The sale
Full price, not the margin
When you set the price, take the payment and handle returns, the whole order is your sale and the supplier's charge is a cost. Recording only the margin hides both.
Industries · Ecommerce · Dropshipping
Dropshipping accounting for stores that pay twice for every sale.
Excello's dropshipping accounting keeps the books for dropshipping and print-on-demand stores: every payout matched to the bank, supplier and ad costs in their own accounts, and the month closed within five business days.
You pay the supplier for the product and the ad platform for the buyer. Your books should show what is left after both, inside your own QuickBooks, Xero or Odoo.
- Dropshipping
- Payouts matched daily
- Supplier and ad costs kept apart
- Tax returns US, UK and UAE
- Closed within five business days
What is dropshipping accounting?
No stock, three bills
Dropshipping accounting is the bookkeeping of a store that sells products it never holds: each sale recorded at full value, the supplier's charge as cost of goods sold, and the fees and ad spend in between.
With no stock to count, it looks simpler than other ecommerce. It isn't. The customer's money arrives with the store payout days later, the supplier charges your card the moment you place the order, and the ad platform charges as you spend. Three streams, three timetables, one profit figure that has to be right.
Dropship accounting entries for one order
One order, four entries
One $40 order, recorded the way it happens. The figures match the dropshipping example in the break-even calculator.
| What happens | Debit | Credit | Amount |
|---|---|---|---|
| The customer pays for the order | Store clearing account | Sales | $40.00 |
| The supplier charges your card for the product and shipping | Cost of goods sold | Credit card | $17.00 |
| The store pays out, less its fees | Bank $38.00, payment fees $2.00 | Store clearing account | $40.00 |
| The ad platform charges your card | Advertising | Credit card | $14.00 |
| Left from the order | $7.00 |
The store clearing account holds the sale until the payout arrives, so a payout that covers many orders still matches the bank to the cent. Ad spend here is the average per order; the platform bills it as you spend.
Dropshipping accounting treatment: the three things to get right
Treatment
The cost
Supplier charges are cost of goods sold
Product and shipping charges from suppliers such as AliExpress, CJdropshipping, Spocket or Zendrop go to cost of goods sold, apart from ad spend and software.
The refunds
Two sides to every return
A refund to your customer and a refund from your supplier are separate events. Each is recorded in its own account, so a lost parcel shows what it really cost.
Dropshipping accounting tools and apps can post orders to your ledger. Someone still has to check the supplier charges, refunds and payouts against each other, which is the work Excello does.
How do taxes work with dropshipping?
Dropshipping taxes
Source: IRS Instructions for Form 5472 (Rev. December 2024). Checked 22 September 2026.
Print on demand works the same way
Printful and Printify
A print-on-demand store is dropshipping with a printer as the supplier. The customer pays you, Printful or Printify charges you for printing and shipping, and that charge is your cost of goods sold.
Payouts, fees, ad spend and refunds are handled exactly as above, so a store that mixes dropshipped products with printed ones still gets one set of books and one profit figure.
What dropshipping bookkeeping from Excello includes
Full scope
Orders, supplier charges and payouts are recorded and matched every day. Accountants review them weekly, or every business day on Growth and Scale, and close the month.
| What Excello does | When |
|---|---|
| Store payouts recorded, split and matched to the bank | Daily, reviewed every week or every business day |
| Supplier charges recorded as cost of goods sold | From your supplier and card statements |
| Ad spend from Meta, Google, TikTok and other platforms | From each platform's invoices and your card |
| Customer refunds and chargebacks, and supplier refunds | In their own accounts, as they happen |
| PayPal and other payment accounts | Reconciled to their statements at the close |
| Supplier costs in other currencies | Converted into your base currency |
| Month-end close with your three statements | Within five business days |
Selling on Shopify? See Shopify bookkeeping for payouts, gift cards and Shopify Capital.
Choosing a dropshipping accountant, and what it costs
Pricing
Frequently asked questions
How do you account for dropshipping?
Record each sale at its full price, and the supplier's charge for the product and shipping as cost of goods sold. Payment fees, ad spend, refunds and chargebacks each go to their own account, and every store payout is matched to the bank.
Is dropshipping revenue the full sale price?
Usually yes. When you set the price, take the customer's payment and handle returns, you are the seller, so the full order value is your sale and the supplier's charge is a cost. Recording only the margin makes your sales look smaller than they are.
How do taxes work with dropshipping?
Profit from a dropshipping store is taxed as business income where the business is set up. The return depends on the structure: Schedule C for a US single-member LLC, Form 1120 for a corporation, a CT600 for a UK company, or a UAE corporate tax return.
Do I need a dropshipping accountant?
Once the store takes more than a handful of orders a day, usually yes. Supplier charges, ad spend and payouts arrive from different places at different times, and a dropshipping accountant keeps them lined up so you know what each order really made.
Does the same bookkeeping work for print on demand?
Yes. Printful and Printify stores work the same way: the customer pays you, the provider charges you for printing and shipping, and that charge is your cost of goods sold. The payouts, fees and ad spend are handled exactly as for dropshipping.
How much does dropshipping bookkeeping cost?
Excello's plans start at $150 a month and scale with your order volume and how often the books are reviewed. Months that are behind are caught up first and quoted separately, and tax returns are quoted before work starts.