Shopify Payments pays merchants in batches. A single payout can contain dozens of orders from several days, minus refunds, transaction fees, chargebacks and adjustments, sometimes with a reserve held back. Orders paid through PayPal, other gateways or manual methods arrive separately. Reconciling these flows is the main monthly job for a Shopify store’s books.
Reports to use
| Shopify report | What it gives |
|---|---|
| Payouts (Shopify Payments) | each payout and the transactions in it: charges, refunds, fees, adjustments |
| Sales by order or finance summary | gross sales, discounts, returns, delivery and taxes by period |
| Taxes report | VAT charged per period, by rate where configured |
| Billing invoices | Shopify’s own subscription and app charges |
Posting through a clearing account
Record sales from the sales report into a Shopify clearing account, then record each payout against it.
| Account | Debit | Credit |
|---|---|---|
| Shopify clearing | £5,040 | |
| Sales | £4,200 | |
| Output VAT | £840 | |
| Payment processing fees | £120 | |
| Shopify clearing | £120 | |
| Bank | £4,920 | |
| Shopify clearing | £4,920 |
Refunds reverse sales and VAT in the period they are made. A chargeback is posted as a reduction of the clearing balance (and an expense if lost), with the chargeback fee as a separate cost. The clearing account balance at month end should equal sales captured but not yet paid out, plus any reserve.
Making Shopify’s VAT agree with the return
Shopify calculates VAT using the tax settings of the store. Common sources of mismatch:
- Tax-inclusive prices with product tax overrides set wrongly, for example zero-rated children’s clothing taxed at 20%.
- Delivery taxed at a single rate on mixed baskets; see VAT on delivery charges.
- Gift cards: Shopify treats the sale of a gift card as a non-taxable liability and taxes the products when the card is redeemed, which matches the multi-purpose voucher rule, but a store selling only one type of product may need single-purpose voucher treatment instead.
- Discounts applied after tax in custom checkouts.
Each quarter, compare Shopify’s taxes report with output VAT in the ledger before submitting the VAT return, and investigate differences of more than a few pounds.
Fees and subscriptions
Shopify Payments transaction fees and third-party gateway fees are costs of selling; record them gross, not netted from sales. Shopify’s subscription and app charges arrive on separate billing invoices. Check each invoice for the issuing entity and VAT shown to decide whether to reclaim UK VAT or apply the reverse charge, as explained in VAT on marketplace and payment fees.
Month-end checklist
- Post sales, refunds and VAT for the month from Shopify reports.
- Match every Shopify Payments payout and every other gateway payout to the bank.
- Explain the clearing balance.
- Agree the VAT to the taxes report.
For running a Shopify store’s books in Nexbal, see Shopify bookkeeping with Nexbal; stores also selling on marketplaces should read multi-channel e-commerce accounting.