Quick Overview: Don't Just Track Fees — Track Your Year-End Inventory Too
Most people searching for how to handle BASE's fees at tax time are focused on how to book the payment processing fee and service fee as expenses. But the part of tax filing that actually trips up product sellers more often isn't the fees — it's correctly accounting for unsold inventory at year-end. This guide covers the basics of sales and expenses for tax filing, how to calculate year-end inventory correctly, how to book BASE's fees as a "payment handling fee" expense, why you shouldn't net your sales against fees, and how accounting software can help.
The Basics: What Counts as "Sales" and What Counts as "Expenses"
Profit from selling on BASE is generally treated as business income for sole proprietors in Japan, subject to annual tax filing. Business income is calculated by subtracting the cost of goods and operating expenses from a year's worth of sales (gross receipts).
The first thing worth getting right is what counts as "sales." On BASE, the amount a buyer pays at checkout is your sales figure — but the amount that actually lands in your bank account is smaller, after BASE deducts its payment processing fee, service fee, and payout fee. Don't record only the amount that was actually deposited as your sales. Record the full amount the buyer paid as sales, and separately book each deducted fee as its own expense.
How to Correctly Count Year-End Inventory
Where product sellers filing as sole proprietors tend to stumble is in handling unsold inventory at year-end. According to freee's help pages (a Japanese accounting software provider), sole proprietors are required to take a physical inventory count as of December 31.
Why the Count Matters
You can't simply expense everything you purchased for resale in the year you bought it. Cost of goods sold for tax purposes is calculated as:
Cost of goods sold = Opening inventory (value at the start of the year) + Purchases during the year − Closing inventory (value of unsold stock at year-end)
In other words, whatever inventory remains unsold at year-end gets carried forward rather than expensed in the current year. If you purchased a large amount of stock but skip the year-end count and expense all of it as "purchases," you'll end up overstating your expenses.
How Inventory Gets Valued
There are several valuation methods for inventory — the last purchase cost method, FIFO, the weighted-average method, and others. According to freee's help pages, if you haven't filed a specific notification, the default method applied is the "last purchase cost method" (valuing inventory using the unit cost of your most recent purchase before year-end). If you want to use a different method, such as FIFO or weighted average, you need to file a "Notification of Inventory Valuation Method" with the tax office — generally by the filing deadline for the year your business started. Without that filing, the last purchase cost method applies automatically.
Booking BASE's Fees as a "Payment Handling Fee" Expense
On BASE's Standard plan, according to BASE's own pricing page as checked at the time of writing, sellers pay a payment processing fee of 3.6% plus ¥40 per order, plus a 3% service fee — together, roughly 6.6% of sales plus ¥40 per order (payments via PayPay, Amazon Pay, or PayPal add a further 1% to the processing fee). These fees are generally booked as a "payment handling fee" expense for tax purposes.
The administrative and transfer fees deducted when you request a payout can be booked the same way. You can check the breakdown and amounts of these fees from the "Sales" page in your BASE dashboard. Recording them monthly rather than tallying everything at tax time cuts down on year-end workload.
Why You Shouldn't Net Sales Against Fees
As noted above, the amount BASE actually deposits is your sales minus various fees. If you only record the deposited amount as sales and skip recording the fees entirely, both your sales and your expenses end up understated.
The final profit figure (sales minus expenses) might look the same either way, but this isn't correct bookkeeping practice. Sales should be recorded at the full amount the buyer paid, with each fee booked separately as a payment handling fee — the "gross recording" principle. This matters even more once you become subject to consumption tax, since whether you're recording gross amounts affects how consumption tax is calculated. It's worth building the habit of gross recording from the start of your business.
Using Accounting Software to Cut Down on Manual Bookkeeping
Recording every fee and sale by hand is time-consuming. According to freee's support pages, linking freee with BASE lets your product sales, payment processing fees and shipping charges, cancellation information, and payout administrative/transfer fees get pulled in automatically as transactions — rather than as bank statement line items that still need matching, they're registered directly as transactions from the start.
One important caveat from the same freee support page: this integration does not automatically sync invoice-related information under Japan's qualified invoice system. Businesses that need to handle qualified invoices should check and input that part separately.
For inventory tracking, freee's individual plan includes an inventory count feature under the "Tax Filing" menu, where you enter your closing inventory value. The following year's opening inventory is then carried forward automatically from the prior year's closing figure — once you get the process right once, the annual bookkeeping burden gets lighter from there.
Day-to-day tasks like product registration, inventory updates, and fee bookkeeping are less glamorous than building the store itself — and they're easy to put off. But getting this operational groundwork right is exactly what it takes to keep an e-commerce business running over the long term. Leap's AI E-Commerce Agent is built around the idea that AI can support everything from building a store to the ongoing operational work that follows, including the kind of day-to-day bookkeeping and operational efficiency work that every store has to deal with eventually.
FAQ
Q. Can I deduct the full amount of BASE's fees as a business expense?
A. Generally, yes — BASE's payment processing fee, service fee, and payout fees can be booked in full as a payment handling expense, since they're necessary to run the business. If personal and business use overlap in some way, you may need to prorate the expense accordingly; check with a tax accountant or your local tax office if you're unsure.
Q. What if I don't know my inventory value — can I still file my taxes?
A. Filing without taking a physical inventory count isn't advisable. You need to know the quantity and value of your unsold stock at year-end and reflect it as closing inventory in your cost-of-goods calculation. Even with a small amount of stock, it's worth keeping a habit of tracking unit costs and remaining quantities, so the year-end count goes smoothly.
Q. I didn't file an inventory valuation notification in my first year — what happens?
A. Without a filing, the last purchase cost method is applied automatically. If you want to use a different method, such as FIFO or weighted average, you need to file a "Notification of Inventory Valuation Method" with the tax office, generally by the filing deadline for the year your business started.
Summary and Key Takeaway
The question of how to book BASE's fees comes down to a fairly simple rule: record them as a payment handling expense, and record sales at the gross amount rather than netting it against fees. But the part of tax filing that actually trips up product sellers is the year-end inventory count — how you handle unsold stock. Focus too much on fee bookkeeping, and it's easy to overlook the inventory count, which actually has a bigger effect on your overall income calculation. Running a store and generating sales is one thing; putting that income into a state where it can be correctly reported as taxable income is a separate task. The unglamorous work of monthly bookkeeping and a careful year-end count is what gives a business the footing to keep running long-term.
For more on this, see our guide on when to switch to BASE's Growth plan from an inventory strategy perspective.
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