How to Reconcile Shopify Payouts in Your Books: A Guide for Canadian Sellers
- Targeted Accounting
- Bookkeeping
Table of Contents
Why Shopify Payouts Never Match the Sales Report
Every Shopify seller hits the same wall. The sales report says one number, the bank deposit says another, and the gap is made up of refunds, processing fees, chargebacks, sales tax and timing. If you record each deposit as sales, your revenue is understated, your fees disappear and your GST/HST return is built on the wrong figures.
The fix is a standard bookkeeping method called a clearing account. It takes a little setup and then works the same way every payout. This guide walks through it with a worked example. It is part of our guide to ecommerce bookkeeping in Canada.
What Is in a Shopify Payout
Open any payout in Shopify and you will see it is built from several pieces:
- Gross sales for the orders included, after discounts.
- Shipping you charged customers.
- Sales tax collected, which depends on where each customer is.
- Refunds, including the tax and shipping refunded.
- Processing fees deducted by Shopify Payments.
- Chargebacks, dispute fees and reserves, if any.
- Adjustments, such as reversed disputes or currency differences.
Payouts also lag behind orders by a few business days, so a sale on 30 June can arrive in July. That timing difference is another reason deposits and sales reports never line up month by month.
The Clearing Account Method, Step by Step
Create a current asset account called Shopify Clearing. Think of it as money Shopify is holding for you. Then, for each payout (or each day of sales):
- Record the sale: debit Shopify Clearing for the total charged to customers, and credit sales, shipping income and sales tax payable.
- Record refunds: debit sales returns and sales tax payable, credit Shopify Clearing.
- Record fees: debit merchant fees expense, credit Shopify Clearing.
- Record the deposit: debit the bank, credit Shopify Clearing.
Here is one payout worked through for an Ontario seller charging 13% HST:
| Item | Amount | Recorded as |
|---|---|---|
| Product sales | $1,800.00 | Sales |
| Shipping charged | $100.00 | Shipping income |
| HST collected | $247.00 | HST payable |
| Refund (one item plus HST) | -$113.00 | Sales returns $100, HST payable $13 |
| Processing fees | -$62.40 | Merchant fees |
| Payout deposited | $1,971.60 | Bank |
After all four entries, the clearing account is back to zero, your sales are recorded at $1,800, your fees show up as an expense and your HST payable is exactly what you owe on these orders.
Getting Sales Tax Right on Shopify Orders
Shopify calculates tax on each order based on where the customer is, so a single payout can include 13% HST from Ontario, 5% GST from Alberta and 15% HST from Nova Scotia. Your books need to keep those apart, because your GST/HST return reports the tax you collected and the PST in some provinces is filed separately.
Use Shopify’s taxes report to split each period’s tax by province and record it to the right liability accounts. Sales to customers outside Canada are usually zero-rated. Our GST/HST guide for small business covers registration, rates and filing.
Other Channels and Payment Methods
Every place money is collected needs its own clearing account and its own reconciliation: Shopify Payments, PayPal, Shop Pay Installments, Amazon, Etsy and any wholesale invoices paid by e-transfer. Mixing channels in one account is the fastest way to end up with a balance nobody can explain.
Gift cards are another trap. Selling a gift card is not a sale yet; it is a liability until the card is redeemed, and sales tax applies when it is used, not when it is bought.
Shopify Bookkeeping Apps That Do the Heavy Lifting
Recording every order individually floods your accounting software and is hard to reconcile. Most sellers are better served by a connector that posts one summary entry per payout, already split into sales, tax by province, refunds and fees, into QuickBooks Online or Xero. You then only have to match each summary to its bank deposit.
Whichever tool you use, review the clearing account balance at every month end. A balance that keeps growing means something is not being recorded. Our guide to accounting software for small business in Canada covers how to connect your store, and inventory and cost of goods sold are covered in our ecommerce bookkeeping guide.
Want Your Store's Books Reconciled Every Month?
We set up clearing accounts, sales tax by province and payout reconciliations for Canadian online sellers, then keep them current every month. See our bookkeeping services or get in touch.
