How should an online seller record marketplace payouts versus gross sales in the books?

Marketplaces such as Amazon, Shopify Payments or HKTVmall usually pay out the sale price minus commission, fees, refunds and sometimes advertising. The deposit in your bank account is therefore smaller than what customers paid.

The general approach is:

1. Record the full selling price of orders as sales revenue.
2. Record commission, payment-processing fees, advertising and fulfilment charges as expenses.
3. Record refunds and returns as reductions of sales.
4. Treat cash held by the platform and not yet paid out as an amount receivable.

This matters for profits tax: assessable profits are worked out from your revenue less deductible expenses, so the return should reflect gross figures. The IRD expects accounts that comply with generally accepted accounting principles, and for companies this means the financial reporting standards applicable to them.

Worked example: a sale of HK$1,000 with a HK$120 platform fee pays out HK$880.

• Sales revenue: HK$1,000.
• Platform fee (expense): HK$120.
• Cash received: HK$880.

Reconcile each platform report to the bank statement every month so the differences are explained line by line.