How to Categorize Etsy Fees and Deposits in QuickBooks and Xero

Etsy charges in at least six different ways, and the deposit you receive has had all of them taken out. Listing fees, transaction fees, payment processing, offsite ads, shipping labels and currency conversion all come off before payout. Sellers who book the deposit as sales typically understate revenue by a fifth or more — and never see what Etsy actually costs them.

The Short Answer

Offsite Ads Is the Fee That Surprises People

Etsy’s Offsite Ads charges a percentage of a sale when the buyer arrived through an advertisement Etsy paid for — and for sellers above a revenue threshold, participation is not optional.

Two things follow for the books. It is advertising, not a selling fee, so it belongs with your other advertising cost where it can be compared against the revenue it generated. And because it only applies to some orders, the effective rate varies month to month — which looks like an error if the fees are lumped together and nobody knows the mechanism.

Separating Offsite Ads from transaction fees is what lets you see the real cost of Etsy as a channel. For many sellers it is the largest single component.

Marketplace-Collected Sales Tax

Etsy collects and remits sales tax for most jurisdictions as a marketplace facilitator. That is genuinely helpful, and it creates a specific bookkeeping requirement: the tax must not end up in your sales figure.

It is not your revenue, and because Etsy remits it, it is generally not your liability either. The practical treatment is to record gross product revenue excluding it, so that your sales figure is your sales — and so that if a jurisdiction is not covered, the exception is visible rather than lost in a total.

Etsy Fees and Deposits Categorisation FAQs

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