A Shopify payout is not your sales. It is what customers paid, minus processing fees, refunds, and chargebacks, sent to your bank several business days after the orders came in, so a deposit will rarely equal any day's sales. When the deposit doesn't match the payout Shopify shows, check timing, a retried payout, a debit from your account, and currency conversion.
This post covers Shopify Payments, Shopify's own payment processor, for a US store.
What Comes Out of a Payout Before It Reaches My Bank?
Shopify's help center lists what can lower a payout. The ones most stores see are these:
- Processing fees. They are deducted before the payout is sent.
- Refunds. A refund comes out of your next available payout.
- Chargebacks. A chargeback is a payment the customer's bank reverses after the customer disputes it. Shopify deducts the payment and a dispute fee.
- Reserves. A reserve is money Shopify holds back for a time to cover possible disputes.
Here is an example with made-up numbers for one weekend:
- Customer payments: $6,420.00 (sales of $6,000.00 plus $420.00 of sales tax)
- One refund: minus $321.00 (a $300.00 sale plus its $21.00 of sales tax)
- Processing fees: minus $188.00
- Payout: $5,911.00
Why Does the Deposit Arrive Days Later, and Sometimes in the Next Month?
Shopify's payout timing page lists a minimum settlement time of three business days for US stores, and it can be longer for some stores. Settlement time is the wait between the moment a customer's payment is captured, meaning collected, and the day that money is available to pay out. Payouts aren't processed on weekends or public holidays, and payments captured on Friday, Saturday, and Sunday are grouped into one payout. After Shopify sends it, your bank can take one to three more days to show it.
Black Friday this year is November 27. If your store pays out daily on a three-business-day settlement time, Shopify's rule puts payments captured that Friday, Saturday, and Sunday into one payout around Wednesday, December 2. The biggest weekend of November shows up on December's bank statement.
What If the Deposit and the Payout Still Disagree?
Open the payout in your Shopify admin, under Finance. Shopify's page on viewing payout details shows the breakdown: charges, refunds, adjustments, fees, reserves, and retried payouts. A status of "Deposited" means Shopify has sent the money, not that your bank has posted it. And for US stores, when a refund is larger than the balance available to cover it, Shopify debits your bank account outside the regular schedule, so you may see a withdrawal instead of a smaller deposit.
How Should This Go in My Books?
Under US GAAP, the accounting rules US companies follow (the revenue standard is ASC 606), revenue is recognized when control of the product passes to the customer, in the amount you expect to be entitled to. That is the sale, not the payout. Sales tax is a liability, and GAAP lets a seller elect to keep it out of revenue. Merchant fees are an expense.
Here is the entry our Payout Elf is built to write for that weekend, dated in November, when the sales happened:
| Account | Debit | Credit |
|---|---|---|
| Cash on its way from Shopify | $5,911.00 | |
| Merchant fees | $188.00 | |
| Sales returns | $300.00 | |
| Sales tax payable | $21.00 | |
| Sales | $6,000.00 | |
| Sales tax payable | $420.00 | |
| Total | $6,420.00 | $6,420.00 |
Memo from the Payout Elf: Black Friday weekend, tied out to the penny. Nobody was woken.
When the deposit lands in December, the $5,911.00 moves from "on its way" to the bank, and the two match.
A2X does this same job, and does it well. It posts one summarized entry per payout to QuickBooks or Xero and splits a payout that spans two months. But A2X says plainly that it does not replace QuickBooks or Xero. It is a separate subscription that sits between Shopify and your books, and it needs your product costs fed in from somewhere else. Eleven Elves is built to be the books, with the payout work and your inventory in the same system, so there is no bridge to pay for or keep in step. We aren't open yet, so today A2X is the tool that exists.
Tax can differ from GAAP on timing. GAAP uses accrual accounting, which records a sale when it happens. A business on the cash method for tax reports income when it is actually or constructively received. Ask your CPA which method applies to you. Also, Form 1099-K, the form a payment processor files with the IRS, reports the gross amount of payments, not adjusted for fees or refunds, so it won't match your deposits either.
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JJ
This article is general information, not tax or accounting advice. Check with your accountant about how it applies to your business.