Why the numbers never line up
Shopify says you sold 94,000 dollars this month. Stripe deposited 86,400. Your bank shows 84,100. None of these is an error, and all three belong in your books, but they are measuring different things at different points in time.
The gap is made of processor fees, refunds, chargebacks, sales tax collected on behalf of states, and the delay between a sale and its payout. A business that records only the bank deposit loses visibility into every one of those, and understates both revenue and expenses by the same amount.
Record gross, then subtract
The single most important rule in ecommerce bookkeeping: record the gross sale, then record the deductions as their own lines. Never book the net payout as revenue.
A 100 dollar order should produce roughly this:
- Revenue of 100 dollars, gross.
- Sales tax collected recorded as a liability, not revenue, because it is not your money.
- Processing fees of around 3.20 as an expense.
- Shipping charged to the customer as revenue, shipping paid to the carrier as cost of sales.
Booking the 96.80 net deposit as revenue makes your margins look better than they are and makes your processing costs invisible. You cannot negotiate or optimise a cost you never recorded.
The payout timing problem
Stripe, PayPal, Shopify Payments and Amazon all batch payouts on their own schedules, and those batches rarely align with month end. A sale on the 30th may settle on the 3rd. If you record revenue when cash lands, you push revenue into the wrong month every single month.
The fix is an undeposited funds or payment processor clearing account. Sales post to it when they happen; payouts clear out of it when they arrive. The balance at month end is simply sales made but not yet paid out, which should reconcile to the processor's own pending balance. If it does not, something is missing.
Refunds, chargebacks and the reserve
A refund is not a negative sale in the month it is issued. If you sold it in March and refunded in May, March was overstated. For most businesses the volume is small enough that recording refunds as they occur is acceptable, but if returns run above roughly five percent of sales, a returns reserve gives a truer picture of what you actually earned.
Chargebacks need their own account rather than being lumped with refunds. They carry fees, they signal fraud or fulfilment problems, and tracking them separately turns an accounting line into an operational warning.
Sales tax is a liability, not income
Tax collected at checkout is money you hold on behalf of a state. It should never touch your revenue line. With marketplace facilitator rules, some platforms remit on your behalf and some do not, and the split varies by state and by channel. Businesses that record everything as revenue and sort it out at filing time consistently discover they have spent money that was never theirs.
Inventory and true margin
Cost of goods sold must move in step with sales, not with purchasing. Buying 40,000 dollars of stock in one month is not a 40,000 dollar expense that month; it becomes expense as the goods sell. Landed cost matters too: freight, duty and fulfilment per unit can be twenty percent of a product's true cost, and leaving them out of COGS produces a margin figure that will not survive contact with reality.
A workable month-end routine
- Reconcile each sales channel's gross sales to the clearing account.
- Reconcile each processor payout to the bank, with fees expensed.
- Confirm sales tax collected matches the liability account.
- Adjust inventory and COGS for units sold at landed cost.
- Review refunds and chargebacks as a percentage of sales, by channel.
Done consistently, this takes a few hours a month and gives you true margin by channel. Done once a year, it is a reconstruction project with guesses in it.
TallyWise provides this as part of our ecommerce accounting services. Book a call to talk through your situation.
