How do I manage Shopify deposit payments to avoid double-counting sales income?

I have successfully integrated my Shopify eCommerce sales with my Quickbooks system. 

1) My Shopify sales have been selected to "deposit to Shopify Holding" - is this correct treatment? See attached image QBS1

2) How should I then manage the payments that I then receive from Shopify?

a. It is currently set to deposit to BankAccoun1 (this is where it is received)
b. Is is currently being classed as "Sales of Product Income" 
c. VAT is also classed at 20%S

See attached image QBS3

What I think I need to do is offset the Shopify holding account transactions previously made. 

3. The effect of the above two is that the VAT report seems to be double counting both the true sales income (shopify sales) and also the deposits from Shopify which I don't want to count as income (see attached image QBS2) Instead I want to reduce accordingly the Shopify holding account balance. 

How do I do this?



2 people found this helpful

Hey kritsana2712,

Thanks for the confirmation.

You are correct in that QuickBooks Online will be counting these transactions twice. Essentially it is working as designed as the transactions have been duplicated.

When you have recorded the initial transaction to the Shopify Holding account, you have assigned this with the correct rate of VAT and full transaction amount. Looking at the screenshots you have included, it appears that the amount deposited when funds are received from Shopify is the full amount minus a fee and the associated VAT code. This is the incorrect way to record the transaction.

If this is the case, what you need to do is use a Sales Receipt to record the initial transaction with VAT to Shopify Holding account and when the funds are received into you bank account minus fees, record a Bank Deposit to move the funds from the holding account into the bank and include a negative transaction line to minus off any fees paid. When created in this way, the Bank Deposit transaction will then match against your online banking feed.

To do this, follow the below steps using the transaction you have included on the screen shot as an example.

  1. Record the initial Sales Receipt as the transaction occurs with the full amount paid by the customer £60 with the appropriate VAT code to the Shopify Holding account.
  2. Next, select the option for Bank Deposit from the Create + menu.
  3. On the next screen, you will see all of the Sales Receipts that have been recorded to Shopify Holding account listed
  4. Enter the correct date of when the funds have been received into your bank account
  5. Tick the box beside the Sales Receipt/s that are being settled to the bank
  6. If you need to enter a fee to reduce the amount received into the bank, scroll to the bottom of the screen and you will see the option to Add New Deposits
  7. Enter the details of Received from and select your fee account from the Account box.
  8. Lastly enter the amount of fee paid as a minus figure, eg -1.34.
  9. Save and close the transaction.

You can now go to your Banking tab and you will see that the depsoit shows as a Match to the entry on your banking feed. Click Match to match the two together instead of Add.

By doing these transaction in this manner, you will ensure only one sale is recorded with a single amount of VAT paid and the funds received into your bank account will correctly match your bank statement.

Let me know if you have any queries. Or, if you'd like to go through this over the phone, you can call our dedicated team who will be happy to assist you. Our contact details can be found here along with our opening hours.

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