A Comprehensive Guide to Bookkeeping and Accounting for eBay Sellers in 2025
This bookkeeping guide for eBay will walk you through what numbers you need to track for your eBay business, how to set yourself up for success when it comes to tax time, and how to use bookkeeping to help you manage your business most effectively. Learn about top software providers in the space and the trade-offs among them as well as best practices in bookkeeping and accounting for eBay sellers.
What is Bookkeeping for an eBay business?
To put it simply, bookkeeping is keeping track of all the money that flows into and out of your business. Itʻs important to do a good job of bookkeeping for your eBay business for a number of reasons. First, it helps you to know how much money youʻre making from your business. It organizes your numbers so you know how much you need to pay in taxes each year. Good bookkeeping can also deliver insights around how to make more money by helping you to better understand things like your most profitable items, your biggest costs, and total fees you are paying. Finally, it can actually save you money by helping to ensure you are taking all of your eligible deductions and not overpaying your taxes. Good bookkeeping is critical for eBay sellers to manage their business effectively.
What’s the Difference between Bookkeeping and Accounting for an eBay Business?
Bookkeeping involves collecting all the data to keep track of your finances for your eBay Business and making sure you have everything entered correctly. Accounting, on the other hand, involves creating reports out of that data and interpreting that data to help you manage your business.
Effective bookkeeping puts all the different types of data into the right categories to properly summarize it later in Accounting reports. Accounting activities include preparing financial reports such as a Profit & Loss statement, conducting audits to ensure accurate measurement of your business, analyzing the health and performance of your business for insights you can take action on, budgeting and forecasting, and tax planning and filing.
A Set-Up for Success: Separate Business and Personal Accounts
The single most important thing you can do to set yourself up for success is to create a separate business bank account for your eBay business. This will enable you to avoid co-mingling your personal expenses with your eBay business expenses. You don’t have to tie the bank account to an actual business entity like an LLC or an S Corp. It could just be a personal checking account. The point is that you should use the account exclusively for your eBay business and it should be separate from the bank account you use for your personal expenses.
Once you’ve set this bank account up, ensure this is the account where eBay deposits your payouts. Deposit any money earned from your eBay transactions into this account.
While it seems like a simple step, separating your business and personal expenses is the single most helpful thing you can do to give yourself a clean set of books for your business. Any time you invest to set this up in the beginning will be well worth it in the hours you save on an ongoing basis with your bookkeeping!
Does it matter which Bank I use for my eBay Business Bank Account?
Not all banks are created equal! Just like different people have different skills when it comes to using the latest and greatest technology, different banks have different capabilities in this area as well. If your business takes place in an online environment, youʻll want to select a bank for your business that is going to work well in online environments, so you can take advantage of automated features like connecting to accounting software. Look for banks that have good connectivity in the online world. Larger banks tend to have better connectivity than local credit unions but they may have higher fees.
As an eBay seller, while it is of course truly up to you which bank you want to work with for your business, it can save you time and effort down the road if you select a bank that operates effectively in the online arena.
A Set-Up for Success: Separate Business Debit or Credit Card
With most bank accounts, you have the opportunity to open a debit or credit card associated with that bank account. We recommend doing this as well. If you have a debit or credit card associated with your ebay Business bank account, then you can use that card for all of your expenses associated with your business. It will help you to have all your business expenses in one place and avoid co-mingling personal expenses with your eBay business expenses.
Once this account is set-up, youʻll want to make it a practice to use this debit or credit card every time you have an expense associated with your business. It takes some personal discipline to make sure you have this card with you and use it every time, but again, itʻs going to save you so much time in the long run that itʻs worth it!
What to Track for your eBay Bookkeeping: The Essentials
There are many many things you can keep track of for your eBay business, but weʻre going to focus here on the true essentials:
- Gross Sales
- Cost of Goods Sold
- Returns and Refunds
- Gross Profit
- Fees
- Operating Expenses
- Net Profit
Weʻll cover each of these things to track in its own section. If you want to go beyond these basics, see the section at the end of this guide entitled Advanced Bookkeeping for an eBay Business: Further Resources.
