A Shopify payout almost never equals the sales for the same period, and once you understand why, most other bookkeeping questions in a growing store answer themselves. Sales are gross. Payouts are net of processing fees, refunds, chargebacks, and a settlement window that closes on Shopify’s schedule instead of yours. The questions below surface when a store outgrows a folder of receipts and an accountant starts asking for numbers the owner cannot produce on demand.
Why doesn’t my Shopify payout match my sales for the same period?
Because the payout is a net cash movement and your sales figure is gross revenue. Shopify subtracts processing fees, refunds issued during the period, chargebacks, and adjustments before the money reaches your bank, and the payout period rarely aligns with a calendar month.
The fix is to stop treating the bank deposit as revenue. Record gross sales, record each deduction on its own line, then confirm what remains equals the deposit. Shopify explains how payout schedules and periods work in its payouts documentation, which is worth reading once, slowly, rather than guessing at. A payout that straddles month end is normal. A payout you cannot break back into its parts is the actual problem.
How should I record Shopify Payments fees?
As an expense in their own account, not as a reduction of revenue. The gross sale is revenue and the processing fee is a cost of running the store, usually booked under merchant fees or payment processing.
Netting the fee against the sale hides both numbers. Your top line reads low, your cost base reads low, and every margin percentage you calculate afterward is wrong in a way that is hard to spot later. Fees on refunded orders deserve their own attention too. When you refund a customer, the processing fee on the original sale may or may not come back to you, and that difference is a real cost of accepting returns.
A customer bought a gift card. Is that revenue?
Not when you sell it. Cash received for a gift card is a liability on the balance sheet, commonly labeled deferred revenue or unredeemed gift card liability, and it becomes revenue only when the card is redeemed for goods.
Stores that book gift card sales as revenue on the sale date inflate a good month and then take a phantom hit later, because the eventual redemption ships product with no revenue attached. Unredeemed balances also carry rules that vary by state, including unclaimed property requirements. Track the outstanding balance as its own number and ask a professional in your state how long you are expected to carry it.
Is the sales tax Shopify collects mine to keep?
No. Tax collected at checkout is money you hold for a taxing authority, so it belongs in a liability account until you remit it, never in revenue.
The complication is that collected and owed are two different numbers. Marketplace facilitator rules mean some platforms remit tax on your behalf for certain transactions while you remain responsible for others, and registration obligations depend on where you have nexus. That determination is specific to your business and changes as you grow. Read the general small business guidance on IRS.gov for federal context, then take the state question to your state’s department of revenue or a tax professional. Nobody writing a blog post can tell you where you owe.
How do refunds and chargebacks hit the books?
A refund reverses revenue in the period the refund is issued, and if goods come back in saleable condition, inventory and cost of goods sold reverse with it. A chargeback does the same to revenue but adds a dispute fee and a timing lag that can push the whole event into a later month.
Keep the two separate in your chart of accounts. Refunds signal product fit; chargebacks signal fraud exposure and delivery problems. One blended contra-revenue bucket destroys that distinction.
Do discounts reduce revenue or count as a marketing expense?
Discount codes and site-wide promotions reduce revenue, so they belong in a contra-revenue account rather than in marketing. The customer never paid the full price, so recognizing it and then expensing it overstates both sides.
Free shipping you absorb is the edge case. It is a fulfillment cost you actually pay, so booking it as a cost rather than a discount usually matches reality better. Pick one treatment and hold to it across periods.
What happens when I sell in more than one currency?
You get two separate accounting events: translating the sale into your reporting currency at the transaction date, and recognizing a gain or loss when the money actually settles at a different rate. Both need to land in the ledger or your bank reconciliation will drift by small amounts forever.
Check your accounting plan before you turn on a second currency. Multi-currency handling sits on higher tiers in some ledgers, Xero for example places it on its Established plan, so the decision to sell internationally can quietly change your software bill.
When does inventory turn into cost of goods sold?
When the item sells, not when you buy it. Purchasing stock converts cash into an asset; the cost moves to the income statement only as units leave.
Landed cost is where growing stores lose accuracy. Freight, duty, inbound handling, and inspection all belong in the unit cost, and if you leave them out, every margin you report is optimistic. At a few dozen SKUs a spreadsheet can hold this. Past that, most operators move to a system that tracks cost per unit and reports profit by product, which is why tools offering SKU-level profit reporting tied to each Shopify payout exist in the first place. The point is not the software. The point is knowing which products actually make money.
When does cash basis accounting stop working?
Roughly when inventory becomes material to your business. Once you are holding meaningful stock, cash basis reports the month you paid a supplier as a terrible month and the month you sold the goods as a great one, which describes your bank account rather than your business.
The eligibility rules are set out in IRS Publication 538 on accounting periods and methods, and there are thresholds and exceptions that depend on your size and entity type. Bring it to your accountant before you switch. Changing method mid-stream has filing consequences.
How should I treat app subscriptions and platform fees?
They are operating expenses, recognized monthly as you use them. Annual plans get spread across the year as prepaid expense rather than dumped into the month you paid.
Give the app stack its own expense account. Stores accumulate subscriptions the way garages accumulate boxes, and a line item you review quarterly is the only thing that catches the reviews app you stopped using in March.
When should I hire a bookkeeper?
When closing the month takes you longer than the work you would otherwise do in that time, or when you cannot answer “what was my gross margin last month” within a day. Both are capacity signals rather than revenue signals.
Some owners cross that line while the store is still small because the catalog is complicated, and others run a much larger operation on two SKUs and a tidy process. Volume matters less than variability. Bundles, kits, multiple warehouses, international sales, and frequent promotions all add reconciliation work that scales faster than order count.
What does my accountant actually need at year end?
A short, boring list, delivered in one package rather than in nine emails across February.
- All Shopify payout reports for the year, plus the transaction detail behind them
- Bank and credit card statements for every account the business used
- An ending inventory count with the cost basis you used to value it
- Sales tax collected and remitted by jurisdiction
- Supplier invoices, including freight and duty documentation
- Loan and financing statements, including merchant cash advances
- Payroll and contractor payment summaries
- A list of anything unusual: an asset purchase, a legal settlement, an owner draw
The last item saves the most time. Accountants spend billable hours reverse engineering a transaction that one sentence from you would have explained.
