If you are doing your bookkeeping and you notice your Shopify Sales do not match your Quickbooks sales, there is something terribly wrong. This happens more often than you think and could lead to bigger issues if not resolved immediately.
This issues typically happen if you have little bookkeeping knowledge. Or you don’t understand how sales are captured in Shopify and how they should be treated in Quickbooks.
In this guide, we’ll break down 10 common reasons why Shopify Sales don’t match Quickbooks sales and explain what you can do to identify and fix the differences.
Reason 1: You Are Recording Shopify Payouts as Sales
This is the most common reason why your Shopify sales do not match your Quickbooks sales. It may be because you are recording your Shopify payouts as sales.
Shopify payouts represent the money you see in your bank account from Shopify after a period of sales. These payouts are the net of sales you receive from Shopify after they subtract their fees. This means that you record payouts as sales and even subtract taxes from it, your sales figure will be much lower than what it should be. Let’s look at an example.
Say you made $500 in gross sales from your Shopify store last week. On top of this, you collected $40 for shipping and $70.2 in HST sales tax in Ontario. In Shopify, money collected from sales will be $610.20. In Quickbooks, you would record sales as $540 and sales tax collected as a liability of $70.2. Now say Shopify collects $15 from sales as their fee. Your payout will be $595.20. In Shopify you will need to record the Shopify fee as an expense by subtracting it from the sales for it to reconcile with the payout. That is the correct way to record sales.
Now let’s look at an example where you record only the payout as sales. Say you record $595.20 you see in your bank as sales and included in this is sales taxes. In this case, the sale would be 526.73 and the sales tax would be $68.47. See the difference?
If you record your Shopify sales based on just the Shopify payouts you see in your bank, you fail to account for Shopify fees, actual gross sales, and actual sales taxes.
Reason 2: You are Recording Sales from a Payment Gateway instead of From Shopify Reports
Shopify allows you to have multiple payment gateways. For example you can connect your Shopify to Paypal or other merchants to collect money. These gateways record sales on their platform and if you only rely on them to record sales, you may miss sales collected in Shopify’s native gateway.
See, when you open a Shopify store, Shopify allows you to use it’s native payment gateway to collect funds as well as the ability to connect others to do the same. If you focus on the sales from the payment gateway you connected only, the sales you record in Quickbooks online may not account for all the sales.
A better way to record says if you use multiple payment gateways it to record sales as they are captured in your Shopify stores. This can be done by using your Shopify finance reports to record sales.
Reason 3: You Have An App Connected to Your Shopify and Quickbooks
Shopify can be connected to Quickbooks to record Shopify sales in Quickbooks automatically. However, if this is not mapped correctly, you may end up not recording the correct sales amount.
These connections generally give you the option to map sales, payouts, and fees associated to each shopify sales. If these options are not corrected map to give accurate results, you may end up recording Shopify sales wrong in Quickbooks.
When mapping a connection that allows you to record Shopify sales in Quickbooks, it important to do a test before you fully implement it. Also, map ensure all the events happening in Shopify are mapped correctly. Here are a few things to consider:
- Gross sales should link to an income account in Quickbooks
- Sales taxes should link to a sales tax liability account in Quickbooks
- Shopify fees should link to a fee expense in Quickbooks
- Payouts should link to a bank account in Quickbooks. Preferably the account receiving the Shopify payouts
- Discounts should link to an income account in Quickbooks
- Shipping income should link to an income account in Quickbooks
- Shipping expenses should link to an expense account in Quickbooks.
Once these are mapped out correctly, you should have no problem matching the sales in Shopify to your sales in Quickbooks.
Reason 4: You Recorded Sales Correctly But Your Sales Taxes Are Missing
It can happen that you recorded sales correctly but your sales in Quickbooks appear to be different from Shopify. In this case, you have to ask yourself, were sales taxes recorded in Quickbooks as well? If so, how are they captured in Quickbooks?
Sales taxes are not captured as part of sales in Quickbooks but rather as part of a liability account. This account is typically the account in which sales taxes are kept until they are filed and paid. Sales taxes are not part of sales. This means that when you are comparing your sales in Shopify versus in Quickbooks, you have to subtract the sales from your bottom line in Shopify to see if it matches. If it matches to the sales recorded in Quickbooks, and you can track the sales taxes in the liability account in Quickbooks then you recorded it correctly. Otherwise, you have to determine where you went wrong.
Reason 5: You Are Not Accounting for Payout Fees Correctly
As previously mentioned, payout fees are fees that are taken out of sales before Shopify transfers money collected from sales to your bank account. If you account for these fees by subtracting it from sales directly your sales may be lower than actual.
Payout fees are unrelated to sales so therefore should not be subtracted from sales. Instead they should be recorded separately from sales and account for an expense in Quickbooks. This allows the sales figures in Quickbooks to match the sales in Shopify while still accounting for payout fees correctly.
Reason 6: Your Reporting Period Does not Match
This is issue is very simple to correct. You have used a different reporting period to record your Shopify sales in Quickbooks. This is happens more commonly than you think. If it does happen, there’s no need to panic. You have to have to reverse what you originally recorded and re-record the sales for the correct period.
Conclusion to 6 Reasons Shopify Sales Don’t Match Quickbooks Sales
There you have it, 6 reasons your Shopify sales don’t match Quickbooks sales. Most of the reasons listed here are an easy fix as most are entry errors. If you are try fixing these errors and you are not able get your Shopify sales to accurately match Quickbooks, it is time to see professional help.
At Paperless Books, we help Shopify business owners fix issues related to recording Shopify sales in Quickbooks. Book a free consult today to see how we can help.