Bookkeeping for Shopify Sellers
Your Shopify payout is not your revenue. Here is how to book gross sales and fees correctly, why you remit your own sales tax, how to track inventory and COGS, and what the 1099-K really means.
Running a Shopify store, the bookkeeping mistake that bites hardest is treating your payout as your revenue. The deposit that hits your bank is already net of fees and refunds, so booking only that number understates both your sales and your deductions. Here is how to keep clean books for a Shopify business.
Book the gross, not the deposit
A Shopify payout is your gross sales minus Shopify Payments fees, refunds, and chargebacks. For accurate books you record the gross sales as revenue, then record the processing fees, refunds, and chargebacks separately as their own lines. Booking just the net deposit hides revenue, buries deductible fees, and makes your sales tax numbers impossible to reconcile. It is the same gross-versus-net trap that trips up Etsy sellers.
You remit your own sales tax
This surprises a lot of sellers: unlike Amazon or Etsy, a standalone Shopify store is not a marketplace facilitator, so Shopify does not remit sales tax for you. It can calculate and collect it, but registering, filing, and paying it to each state is on you. You owe it wherever you have economic nexus, which commonly kicks in around 100,000 dollars in sales or 200 transactions in a state, though the thresholds vary.
Track inventory and cost of goods sold
If you sell physical products, treat unsold inventory as an asset and expense it as cost of goods sold only when an item sells. That is what turns your deposits into real profit rather than a guess. Your Shopify subscription, apps, transaction fees, shipping, packaging, and ads are all separately deductible expenses.
The 1099-K, and why it doesn't matter much
Shopify Payments issues a 1099-K once you pass the federal threshold, which the 2025 tax law set back to more than 20,000 dollars and more than 200 transactions. Some states use lower thresholds, so you might get one sooner. Either way it changes nothing about what you owe: all your sales income is taxable and reportable whether or not a form ever shows up.
Turn payouts into real numbers
When your gross sales, fees, and refunds are each recorded, your books show true profit instead of just what landed in the bank.
Start freeHow Vuuv helps
Vuuv does not connect to Shopify directly today, but the clean way to track a Shopify business still works well. Connect the bank account where your payouts land, then record each payout as gross sales with the fees and refunds split out, and categorize your subscription, shipping, and ad costs as they come in. For sellers on Amazon or eBay, Vuuv does connect to those platforms directly to pull in sales and fees.
Frequently asked questions
Is my Shopify payout the same as my sales revenue?
No. A Shopify payout is the net deposit after Shopify Payments fees, refunds, and chargebacks are subtracted. For accurate books you record your gross sales as revenue and then deduct fees, refunds, and chargebacks separately, never just book the deposit.
Does Shopify collect and remit sales tax for me?
Shopify can calculate and collect sales tax, but it does not remit or file it for you. Unlike a marketplace facilitator such as Amazon or Etsy, Shopify is not the merchant of record on your own store, so you are responsible for registering, filing, and remitting sales tax in every state where you have nexus.
Will I get a 1099-K from Shopify, and at what amount?
For 2025 and forward, the federal threshold reverted to more than 20,000 dollars in gross payments and more than 200 transactions, so Shopify Payments issues a 1099-K only when you exceed both. Some states require one at lower amounts. Either way, you must report all your sales income whether or not you receive a 1099-K.
How do I handle inventory and cost of goods sold for a Shopify store?
Treat unsold inventory as an asset and expense it as cost of goods sold only when items sell. You compute COGS as beginning inventory plus purchases minus ending inventory, and report it in Part III of Schedule C. Tracking inventory accurately is what lets you report true profit rather than just deposits minus expenses.
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This article is general information, not tax advice. Tax rules change and every situation is different. Confirm the details against current IRS guidance or talk to a qualified tax professional before you file.