Matching Etsy sales with bulk bank deposits

caitcait Member Posts: 2

I sell on Etsy and have the transactions imported into Wave.

My Etsy funds are deposited into my bank account from the Etsy payment account in bulk amounts, so the sales transactions and the bank deposits do not match. I categorize the deposit into my bank as a transfer from the Etsy payment account, and a matching transfer transaction is created (called "Created Transfer"). Is this correct?

Also, should my Etsy payment account be "Money in Transit" or "Cash and Bank"?

Thanks!

Comments

  • JessGJessG Administrator Posts: 54 admin

    Hey @cait there are several ways you can account for this and I would recommend reaching out to a local accounting practitioner to find the best option for you and your business.

    You can potentially use your Etsy Account as a "Money in Transit" account. A Money in Transit account tracks the funds that are expected to be deposited into or withdrawn from a Bank account at a future date. This article goes into some details here: https://support.waveapps.com/hc/en-us/articles/360000389783-Bookkeeping-undeposited-checks

    Using the "Money in Transit" account, you can then manage your sales by having two deposits (green) and one withdrawal transfer transaction (black).

    1. As soon as payment is made, your sale will be recorded in your Money in Transit account (Etsy).

    2. Once the sales are processed and sent to your bank account (which is presumably connected) you will see another transaction deposited in your account.

    3. Then you would have to create a transfer (black) between your Money in Transit account and your bank account. That transaction represents the movement of funds from the holding account to your bank account. See how to create a transfer here: https://support.waveapps.com/hc/en-us/articles/208621616-How-to-create-a-transfer-between-two-accounts-e-g-categorize-a-credit-card-payment-

    Hope that helps!

  • havahhavah Member Posts: 2

    How do I account for Etsy fees and advertising that are taken out of the sale deposits?

    I saw someone on reddit post this:

    "In Wave's Chart of Accounts I created:

    Bank Account: Etsy Account

    Money in Transit Account: Etsy Holdings

    Etsy Account is linked to my Etsy store. All orders flow in to Etsy Account and I categorize each of them as "Product Sales". The amount that comes in is the total for the order (before Etsy takes their processing fee).

    Within the Etsy Account, I create an Expense transaction for each order that is split two ways:

    The processing fee goes to expense category "Etsy Fees"

    The remaining balance goes to the money in transit account "Etsy Holdings"

    When I receive a deposit from Etsy in my checking account, I set the category to be a transfer from the "Etsy Holdings" money in transit account.

    "

  • BarsinBarsin Administrator Posts: 2,030 admin

    Hey @havah

    This is definitely a good method, however I think if you check out our help centre article on ACCOUNTING FOR FEES this might provide you with an easier solution to accounting for this. Let us know if you have any questions!

  • havahhavah Member Posts: 2

    Thank you @Barsin , this was helpful in most cases, but this article doesn't talk about what to do in case you have more than one certain type of expense. I couldn't add marketing expenses or shipping expenses.

    In this scenario I have, I have one Etsy Transaction with a deposit of $101.11. I have to split this into many categories:

    +$178.08 product sales
    -$27.75 marketing
    -$24.30 shipping & handling
    -$24.92 fees

    See attached. !

    edited November 22, 2020
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