Choose a reliable starting point
List every sales channel, payment processor, bank account, cash collection process, and marketplace used during the year. Export gross activity by month. Identify whether reports include sales tax, refunds, shipping, tips, or chargebacks. Preserve the report settings so another reviewer can reproduce the totals. The objective is a complete transaction trail, not simply a number that happens to match a bank account.
Create a bridge from sales to cash
Begin with channel sales and show each adjustment to arrive at processor payouts and bank deposits. Separate fees, reserves, refunds, transfers, and timing differences. Record cash sales and direct customer payments outside the processor. When two reports describe the same transaction, avoid counting both as revenue. Label differences that arise because a December sale was paid out in January.
Review year-end forms against the books
Compare information returns with the business records and investigate discrepancies. The type of form and payment method affect the reporting rules. Do not change accurate books solely to force a match with an incorrect form; seek a correction where appropriate and document the explanation for the preparer. Save a final bridge showing how reported amounts relate to the tax workpapers.
- Inventory all selling and payment channels, including cash.
- Preserve gross sales, refunds, fees, and payout detail.
- Identify transfers and timing differences explicitly.
- Give the preparer both the forms and the reconciliation.
Questions to consider
Can I report only what reached my bank?
Net payouts can omit processor fees and other activity that should be separately recorded. Use complete sales and expense records to establish the correct treatment.
What if I never receive an information return?
The absence of a form does not determine whether income is reportable. Keep complete business records and ask the preparer how the activity should appear on the return.
Official sources and further reading
Use this guide to prepare questions and organize records. It does not determine eligibility, establish a professional engagement or guarantee a tax or business outcome.