Tracking Gross Sales for your eBay Business
Your eBay Gross Sales is the total value of all goods youʻve sold on eBay. It includes both the revenue from the items youʻve sold to customers and what youʻve collected in shipping or handling charges for those items.
eBay has a simple report in Seller Hub where you can review your total Gross Sales on eBay for a particular time-period. To view your Gross Sales report on eBay, login to your eBay account and click to the Seller Hub. From there, click the Performance tab. On the left hand side, select Sales as the category for the report. You can select the beginning and ending dates for the report and download the report.
Itʻs simple to view these top-line Sales numbers on eBay, but the complexity comes when youʻre trying to understand whatʻs included and whatʻs not included within them. For example, eBay both collects and remits Sales Tax for sellers, so the eBay Sales report does not include Sales Tax within Gross Sales. Sales Tax is separated out as itʻs own category. While you can run reports on eBay to see your Gross Sales, it may be helpful to use bookkeeping and accounting software to understand more granular detail around whatʻs behind these numbers. This becomes even more valuable when we get into things like Returns and Refunds and weʻll talk more about this in the section on Accounting & Bookkeeping Software below.
Tracking Cost of Goods Sold for your eBay Business
Cost of Goods Sold is the price you paid to acquire all the goods youʻve sold on eBay. Itʻs the purchase price of your inventory, or if youʻre creating something to sell, then itʻs the cost of the raw materials used to make that thing. Click here for an article with some further detail on Cost of Goods Sold for eBay sellers.
Your Cost of Goods Sold is something eBay doesnʻt know about your business, so you have to find a way to track it for yourself. You can’t download Cost of Goods Sold from a report on eBay.
As we outlined above, it helps tremendously to use your Business Debit or Credit Card for all your purchases, which will result in all your inventory costs in one place. If you need to pay cash for some purchases or you canʻt use your Business Credit Card everywhere, youʻll want to set up a regular process where you manually record these transactions so theyʻre included in your numbers. Depending on the size of your business, monthly is likely frequently enough, but you may choose to do it more often.
At this point, you have a decision to make as to whether you want to track your costs on the item level (where youʻre tracking the cost of each item individually) or whether you want to track your inventory costs in total. Tracking at the item level is definitely more work, but it enables you to do more financial analysis to understand the profitability of different parts of your inventory. We cannot offer advice on which method you should choose, but we see most sellers start by tracking their inventory costs in total.
Understanding Gross Profit for your eBay Business
Your Gross Profit is calculated with simple arithmetic. It is your Gross Sales minus your Cost of Goods Sold. While this figure doesn’t tell you your true profit after all expenses, it is still valuable as a way to measure your business. If your Gross Profit is too small, then you can’t possibly make a profit after your full set of business expenses are factored in. Too little Gross Profit is a red flag to help indicate that you need to modify your business somehow. It might be to change your pricing, modify your sourcing strategy, or any number of other tactics.
Many eBay sellers question what their Gross Profit should be, and the answer is that it really depends on what you are selling and what the goals are for your particular business. If you’d like to go deeper on this topic, read our article on eCommerce Gross Margin which explains not only how to calculate Gross Profit and Gross Margin, but also what some typical numbers are for Gross Margin in eCommerce businesses.
Tracking Fees for your eBay Business
Selling on eBay involves a number of fees. This includes Insertion Fees, charged when you list an item for sale on eBay, or Final Value Fees when an item sells. There are also a number of optional fees on eBay for Listing Upgrades. There are subscription fees for things like having a Storefront on eBay. If you participate in the eBay Advertising program, there are fees for Promoted Listings and Promoted Stores as well as opportunities to promote your eBay listings off of the eBay website. All of these fees are costs of doing business that will be factored in when you calculate your Net Profit.
