How It Works
How Netto Converts Shopify Payouts into Accounting Records
Shopify processes seller payouts on a rolling schedule — typically every business day or weekly. Each payout contains a net amount that bundles gross sales, returns, Shopify fees, and third-party transaction fees. Netto intercepts each payout, decomposes it into its components, and creates a balanced journal entry and accurate financial records that post directly to QuickBooks Online or Xero.
The Problem
The Problem With Recording Payouts as Revenue
When a Shopify payout of $1,847 arrives in your bank account, recording that $1,847 as revenue is incorrect for three specific reasons.
First, the payout nets out Shopify fees before depositing — the fees are expenses that offset gross revenue, not revenue reductions. Recording the net amount makes fees invisible in your books, understating expenses and overstating gross margin.
Second, the payout contains returns and refunds from the period. These must be separated from gross sales and posted to a returns and allowances account, not simply subtracted from a single revenue figure. Mixing them produces revenue numbers that no accountant can reconcile to source data.
Third, taxes collected through Shopify Payments are included in the payout net but are a liability — you collected them on behalf of a tax authority and owe them forward. Recording taxes as revenue inflates reported income and creates a tax liability that isn't visible in the books.
The result of recording payouts as revenue: overstated income, understated expenses, hidden liabilities, and financial statements that fail any standard accountant review or audit.
Payout Breakdown
Payout Decomposition — What Netto Actually Does
Netto retrieves the full line-item breakdown of each payout from Shopify's Payments API. Each component maps to a specific account in your QuickBooks Online or Xero chart of accounts.
Gross Sales Amount
The total revenue from orders included in this payout period. Posted as a credit to your sales revenue account.
Refund Amounts
Refunds processed during the payout period. Posted as a debit to a returns and allowances account, reducing net revenue accurately.
Shopify Subscription & Processing Fees
Shopify subscription fees and payment processing fees (typically 2.4%–2.9% + 30¢ per transaction). Posted as debits to a Shopify fees expense account.
Taxes Collected
Sales tax collected from customers through Shopify Payments. Posted to a sales tax payable liability account — it is not revenue and must not be recorded as such.
Shipping Label Costs
Shopify Shipping label charges deducted from the payout. Posted as a debit to a shipping expense account.
Adjustments
Disputes, chargebacks, and other miscellaneous adjustments. Posted to the appropriate account based on adjustment type.
Real Example
Example Payout Decomposition
Journal Entry Example
$2,401.00 Gross sales → Credit: Sales Revenue
− $312.00 Refunds → Debit: Returns & Allowances
− $189.50 Shopify fees → Debit: Shopify Fees Expense
− $52.27 Taxes collected → Credit: Sales Tax Payable
─────────────────────────────────────
$1,847.23 Net payout (bank deposit) → Debit: Bank Account
Netto creates one balanced journal entry with accurate financial records: debits total = credits total = $2,453.27.
Profit Dashboard
Real-Time Profit Visibility Inside Shopify Admin
Netto's profit dashboard reads from the same payout data used to generate journal entries. Every metric is derived from actual Shopify transaction data — not estimates or ad-spend projections.
The dashboard shows:
Gross Revenue
Total sales before refunds, fees, or any deductions, for the selected date range.
Refunds
Total refunds processed in the period, shown as a separate line so you can see return rate independently.
Net Revenue
Gross revenue minus refunds. This is the revenue figure your accountant expects to see at the top of a profit and loss statement.
Cost of Goods Sold
If you've entered product costs, Netto calculates COGS from order data. If not, this line shows zero — you can add costs at any time.
Gross Margin %
(Net Revenue − COGS) ÷ Net Revenue. Updated on each payout cycle using actual transaction data.
Net Profit
Net Revenue minus COGS and operating expenses you've recorded. The bottom-line figure for the period.
The dashboard updates automatically each time Shopify processes a payout. No manual refresh, no scheduled jobs to manage.
Integrations
QuickBooks Online and Xero Integration
OAuth authentication (one-time): You connect QuickBooks Online or Xero once via a standard OAuth flow. Netto stores the access token and refreshes it automatically — you never re-authenticate unless you explicitly disconnect.
Account mapping: During setup, you map each payout component (gross sales, refunds, Shopify fees, taxes, shipping) to an account in your chart of accounts. Netto provides sensible defaults that work for most setups. You can change any mapping at any time from the Netto settings page.
Journal entry format: Netto creates one journal entry per payout, dated the payout date. Each entry is balanced (debits equal credits). The memo field includes the Shopify payout ID for traceability. Entries appear in your accounting platform's transaction list and are included in all reports (P&L, balance sheet, trial balance) automatically.
Tax Handling
How Netto Handles Sales Tax
Taxes collected through Shopify Payments are a liability — you collected them from customers on behalf of a state or local tax authority, and you owe them forward. Netto records taxes collected to a sales tax payable account (a liability), not a revenue account. This ensures your income statement shows only actual revenue, and your balance sheet correctly reflects the tax obligation.
Netto tracks nexus exposure by state based on your order data. It shows you which states have order volume that may trigger sales tax nexus obligations, so you can engage a tax professional to assess whether you're required to register and remit. Netto does not file sales tax returns — it provides the visibility needed to have an informed conversation with a tax advisor.
Ready to See It in Action?
Install Netto from the Shopify App Store and start building accurate financial records for your store. 14-day free Growth trial. No credit card required.