the price on your behalf works like an agent, and Publication 334 treats income an agent receives for you as received when the agent receives it. That is why Excite Tax books the sale in the month the customer paid, even on the cash method, and why orders from the last days of December belong to the old year even though the money arrives in January.
Amazon pays out through settlements, and a settlement is a small income statement. It lists product sales, shipping credits, gift wrap and promotional rebates, then takes out referral fees, fulfilment and storage fees, advertising, refunds and any reserve it holds back, and deposits what is left. Book each settlement as one entry through an Amazon clearing account, from the settlement report, and the deposit matches to the penny.
In QuickBooks, an Amazon seller's books follow the same pattern as any other channel; the setup is in QuickBooks for Shopify and Amazon sellers.
Etsy lists your goods on a marketplace it runs and takes the customer's payment, which is the kind of business Utah's statute defines as a marketplace facilitator: one that lists or facilitates a seller's sales on a marketplace it owns or operates and collects the price. So the bookkeeping is the same as Amazon's at a smaller scale. Record each month's sales at gross, then the listing, transaction, payment-processing, advertising and shipping-label charges as expenses, then the deposits.
Two points trip up small shops. First, the tax form may never come: a marketplace must send a Form 1099-K only when payments total over $20,000 in more than 200 transactions, though it may send one for less. The income is reportable either way; the IRS says no matter the amount of reported payments, all income from selling goods or services must be reported. Second, a maker's materials are inventory, not supplies to expense on the day they are bought; see inventory.
A seller who is also a freelancer, or who sells at craft fairs as well as online, keeps one set of books with a sales line per channel. The self-employed side of that is covered in bookkeeping for freelancers.
The software does not decide how the books are kept; the setup does. The same six moves work in QuickBooks or any other ledger.
At each month end, the clearing account's balance should equal what the platform shows as pending payouts and reserves. A balance that grows month after month means payouts, fees or refunds are going unrecorded. If the books have already drifted, fix messy books is the place to start.
The general rule is strict: a business that produces, purchases or sells merchandise generally must keep an inventory and use an accrual method for purchases and sales of merchandise. Most small online sellers qualify for the exception in IRC §471(c), which lets a business meeting the §448(c) gross-receipts test treat inventory as non-incidental materials and supplies, or follow its own books and records. For tax years beginning in 2026, a business meets that test when its average annual gross receipts for the 3 prior tax years do not exceed $32,000,000.
The exception is not a licence to expense stock when it is bought. Under the materials-and-supplies treatment, the cost is deducted in the year the inventory is provided to customers.
A Utah seller buys stock in November 2026 (Publication 334 on inventory treated as materials and supplies)
| Amount | Deducted in 2026? | |
|---|---|---|
| Stock bought in November | $10,000 | Not on purchase |
| Cost of the items shipped to customers by December 31 | $4,000 | Yes: provided to customers in 2026, the year it is deducted |
| Cost of the items still on the shelf at December 31 | $6,000 | No: deducted in the year they ship |
So the books need the cost of each item and a count at year end, whichever method is chosen. Choose on purpose: the accounting method is chosen on the first return, and changing it later generally needs IRS approval. How the method interacts with cash and accrual is in cash vs. accrual accounting.
Every channel that paid you may send a form, and a seller who accepts payments on different platforms could get more than one Form 1099-K. Card payments taken on your own website are reported regardless of volume: a payment card processor sends a Form 1099-K no matter how many payments or how much.
Match each form to the gross sales for that channel in the books, not to net sales. The form may not include all receipts and may include items that are not receipts, such as sales tax, so the reconciliation lists the differences: refunds, fees, shipping and tax. A form that does not reconcile is a question for that platform before the return is filed.
Check the name and tax number too. If the form carries your personal name and number but the business files Form 1120, 1120-S or 1065, the IRS says to have the Form 1099-K corrected. That happens most often after an owner forms an LLC or elects S corporation status and never updates the platform's tax profile.
Utah splits the sales tax on online sales by channel. A marketplace facilitator whose sales, including those it facilitates for sellers, exceed $100,000 in the previous or current calendar year pays or collects and remits the tax on each sale it makes or facilitates (Utah Code § 59-12-107.6). For those sales, the seller may not collect and remit the tax, and is not liable for the facilitator's failure to.
A platform that only runs the checkout is different. Utah's definition of a marketplace facilitator does not include a person that only provides payment processing services, so sales through your own website are generally yours to collect on; confirm in writing what your storefront platform says it does in Utah. A seller with an office, a warehouse or a stock of goods in Utah must pay or collect and remit the tax on its own sales, and the statute also requires a marketplace seller to collect on its own Utah-sourced sales once those sales outside a marketplace exceed $100,000 in the previous or current calendar year. Which rule reaches your business, and when to register, is in Utah sales tax for small businesses.
For the tax you do collect, the books carry it as sales tax payable, never as sales, and the balance should equal the next return. Utah returns are TC-62S and TC-62M, filed electronically through Taxpayer Access Point, filed quarterly at $50,000 or less of annual sales-tax liability and monthly from $50,001, and due the last day of the month after the filing period.
Hand the books over when keeping them costs more hours than the business can spare, or when they stop agreeing with the bank.
Filing the Utah sales-tax return itself is not a service Excite Tax lists yet; you, or whoever you authorise, file it with the Utah State Tax Commission.
Excite Tax keeps these books; the return they feed is reviewed and signed by a licensed CPA at TBD CPA LLC.
Ranked and explained on the sources page.