While eBay fees may seem costly, it’s worthwhile to remember that eBay is exposing your listings to their large audience which they have done all the marketing work to grow. It requires a tremendous amount of work and investment to market your items for sale if you do it all yourself without the buyers eBay has aggregated. For some additional perspective on this topic, read our article, eBay fees too high? It depends.
Tracking Returns and Refunds for your eBay Business
It is important to note when a buyer returns an item and you have to issue a refund, because you wonʻt have any income from this transaction. You will need to subtract your Returns and Refunds out of your Gross Sales to have an accurate picture of what youʻve actually sold.
There are multiple places within eBay where you can see your Returns and Refunds. To view a Refunds report on eBay, login to your Seller Hub dashboard. Select the Payments tab at the top and then Reports from the left-hand navigation. You can select the desired time period for the Refunds report and download the results. You can also view your Returns on eBay by navigating to the Orders tab within Seller Hub and selecting Returns from the left-hand navigation.
These reports on eBay are complex, and reports show different things in different places. For example, when eBay issues a 1099K report, sometimes returns and refunds are included and sometimes they are not. For a more detailed breakdown on exactly what is included where, see our comprehensive 1099K guide for eBay Sellers.
Tracking Operating Expenses for your eBay Business
In addition to the Cost of Goods Sold for your inventory that is being sold on eBay and your eBay Fees, you are likely to have a number of other costs to actually run your eBay business. These Operating Expenses would include things like the cost of equipment to photograph items for sale and the cost of boxes and other packaging supplies to prepare items for shipping. If you have employees, they would count as an Operating Expense. Subscriptions for software solutions that help you to perform some of the functions for your business would be Operating Costs as well.
In addition to costs that are purely for your business, you may have a number of shared expenses that you’re using for both Business and Personal purposes. This might include Mileage expenses when you’ve used your car for business purposes. You may be using space in your home for Inventory Storage. Perhaps you share the same cell phone and Internet accounts across personal and business use. You may want to allocate a portion of those costs to your Business.
Unlike your Sales which are recorded on eBay, there is no eBay report to understand your Operating Expenses. You will need to track these on your own.
Understanding Net Profit for your eBay Business
Net Profit is how much money you’ve made at the end of the day taking into account all of your Revenues that have come in, and all of the Expenses that have gone out.
How to Easily Track the Basics for your eBay Business
Now that you know the basic things you need to track to do a good job with Bookkeeping for your eBay business, let’s talk a little bit about some practices you can implement and some choices you can make to help make Bookkeeping and Accounting for your eBay Business as simple as possible.
Spreadsheets vs Software for eBay Bookkeeping: The Trade-offs
Some people use spreadsheets to track their eBay sales and others use software that is designed for this purpose. What are the advantages and disadvantages of each?
Spreadsheets
The big advantage of using spreadsheets (such as Excel or Google Sheets) is that you may already be familiar with spreadsheets, so it will seem less intimidating to track via this method. It may take less time to set up in the beginning. You also get to design your spreadsheet in exactly the way that makes the most sense for you. The downside is that you will have to manually enter every detail of your business in the spreadsheet on an ongoing basis in order to track this way. Unless you sell a very low volume of items, the time it takes for ongoing manual data entry will greatly outweigh any time spent setting things up in a software solution. In addition, manual data entry is prone to errors as it’s very easy to make a mistake when transposing numbers.
Software
Software uses automated connections to pull data in electronically so you don’t have to enter it manually. Because an eBay business consists of online transactions, all of this data can be captured on an ongoing basis without having to type it in manually. In addition, if you purchase things for your business through your business bank or credit card, your expenses can be pulled in electronically through your bank as well. Most software is “smart” and can remember which categories to put different expenses into automatically. The big advantage with software is the time it saves you on an ongoing basis. The disadvantage is the time to get things set up and the ongoing cost of the software.
Depending on which software you use, there are significant differences in the cost as well as the time required to get things set up for your business and the capabilities offered.
