Here's a mistake that quietly wrecks a lot of Etsy sellers' books: they see a $412 deposit land in their bank account, type "$412 income" into their spreadsheet, and move on. That number is wrong. It's not your income — it's your income minus a stack of fees Etsy already took out before paying you. Record it as revenue and you'll overpay tax, understate your costs, and never really know if your shop makes money.
This guide walks through how to record Etsy fees correctly in 2026, in plain terms, whether you use a spreadsheet or accounting software.
The core idea: Etsy pays you "net," but you must book "gross"
Etsy is what accountants call a payment intermediary. A buyer pays the full order amount to Etsy, Etsy subtracts its fees, and deposits the remainder to you. That remainder is a net figure. Proper bookkeeping records the two sides separately:
- Income: the full amount the buyer paid — item price + shipping they paid + gift wrap.
- Expenses: each Etsy fee, recorded as a business cost.
Both matter. The fees are tax-deductible business expenses, so if you only book the net deposit, you throw away a legitimate deduction and misstate your revenue at the same time.
The Etsy fees you need to record in 2026
These are the standard charges. Each is a deductible expense and each should have a line (or category) in your books:
- Listing fee — $0.20 per item, charged again every time an item sells (auto-renew). See auto-renew fees explained.
- Transaction fee — 6.5% of the order total, including the shipping and gift wrap the buyer paid.
- Payment processing — varies by country: 3% + $0.25 in the US, 4% + £0.20 in the UK, 4% + €0.30 in much of the EU. It's a percentage plus a fixed amount, so it's two things stacked, not one.
- Offsite Ads fee — 12% or 15%, but only on orders Etsy attributes to one of its ads. This one is lumpy: most orders have none, a few have a big one. See are Etsy Ads worth it.
- On-site Etsy Ads spend — your daily ad budget, billed separately. It's an advertising expense, not a per-order fee, so many sellers give it its own category.
The fees sellers forget — and they're all deductible
These are the ones that go unrecorded, usually because they're small, quiet, or only appear in the payment ledger:
- Regulatory operating fee: a small percentage (usually under 2%) Etsy adds in the UK, France, Italy, Spain, Canada, Türkiye and others. See the regulatory operating fee explained.
- Currency conversion — 2.5%, when your listing currency and payout currency differ. See currency conversion fee explained.
- VAT charged on your fees: in many countries Etsy charges VAT on the fees themselves, so the real cost of each fee is higher than the headline rate. See does Etsy charge VAT on your seller fees.
None of these appear in a simple fee calculator, and every one of them is a business expense you're entitled to record.
How to split a lump payout back into its parts
The practical problem: Etsy pays you in batches, so a single deposit can cover several orders and net out several fees at once. You can't reverse-engineer it from the bank statement alone. Instead, work from Etsy's own records:
- Download your monthly CSV statements from Shop Manager → Finances → Monthly Statements. These list every order and every fee as separate lines. (See how to download your Etsy statements for taxes.)
- Total your gross sales (what buyers paid) as income.
- Total each fee type as its own expense line.
- Record refunds — a refunded sale reverses income, and Etsy returns most (not always all) of the fees. See does Etsy refund fees on refunds.
- Reconcile to the bank: gross sales − total fees − refunds should equal the net deposits that hit your account. If it doesn't, something's miscategorized. Our reconciliation guide covers this step by step.
A worked example
Say in a month your buyers paid $2,000 across 40 orders (US shop, no ads). Your books should show roughly:
- Income: $2,000 (gross)
- Transaction fees (6.5%): $130
- Payment processing (3% + $0.25 × 40): $70
- Listing fees ($0.20 × 40): $8
Total fees ≈ $208, so about $1,792 was deposited. If you'd booked only the $1,792, you'd have hidden $208 of deductible expense and understated your revenue by the same. The gross-and-expense method captures both — and it's what makes a real profit & loss statement possible.
Cash basis vs. accrual — a quick note
Most small Etsy sellers use cash basis: you record income and fees when the money actually moves. It's simpler and usually fine for a solo shop. Accrual (recording at the time of sale, before payout) gives a truer month-by-month picture but adds work. Whichever you choose, be consistent, and if you're unsure which your tax authority expects, ask an accountant — this is genuinely their area, not something to guess at.
Estimate a single order, then track the real ones
To sanity-check one order's fees, use our free Etsy fee calculator — it includes the regulatory and currency-conversion fees most tools skip. But bookkeeping needs the actual fees Etsy charged, to the cent, across every order — including ad attribution, refunds, and VAT-on-fees that a calculator can only estimate. That's exactly what Seller Profit Lens does: it connects to your shop read-only, reads every real fee from your Etsy ledger, categorizes it, and subtracts your own costs so your books (and your profit) match reality without hand-sorting CSVs. It's free in beta right now. Join the waitlist →