A2X generates Shopify summary entries, one for each payment gateway. For all transactions processed via Shopify Payments, the A2X summaries will match your Shopify Payments deposits in your checking account. So there is no need to use clearing accounts for the Shopify payouts.
For sellers who offer multiple payment options, or process manual orders in Shopify, a clearing account will be used to account for the non-Shopify payment transactions.
What is a clearing account?
A payment clearing account is for tracking undeposited funds or funds in transit from your payment provider to your checking account. Similar to the concept of a suspense account or a holding account, clearing accounts exist as an account to record an entry that is waiting to be categorized. The clearing account has to be set up as a Current Asset account in the accounting system.
When using a clearing account for Shopify sellers, we use clearing accounts to record the money you expect to receive from a payment provider that has not yet been deposited in your checking account.
Will my deposits match with the Shopify Summary Payouts?
Most payment providers will deduct a processing fee before depositing funds. In addition to fees there is generally a timing difference between the date the funds were collected from the buyer, and the date the payments are deposited into the checking account. This means the majority of your Shopify transactions summaries for Paypal, Stripe, Authorize, Amazon Pay and other payment gateways will not match the deposits in your checking account. Disbursement of funds happens at different timings depending on the payment processor or sales platform processing the payments.
How many clearing accounts do I need?
Shopify sellers who are offering multiple payment options can use one clearing account to account for all non-Shopify payment providers. However, the majority of our users prefer to set up separate clearing accounts for each payment provider which makes reconciling against each payment provider's monthly statement easier.
Three steps to reconcile the payment clearing accounts:
Note: The reconciliation process mentioned below is a general suggestion. Please consult with your financial advisor or accountant to ensure you have the correct mappings and reconciliation process for your business financials.
Step 1: Post the A2X summary entry to the accounting system (see example below). This step generally debits the clearing account
Step 2: Categorize the deposits in the accounting system to the corresponding clearing account to credit the clearing account.
Step 3: For each payment processor we recommend generating a monthly statement to record any processing fees and other transactions that have not been accounted for from the A2X/Shopify integration. For example, you may have disputes and chargebacks processed directly through the payment platform, which are transactions outside of the Shopify integration and need to be recorded manually.
Note: There is generally a balance in the clearing accounts at month-end to account for the funds in transit to the checking account.
A2X payouts and how they affect your accounting system
Each A2X Shopify summary for 3rd party payment processors will include the sales, refunds, shipping income, discounts and sales tax collected and the payment amount collected.
Below is an example of an A2X for Shopify Summary of transactions processed via Stripe. The Stripe Sale and Refund Gateway transactions have been mapped to a Stripe Clearing Account in this example. Think of the clearing account as a temporary account to hold the payment processed amount.
Details of the payout for $6519.49
When this entry is posted to the accounting system, the Stripe Clearing account will be debited by $6519.49, along with all corresponding sales, discounts, refunds, shipping and sales taxes will be recorded.
Example Stripe Clearing account register in QuickBooks Online, Xero or Sage
Example Profit & Loss | Balance Sheet Statement entries
The next step is to credit the clearing account by categorizing the payment deposits from the checking account to the corresponding clearing account. This will reduce the $6519.49 balance. If you received $5456.80 in deposits, then the balance in the clearing account would be reduced to $1092.68.
The last step is to account for the fees if this step applies to you. If your Stripe fees for this month are $500.00, then credit the clearing account by this amount and the balance remaining will be $592.68 in the Stripe clearing account. For many sellers, this remaining balance will match the funds in transit and will be accounted for once the deposits clear the checking account.
This method of using a clearing account to account for the funds in transit from your payment provider gives you accurate Shopify sales and tax entries, without the burden of order by order reconciliations, or time-consuming entries to match the Shopify data directly with each 3rd party payment deposits in the checking account.
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