How to Keep Sales Records for Taxes When You Take Custom Orders

Short answer: keep one sales log with one row for each order. Each row shows the order date, the customer, what you made, the price, and every payment with its date and method. Behind each row, keep the proof: the invoice, and the line in your payment app or bank statement. Put all order money into one business account. Check the log against your statements once a month, and you will be ready at tax time.

This guide is for sellers who take orders in messages and get paid by Venmo, Zelle, PayPal, card or cash. If you sell on Etsy or another marketplace, it keeps a report of those sales for you. Orders from Instagram, WhatsApp, Facebook or word of mouth have no such report. The only record is the one you keep.

This is general information for US sellers, with a short note for the UK. It is not tax advice. Your own case may be different, so please ask a tax professional when you are unsure.

Why custom orders are hard to record

A shop with a till has one sale, one payment and one receipt. A custom order is messier. The price is agreed in a chat. The customer pays a deposit one week and the balance three weeks later. Sometimes the balance comes in cash at pickup, and sometimes it never comes at all.

So a single order can leave three or four traces in different places. There is a message thread, a Venmo payment, a bank transfer and some cash. None of them shows the whole order. In January, you have to find every piece and match them up.

40 orders

Split payments are common in our own data. We looked at 731 orders from 155 sellers who use WISMO. Of the 435 priced orders with any payment recorded, 40 were paid in more than one installment. Of the 67 orders that were part-paid, 48 were past their due date with a balance still owed. Each of those orders needs every payment written down, or the numbers will not add up.

1. Know what the IRS asks for

The rules are simpler than many sellers think. The IRS says you may choose any recordkeeping system that suits your business. It only has to show your income and expenses clearly. A notebook, a spreadsheet or an app can all work.

What matters is the proof behind the numbers. The IRS calls these supporting documents. For sales (it says “gross receipts”), its examples include:

• invoices
• receipt books
• deposit information for cash and card sales
• cash register tapes
• Forms 1099-MISC

For what you spend, it lists proof of payment, receipts, card statements and invoices. It also says electronic records are fine, with the same rules as paper ones.

So you need two things. First, a list that shows every sale. Second, a document for each sale that proves it happened.

2. Give every order one row

The main part of the system is a sales log: one row for each order, in date order, kept for the whole year. A spreadsheet works well. Use these columns:

Two rules make the log useful.

Write the row when the order is agreed, not when it is finished. If you wait, a December order paid in cash is easy to forget by April.

Give each order a number. Use the same number on the invoice, on the payment note and in the file name of any screenshot. Then every trace of the order points back to one row. If you need an invoice format, see how to write a custom order invoice.

3. Record every payment against its order

A payment app shows money coming in. It does not show which order the money was for, or what is still owed. Your log has to link the two.

Each time money arrives, add it to the order’s row the same day. Write the date, the amount and the method. If the app lets you add a note, put the order number in it. Ask customers to do the same when they pay.

Cash needs the most care. There is no app record, so your log is the only record. Write a receipt for the customer and keep a copy. IRS Publication 583 suggests you deposit all your daily receipts into your business checking account. When cash goes into the bank, the deposit backs up your log.

Write refunds as well. If you return a deposit, add it as a negative payment on the same row, with the date and method. Then the row still adds up.

If a balance is late, your log shows it at once. For what to say to the customer, see what to do when a customer will not pay the balance.

4. Keep the proof behind each row

The log is your summary. The proof is what you show if anyone asks. For each order, keep:

• The invoice or receipt, with the order number, price and payments.
• The payment record. This is the line in your Venmo, Zelle, PayPal or bank history.
• The agreed price, if it was set in a chat. A screenshot of the message where the customer agreed the price is enough.

Payment apps keep your history, but you should not rely on them alone. Accounts get closed and apps change. Download your statements and save them with your records.

PayPal, for example, lets you download your activity for up to the past seven years. Each report can cover up to 12 months, and you can save it as a CSV file or a PDF. Most banks and payment apps offer a similar statement download. Save one file for each month, or one for the year, in a folder named for the tax year.

5. Keep business money in one account

IRS Publication 583 says one of the first things you should do is open a business checking account. It also says to keep it separate from your personal account.

This matters more for message sellers than for anyone else. Your friends pay you back for dinner on the same app your customers use. When the two are mixed, it is hard to show which money was a sale and which was not.

