Shopify accounting: Recording Shopify Payments, fees and reconciliation
Laura Tien
November 15, 2023
If you’re using Shopify Payments as your main payment gateway and you’re looking to understand how to manage your accounting and bookkeeping, this article is for you. We’ll go through what Shopify Payments is, how to make sure you’ve set it up correctly, the fees involved and how to properly manage your books when using it.
Feel free to use the clickable links below to skip to the sections most relevant to you. Want a more thorough rundown? We’ve just released a 54-page guide on how to spend less than an hour on your Shopify accounting every month. You can download it entirely for free, no email required and no strings attached.
What is Shopify Payments and how do you set it up?
Shopify Payments is Shopify’s own payment processor or payment gateway. Though they still allow users to link their store to third-party solutions such as PayPal and Authorize.net, Shopify Payments helps to cut out the middleman. Shopify partnered with Stripe, a third-party payment processor, to integrate their system into Shopify and to rebrand it as Shopify Payments.
Essentially, when someone makes a payment, Shopify Payments communicates with their bank, checks that the payment is legitimate and confirms that the bank will make the payment. It typically takes a couple days for the payment to be processed completely before it reaches your bank account.
Before we start, double check that Shopify Payments is available in your region. To see your payment processing settings, go to Settings > Payments and follow the prompts if you’ve never set one up or add Shopify Payments as a new option. You’ll need to have your personal and business details ready.
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What fees are involved with using Shopify Payments?
The fees you pay for Shopify Payments will depend on what Shopify plan you’re on. You don’t need to pay any extra transaction fees, the same way you would for third-party solutions, however, you need to pay credit card processing fees, as you would for any payment gateway, and you need to pay fees for chargebacks and currency conversions.
- Basic Shopify Plan: 2.9% + 30¢ USD for online credit card payments and 2.7% + 0¢ USD for in-person credit card payments
- Shopify Plan: 2.6% + 30¢ USD for online credit card payments and 2.5% + 0¢ USD for in-person credit card payments
- Advanced Shopify Plan: 2.4% + 30¢ USD for online credit card payments and 2.4% + 0¢ USD for in-person credit card payments
If you use a third-party payment processor instead of or on top of Shopify Payments, you’ll have to pay an added transaction fee. The fee is 2.0% for Basic, 1.0% for Shopify and 0.5% for Advanced Shopify. For reference, if you use PayPal, Square or Authorize.Net, you would pay a payment processing fee, generally 2.9% + 30¢ USD, as well as Shopify’s transaction fee.
How do I record payment transactions and fees?
You’ll be happy to hear that you can entirely automate the process of recording your daily Shopify orders. If you’re using either Xero or QuickBooks Online as your accounting software, you can use Amaka’s Shopify + Xero, Shopify + MYOB or Shopify + QuickBooks Online accounting integration to connect your store to your accounting software.
The integration will automatically run a daily sync of your sales data from Shopify into a summarised invoice. It captures all payment transactions including gift cards, tips, tax and payment fees. For those using Shopify Payments, the integration will include a breakdown of Shopify Payments settlement costs and other fees.
To get started, you can book a free, 1-on-1, Zoom call below with one of our Integration Specialists. They can walk you through one of the Shopify accounting integrations or help you set it up.
What is a clearing account and why do I need it?
Clearing accounts are temporary accounts to record transactions in a timely manner. These accounts are used to easily enter payments received before the money is deposited into your bank account. When the payments are deposited, you offset the clearing accounts to remove the temporary balance and post it to a permanent account.
In order to keep track of payments that have been made from customers, but haven’t been paid out by Shopify, the Amaka accounting integration syncs the total payments received and allocates it to an account called the Shopify Payments Balance account (automatically created by the integration).
Once the payout is made by Shopify to your bank account, the integration syncs the total transfer made by Shopify as a bank transfer from Shopify Payments Balance to the business’s bank account. This ensures everything is balanced.
How do I do bank reconciliation when using Shopify Payments?
In this section, we’ll give a brief overview of how to do bank reconciliation when using Shopify Payments along with either our Shopify + Xero or Shopify + QuickBooks Online accounting integration. The steps below assume that you already have one of these accounting integrations set up. If you need support, feel free to book a support session with one of our experts.
The first step is to connect your online banking in Xero or QuickBooks Online through bank feeds. Bank transactions will automatically flow into your accounting software. You’ll have the option to import existing transactions as well.
Now that you have your Shopify data flowing in through the accounting integration and your bank transactions flowing in through a bank feed, reconciling payments becomes extremely easy. Amaka’s integration matches up payment transactions and bank transactions automatically, making the process much easier.
If you’re using Xero, all you have to do is go to the Reconcile tab in Xero and confirm that transactions have been matched correctly and click the OK button. For QuickBooks Online users, go to Accounting > Reconcile and confirm matches by clicking the Match button. For both accounting software, you can do this in bulk on a regular basis, such as every month.
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Our Integration Specialists can also take care of reconciling your books.
Key takeaways on bookkeeping when using Shopify Payments
If you’re looking for ease and efficiency, using Shopify Payments alongside an Amaka accounting integration is definitely the way to go. Not only does it save you from having to deal with third-party payment processes, you can entirely automate the data entry process and fast-track your bank reconciliations. It’s a no brainer for getting your books in order!