Top Bookkeeping & Accounting Software Providers for eBay Sellers with Pros and Cons
There are many different choices when it comes to Bookkeeping and Accounting software for eBay Sellers. Among the criteria you will want to consider are the following:
• Ease of use, including ease of setting up
• Cost
• Accuracy of data
• Functionality included
Here are some of the top providers of Bookkeeping and Accounting software for eBay sellers including the trade-offs on the above criteria.
Seller Ledger
Seller Ledger was created in 2023 by the same founding CEO of Outright.com/GoDaddyBookkeeping. Designed specifically for eCommerce sellers of all sizes and launched for eBay sellers first, it is a low-cost solution (starting at $10/month) focused on ease of use and accuracy of data.
Pros:
- Simple, easy to get started, good for self-directed accounting
- Direct eCommerce integrations (eBay, Amazon, Shopify, WalMart, Etsy, others…) with no third-party connections required
- All eCommerce details such as sales, fees, refunds, payouts, etc. captured, making it easy to match 1099K’s and marketplace reports
- Inexpensive (starts at $10/month)
Cons:
- Newer, doesn’t have the track record yet of the big names
- Doesn’t support non-eCommerce income sources (e.g. invoicing)
- Doesn’t support payroll
- Poor support for non-US businesses currently
Intuit QuickBooks
Intuit QuickBooks is the market leader in the accounting space with very wide name recognition. QuickBooks offers four different tiers of software for eCommerce sellers ranging from $35/month for QuickBooks “Simple Start” to $235/month for QuickBooks “Advanced”. QuickBooks offers Live Experts for an additional fee to help you through all your questions.
Pros:
- Very strong accountant adoption
- Supports all kinds of businesses and payroll
- Growing ecosystem of third-party apps
Cons:
- Requires some custom set-up to get eCommerce integrations to work
- Summary level information imported, missing details
- Expensive ($35-$235/month)
Often, in order to get things right in the eCommerce space, a third-party connector such as A2X or Link My Books is required in addition to QuickBooks to get all the details right. They can provide a powerful solution when used together, but the cost is significant. We offer more details on these third-party connectors below.
Xero
Based in Australia, Xero is a powerful accounting platform for small businesses, particularly those based outside of the US.
Pros:
- Cheaper than Quickbooks ($20-$80/month)
- Strong international support
- Supports all kinds of businesses and payroll
- Growing ecosystem of third party apps
Cons:
- No native eCommerce connections, must use a third-party connector
- Summary level information imported, missing details
- Not as strong for US taxes
Similar to QuickBooks, in order to get things right in the eCommerce space, a third-party connector such as A2X or Link My Books is often required in addition to Xero to get all the details right. They can provide a powerful solution when used together, but the cost is significant. We offer more details on these third-party connectors below.
Zoho Books
Zoho Books works particularly well as an accounting solution if you’re already using Zoho Inventory for inventory management, but it does not have a direct eBay Integration and requires a third party connector.
Pros:
- Works well if you also use Zoho Inventory, which supports multichannel sales through third party integrations
- Strong international support including GST/VAT/Sales Tax support and multi-currency supported on higher-tier plans
- More affordable than some alternatives (Xero, QuickBooks) for solo sellers and small teams
Cons:
- No direct eBay integration. Requires third-party tools like Zapier, Connex, or CartRover for syncing orders, customers and inventory.
- While it has some solid built-in reports, you may need more manual work for reconciliation if not using Zoho Inventory
A2X
A2X is not actually an accounting platform itself, but serves as a bridge that synchs your sales channel data into accounting software like QuickBooks Online or Xero. It is designed specifically for eCommerce.
Pros:
- Built for eCommerce: originally built for Amazon, but now supports eBay, Etsy, Shopify, Walmart and more.
- Offers a full suite of bookkeeping/accounting capabilities with detailed fee breakdowns and accurate reports
- Global focus with tax support for VAT, MTD, etc.
- High degree of customization available for complex setups with multi-country tax, etc.
Cons:
- No accounting platform of its own. Requires you to use Xero or QuickBooks in combination with A2X.
