Quick Answer
Dropshipping bookkeeping tracks gross sales revenue, supplier costs per order (COGS), platform fees, advertising spend, and GST/HST collected. Since you never hold inventory, there's no year-end inventory count — but you must accurately match each sale to its supplier cost to calculate real profit.
Dropshipping has simpler bookkeeping than FBA — no inventory to count, no warehousing costs, no import duties on most shipments. But matching sales revenue to supplier costs, handling refunds, and managing multi-currency transactions still requires a disciplined system.
The Dropshipping Bookkeeping Framework
Every transaction in a dropshipping business falls into one of four categories:
- Customer sale → Debit accounts receivable / credit sales revenue
- Supplier payment → Debit COGS / credit bank (or credit card)
- GST/HST collected → Credit GST/HST payable (NOT revenue)
- Operating expenses → Debit appropriate expense account / credit bank
Tracking COGS per Order
Unlike FBA where COGS is tracked at inventory level, dropshipping COGS is matched per order. For each sale, you have a corresponding supplier payment. Most dropshipping apps (DSers, AutoDS) generate reports you can use to calculate total supplier costs by month — use this as your monthly COGS.
Multi-Currency Complications
Many dropshippers source from AliExpress (USD/CNY) and sell in CAD. Your supplier invoices will be in a foreign currency. The CRA requires you to convert all amounts to CAD using the Bank of Canada exchange rate on the transaction date. Keep records of exchange rates used.
Refunds and Returns in Dropshipping
When a customer returns an item, you refund them but often don't receive a refund from your supplier (especially for AliExpress orders). The full refund amount must still be recorded as a reduction to revenue. Your gross COGS for that order can be reclassified from COGS to a loss, since you paid the supplier but made no sale.
Professional Dropshipping Bookkeeping for Canadian Sellers
MaxRefund provides monthly bookkeeping for Canadian dropshipping businesses — revenue reconciliation, COGS tracking, and GST/HST filings all handled.
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