In plain English
Also called sales or income. Customer deposits, loans and owner contributions are not revenue.
Want a second pair of eyes on your books? A free bookkeeping health check.
Record gross sales, not net payouts.
Why it matters
Revenue is the starting line of the income statement, so every margin you calculate depends on it. If you record only net deposits after platform or card fees, revenue looks smaller and fees disappear from view. If you record loans or owner money as sales, the business looks bigger than it is, which can mislead you and overstate taxable income.
Lenders and buyers often look at revenue trends first, so consistency from year to year matters.
Worked example
Marketplace gross sales of $5,000 are revenue even though the payout was $4,230.
How to handle it
- Record sales at the gross amount the customer paid, before processor or marketplace fees.
- Record fees separately as an expense so the payout reconciles to the bank.
- Code loan proceeds, owner contributions and refunds from vendors to their proper accounts, not income.
- Split revenue into a few meaningful income accounts, such as by service line, so trends are visible.
- Compare reported sales to your point of sale or platform reports each month.
Common mistakes
- Recording marketplace payouts as sales, which understates revenue and hides fees.
- Counting a customer deposit as revenue before the work is done, which inflates current profit.
- Including sales tax collected in revenue, which overstates income and understates what is owed to the state.
Not the same as: Net income
Revenue is everything earned from sales before any costs. Net income is what remains after every cost has been subtracted. See Net income.
Go deeper
- Online Marketplace Seller Records: Income and Expenses: How sellers on online marketplaces should record gross sales, fees, shipping, refunds and inventory, and reconcile payouts to the books.
Related terms
- Sales tax payable: Sales tax collected from customers that you owe to the state.
- Shareholder loan: Money an owner lends to the business or the business lends to an owner, tracked as a loan.
- Retained earnings: The profit a business has kept over time, after distributions, rather than paid out.
Common questions
What is revenue?
The money a business earns from selling goods or services before expenses.
Can you give an example of revenue?
Marketplace gross sales of $5,000 are revenue even though the payout was $4,230.
Is a refund from a vendor revenue?
No. A vendor refund reduces the expense you originally recorded. Coding it as income inflates both revenue and expenses.
Should I record revenue when I invoice or when I get paid?
That depends on whether you keep your books on an accrual or cash basis. Accrual records it when earned, cash records it when received; your accountant can tell you which you should use.
General information, not tax, legal or accounting advice. Confirm rules with the IRS, the NJ Division of Taxation or a licensed professional.
