The payout is not the revenue
When Stripe, PayPal or Shopify Payments pays out, several things have already been taken off. These include platform fees, payment processing fees, refunds from the same period, chargebacks and the currency conversion spread. Some providers also hold back a rolling reserve for a while.
If you book that single figure as revenue, you understate your turnover and hide your real fee cost. You also end up with a VAT return that does not match your sales data.
Done properly, one payout becomes several entries: gross sales, fees as an expense, refunds against the original sale, and the bank movement itself. It is more work. It is also what makes your accounts hold up when the Tax Board asks questions.
A practical test: does your profit and loss show a single line called "Stripe income"? Then your VAT return is almost certainly wrong. VAT is calculated on the gross sale, not on what reached your account.
Cost of goods you never touch
In dropshipping you never hold stock, so people assume there is no cost of goods to account for. There is. The supplier invoice is your purchase, and it has to be matched to the sale it relates to. Otherwise the margin figure means very little.
Suppliers on AliExpress, CJ or a private agent often issue nothing that looks like a compliant invoice. That is a real problem, both for deducting input VAT (the VAT you paid on purchases) and for proving the expense at all. Ask your supplier for proper documents before your volume grows.
Refunds are the most common single error
A refund is not an expense. It reverses a sale, so it has to be reported in the same country and at the same VAT rate as that sale.
Say a German customer is refunded and the credit is booked as a general cost. The German VAT you already paid through OSS (the EU One Stop Shop return for sales to consumers in other EU countries) is then never recovered. Across a year of returns, that is real money.
Multi-currency
Sales in one currency, supplier payments in another, a payout in a third: this is normal in dropshipping. Each leg needs converting at the correct rate for the correct date, not at whatever rate the payment processor used. The difference between the two is an exchange gain or loss. It belongs in the accounts as such, rather than quietly distorting your margin.
Chargebacks and disputes
A chargeback happens when a customer disputes a card payment and the money is taken back. It removes money weeks after the sale, often in a different VAT period. Treat it as a reversal tied back to the original transaction, and book the dispute fee as a separate cost.
Left as an unexplained bank debit, a chargeback overstates profit in one month and understates it in another.
What good bookkeeping looks like here
- Sales imported from the store or marketplace, not worked out from bank deposits.
- Payout reconciliations that tie gross sales minus fees minus refunds to the exact amount received.
- Refunds matched to the original order, and so to the original country and rate.
- Supplier invoices attached to the orders they fulfilled.
- A quarterly sales report split by destination country and VAT rate, ready for the OSS return.
- Fees, ad spend and app subscriptions treated as reverse charge where the supplier is outside Estonia. Reverse charge means your company declares the VAT on them itself.
The signs your books are not keeping up
- Turnover in your accounts does not match turnover in the platform dashboard.
- The VAT return is prepared from bank movements rather than from sales data.
- Nobody can tell you the gross margin on a given product line.
- Advertising invoices from outside Estonia appear with no VAT treatment at all.
- You find out you crossed the €10,000 distance selling threshold when the year is already over.
None of this is unusual. It is simply a different kind of bookkeeping from a company that issues fifty invoices a month. It works best when it is set up that way from the start, rather than rebuilt at year end.
Frequently asked questions
Can I just book my Stripe payouts as income?
No. The payout is already net of fees, refunds and chargebacks, so booking it as revenue understates turnover and gives you an incorrect VAT return. Sales must come from the order data, with fees and refunds recorded separately.
Do I need cost of goods if I never hold stock?
Yes. The supplier invoice is a purchase and should be matched to the sale it fulfilled. Otherwise your margin figures mean little, and without proper documents the expense may not be deductible.
How should refunds be recorded?
As a reversal of the original sale, in the same country and at the same VAT rate. If it is booked as a general expense, the VAT already paid on that sale is never recovered.
Tagsdropshipping accountingShopify bookkeepingStripe reconciliatione-commerce
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