Treat each piece as its own line item in your chart of accounts. When shipping income, postage, payment fees, and marketplace fees all get mixed together, gross margin becomes meaningless and you can’t tell whether your products are actually profitable or whether the platforms are eating you alive.

Customer-paid shipping belongs in its own income account. Keep it out of product sales. If a customer pays $100 for products and $12 for shipping, record $100 to product revenue and $12 to shipping income. The gross margin calculation only works when these stay separated. Mixing them inflates your product revenue and makes pricing decisions harder.

Carrier and postage costs go to a shipping expense account, typically inside cost of goods sold so it pulls against revenue in your gross margin. This is what you actually pay USPS, UPS, FedEx, or ShipStation for labels. Whether you charge the customer for shipping or bake it into product pricing, the carrier cost still needs to be tracked on its own line so you can see the spread between what customers pay for shipping and what shipping actually costs you.

Merchant and payment processing fees from Stripe, Square, PayPal, or Shopify Payments need their own expense account. The mistake most sellers make is recording only the net deposit. If Stripe takes $3 on a $100 charge and deposits $97, posting $97 to revenue understates your sales and hides the fee entirely. The right approach is to record $100 to revenue, $3 to merchant fees, and let the $97 deposit reconcile against both.

Marketplace fees from Amazon, Etsy, eBay, or Walmart should sit in a separate account, not commingled with payment processing. Marketplace fees run much higher than card processing fees, often 15% or more depending on the platform and category. When they’re mixed in with Stripe or PayPal fees, you lose the ability to see how much each sales channel actually costs you to operate on.

The hard part is that marketplaces and processors net out their fees before depositing funds. The bank only sees the leftover, not the gross sale, the shipping the customer paid, and the various deductions. To book this correctly, you have to pull the platform’s settlement or payout reports and split the deposit into its parts. Without that, your books will tie to the bank but tell you nothing useful about profitability by product or channel. This is the work behind ecommerce payment matching, and it’s the difference between books that balance and books that actually help you run the business.

Once everything is set up, your profit and loss should show product revenue, shipping income, postage costs, payment fees, and marketplace fees as distinct lines. Gross margin tells you whether your products work. Margin after fees tells you whether the channel works. If you’re trying to make sense of any of this and want help getting it cleaned up, GMJ provides small business accounting, bookkeeping and tax services in Jacksonville, NC and works with ecommerce sellers across the Carolinas to get these numbers reading the way they should.