- Setup can be complex
- Cost is significant ($19-$69/month), especially when added to the cost of Xero or QuickBooks, and you pay separately for each channel (eBay, Amazon, etc.)
While it is costly to pay for both a QuickBooks account and an A2X account, this is a powerful way to have a high level of functionality with a great deal of accuracy in your numbers.
Link My Books
Link My Books, also not an accounting platform itself, is another third party connection that can sync your eBay data with QuickBooks or Xero providing full detail on your eBay transactions and importing that into these accounting platforms.
Pros:
- Built specifically for eBay and Amazon sellers
- Offers a full suite of bookkeeping/accounting capabilities with detailed fee breakdowns and accurate reports when used in combination with Xero or QuickBooks
- Especially strong in UK/EU
- Excellent customer support, especially for UK
Cons:
- No accounting platform of its own. Requires you to use Xero or QuickBooks in combination with A2X.
- While more affordable than A2X (starts at ~$16/mo), the cost of Xero or QuickBooks is required in addition
Establishing Regular Bookkeeping Updates for your eBay Business
What are some best practices that people use to manage their eBay Bookkeeping and Accounting after the initial set-up?
One of the most helpful things you can do in managing your business is to establish regular bookkeeping updates throughout the year where you check in on your finances and categorize any new expenses that have come up. Depending on the size of your business, you may want to do this more or less frequently, but often once per month is enough.
During each Bookkeeping Update, think about the following activities:
1. Capture any missing data.
If you’re entering things in a spreadsheet manually, update the spreadsheet for the most current time period. If you use software, the software will do most of this work automatically for you.
In either case, ask yourself if you’ve captured everything in your data? For example, did you pay for any materials with cash that weren’t captured on a bank statement? Did you have any recent business travel, mileage expense, or other unusual expenses that should be recorded?
Your data is only as good as what has been captured, so try to be as comprehensive as possible to include everything. You’ll thank yourself when tax time comes!
2. Categorize any uncategorized items.
All of your data should flow into a category so that you can look at your business at a higher level. For example, if one of your expenses is for FedEx shipments of packages to buyers, you would want to categorize that as a Shipping Expense. Most software companies can remember vendors for you, so you only have to categorize a vendor once, but you may have new vendors that have never been categorized before. It’s best to categorize things regularly so it doesn’t pile up to be too much work at the end of the year.
3. Look at the trends in your data.
Look at your Income and Expenses from the most recent month and identify any trends in your data. Are you selling more or less than you expected? Are there any anomalies in your data? You can dig deeper to investigate anything that looks unusual whether it is positive or negative. The goal of looking at trends in your data is to think about whether or not you might want to do anything differently going forward as a result of what you’re learning about your business. Are there products you want to source more of because they’re selling so well? Do you want to forecast differently? Are there products you want to discount to remove quickly from your inventory if they’re not selling well?
4. Take care of any tax payment requirements.
Whether you file annually or quarterly, if you’re making money selling on eBay you’ll need to pay taxes on that income. For the 2025 tax year, the IRS requires that 1099 forms be issued to all businesses that generate over $600 in sales. For a deep dive into eBay 1099K’s, read our article on how to Make sense of your eBay 1099k, learn what to do When an eBay 1099K doesn’t match and how to account for your Personal Item Sales that are included in your 1099k.
Advanced Bookkeeping for an eBay Business: Further Resources
Congratulations! If you’ve made it to this point in the guide, you’re doing a great job managing the Bookkeeping and Accounting for your business. However, you’ve likely discovered areas where you want to go deeper. Here is a list of resources to help you do exactly that. Seller Ledger specializes in eCommerce Bookkeeping & Accounting and we are always updating our blog with articles that go deep on common eCommerce accounting challenges. You can follow us on an ongoing basis at the Seller Ledger Blog.
Balance Sheet and Journal Entries
Accounting for Personal Items in 1099K’s
Add Inventory Costs from Receipts
Allocating Other Charges to Cost of Goods Sold
Know which Items Make You the Most Profit