How to record Shopify sales in your books
The most common Shopify mistake we see is booking each payout from the bank feed as revenue. The P&L then shows net cash received, not sales. Fees disappear, refunds are hidden, and sales tax ends up inside revenue.
Why the payout is not your sales figure
A Shopify Payments payout is the result of several things netted together: orders paid by card, minus refunds, minus processing fees, minus chargebacks and their fees, sometimes minus a reserve. One payout can also cover more than one day of orders. Orders paid through PayPal, Klarna or another gateway do not appear in the Shopify payout at all, because that money settles in a different account.
A method that reconciles
- Record gross sales, discounts, refunds, shipping income and taxes collected as separate lines, using the Shopify sales report as the source.
- Post them to a Shopify clearing account, not to the bank.
- Record processing fees and chargeback fees as expenses against the same clearing account.
- When the payout arrives in the bank, transfer it from the clearing account to the bank.
- Use a separate clearing account for each gateway: Shopify Payments, PayPal, Klarna and so on.
If everything is booked correctly, each clearing account goes back to zero once the payouts for the period have landed. A balance that keeps growing points to a missing fee, a refund booked twice, or a payout posted to the wrong account.
Daily, weekly or monthly entries
There is no need to post every order. A summary entry per day, per week or per month is enough for most stores and keeps the ledger readable. The right frequency depends on how often you want a P&L. Stores that report weekly usually book weekly.
Taxes collected are not revenue
Sales tax or VAT collected at checkout belongs to the tax authority. It goes to a liability account and is paid out with the tax return. If it sits in revenue, both your margin and your tax filings will be wrong.
Month-end checklist
- Shopify sales report totals agree with the sales lines in the ledger
- Every gateway clearing account is at zero or explained by payouts in transit
- Fees are booked as expenses, not netted against sales
- Tax collected agrees with the tax liability account
Questions about your own setup? Write to us at finance@teamsfinance.com or use the contact form.