The IRS says personal payments, such as a friend paying you back for a shared meal, are not taxable income. They should not be reported on a Form 1099-K. But you have to be able to show the difference. The cleanest way is to use one account or business profile for orders, and nothing else.

6. Watch the December deposits

Orders that cross the new year cause the most confusion. A customer orders in December, pays a deposit, and collects in January. Which year does the money belong to?

That depends on your accounting method. IRS Publication 538 says that under the cash method, you include income in the year you actually or constructively receive it. So under the cash method, the deposit counts in the year it was paid. The balance counts in the year it was paid.

This is why the log records the date of each payment, not only the order date. Some businesses use a different method, called the accrual method, with other rules. If you are not sure which one you use, ask a tax professional before you file.

7. Check the log against your statements every month

Once a month, take 15 minutes to compare your log with your statements. Go through each payment app and your bank account for the month. Every payment in for an order should match a payment in your log. Every cash payment in your log should match a receipt and, ideally, a bank deposit.

When something does not match, fix it while you still remember the order. Common gaps are:

• a payment with no order (find the order and add the row)
• an order with no payment (it may still be owed)
• a personal payment in the business account (note it as not a sale)

Check it against Form 1099-K in January

The IRS says payment card companies, payment apps and online marketplaces file Form 1099-K. Payment apps and marketplaces file it when your payments go over $20,000 in more than 200 transactions in a year. Card payments have no threshold. The company must send you a copy by January 31.

If you get one, compare it with your log for that app or card processor. The IRS says you must report your income whether or not you get a Form 1099-K. If your sales stay below that level, you may get no form at all. Then your log is the only full record of your sales.

8. Keep your costs too

Income is only half of the picture. Your costs can lower the amount you pay tax on. Keep receipts for materials, packaging, shipping labels, payment fees and tools. Store them by month in the same folder as your sales records.

Two numbers make costs worth the effort:

• The IRS says you must file Schedule SE when your net earnings from self-employment are $400 or more. Net earnings are what is left after your business costs.
• The self-employment tax rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.

Do you expect to owe $1,000 or more in tax for the year? Then the IRS says you generally need to pay estimated tax during the year. The last payment period runs from September 1 to December 31. Its payment is due on January 15 of the next year, which is January 15, 2027 for this year.

How long to keep your records

The IRS sets these periods for income tax records. They count from the date you filed the return, in most cases.

In practice, many sellers keep each year’s folder for at least seven years. It costs little to keep digital files, and it covers most of the cases above.

In the UK, the rule is different. GOV.UK says self-employed people must keep records for at least 5 years after the 31 January deadline for that tax year. Records from a 2025 to 2026 return filed by 31 January 2027 should be kept until at least January 2032.

A year-end checklist

Use this in late December or early January, before you start the new year’s log.

Sales tax and when to get help

Sales tax is a separate question from income tax. Whether you must charge it on custom orders depends on your state and on what you sell. The SBA lists each state’s tax agency and says to check with your state and local government. If you do charge it, record it in its own column. It is money you collect for the state, not part of your sales.

It is worth paying for help in these cases:

• You sell in several states.
• You have employees.
• You are not sure whether you use the cash method.
• Your sales grew a lot this year.

A tax professional can set up your log once, so every year after is easier.

How WISMO helps you keep sales records

You can do everything in this guide with a spreadsheet and a folder. WISMO is one way to keep each order and its payments together on your phone. Your sales log then grows as you work.

Each order in WISMO has its own number, such as #1042. It holds the customer, the items, the price and the due date. You record each payment against the order, such as a deposit, part payments and the final payment. Each payment has a method: cash, digital wallet, bank transfer, card or other. WISMO works out the balance and shows the order as unpaid, advance or paid. Record each payment on the day it arrives, because WISMO dates it on the day you add it.

From any order, you can make an invoice as a PDF. It lists each payment with its date, method and amount, and the balance due. The Stats screen shows the revenue you collected each month. You can also export all your orders as a CSV file, which opens in any spreadsheet. Invoices, Stats and the CSV export are free on every plan. Your first 30 orders are free, and Pro is $9.99 a month or $99.99 a year if you need more.

There are honest limits. WISMO does not take payments, so it is not a bank or payment app, and it does not file taxes. It does not track your costs as receipts, and it has no sales tax line. The CSV export shows each order’s total paid, not each payment’s date. For a December deposit on a January order, check the payments on the order or its invoice. For more on keeping payments straight across many orders, see customer payment tracking.