Running a Shopify store requires more than great products and marketing. Proper accounting helps you understand profitability, stay compliant with taxes, and scale your business smoothly. Whether you’re a new seller or an established brand, accurate bookkeeping is essential.
1. Why Accounting Is Important for Shopify Sellers
Good accounting allows Shopify store owners to:
- Track real profits after fees and expenses
- Monitor cash flow and payouts
- Prepare accurate tax returns
- Control inventory and pricing
- Avoid tax and compliance issues
Without proper accounting, sellers risk incorrect reporting and unexpected tax liabilities.
2. Tracking Shopify Sales Correctly
Shopify sales reports show:
- Gross sales
- Discounts and refunds
- Net sales
- Payment method details
Best practice:
Record gross sales as revenue, and record Shopify fees, payment processing fees, and apps as expenses.
3. Managing Shopify Fees & Expenses
Common Shopify-related expenses include:
- Shopify subscription fees
- Payment gateway fees (Shopify Payments, PayPal, Stripe)
- App subscriptions
- Advertising and marketing
- Shipping and fulfillment costs
These should be categorized properly to reflect accurate profit margins.
4. Sales Tax Accounting for Shopify Stores
Shopify Sales Tax Collection
- Shopify can calculate and collect sales tax at checkout
- Sellers must configure tax settings correctly
- Tax is based on customer location
Seller Responsibility
- Determine where you have sales tax nexus
- Register in applicable states
- File sales tax returns (even if zero tax is due)
- Keep sales tax separate from revenue
5. Inventory & Cost of Goods Sold (COGS)
Inventory accounting includes:
- Product purchase cost
- Freight and import duties
- Storage and fulfillment costs
Accurate inventory tracking ensures correct COGS and profit reporting. FIFO is commonly used in the US.
6. Income Tax Compliance
Shopify income is subject to:
- Federal income tax
- State income tax (where applicable)
- Self-employment tax (for sole proprietors)
Business structure (LLC, S-Corp, etc.) impacts how taxes are calculated and reported.
7. Bank Reconciliation & Payouts
Shopify payouts should be:
- Reconciled with bank deposits
- Matched against sales and fee reports
- Reviewed regularly to catch discrepancies
This helps ensure financial accuracy.
8. Using Accounting Software with Shopify
Popular tools integrate directly with Shopify to:
- Automate sales and fee entries
- Sync inventory and COGS
- Reconcile payouts automatically
- Generate financial reports
Professional accounting support is recommended for high-volume or multi-state sellers.
9. Common Accounting Mistakes Shopify Sellers Make
❌ Recording net payouts instead of gross sales
❌ Treating sales tax as income
❌ Ignoring refunds and chargebacks
❌ Mixing personal and business finances
❌ Not reconciling payouts
Conclusion
Accounting for a Shopify store is a critical part of running a successful e-commerce business. With accurate bookkeeping, proper tax handling, and organized records, Shopify sellers can focus on growth while staying compliant.