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Dropshipping bookkeeping: find the true margin behind every SKU
Your store dashboard says 30% margin; your bank account says otherwise, because the costs live in systems your dashboard never sees — supplier invoices, embedded sales tax, post-de-minimis duties, chargebacks, and ad spend. Dropshipping bookkeeping pulls all of it into one ledger so contribution margin per SKU is a fact, not a feeling. We build that ledger monthly for Canadian dropshippers selling into the US.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Why the dashboard flatters you
Dropshipping profit is scattered across four systems that never talk: the store records revenue, the supplier platform (AliExpress, CJdropshipping, Zendrop, or a US wholesaler) records product cost, the ad accounts record acquisition cost, and the gateway records fees and disputes. Any one of them alone flatters you. The books are where the four meet, and the number that comes out — contribution margin per SKU — is the only number that decides whether to scale a product or kill it.
| Margin line | Where it hides, and how we book it |
|---|---|
| Gross sales | Store reports — revenue at full order value, not net deposits |
| Gateway and BNPL fees | Payout reports — reconciled per gateway, not lumped |
| Product cost | Supplier invoices matched to orders shipped, on accrual |
| Embedded supplier sales tax | Buried inside US supplier invoices — surfaced and costed |
| Duty and brokerage | Carrier and platform surcharges — into landed cost per unit |
| Refunds and chargebacks | Gateway dispute reports — tracked as an allowance per SKU |
| Ad spend per order | Meta and Google billing — accrued to the month the ads ran |
Supplier invoices and the sales tax buried inside them
US suppliers charge state sales tax unless you hand them a resale certificate — and a Canadian dropshipper with no US registrations usually cannot produce one, so the tax quietly embeds itself in your product cost. We surface it as its own component of COGS rather than letting it hide, which does two things: your per-SKU margin stops lying, and you can see exactly what a US sales tax registration and resale certificate would save before deciding whether it is worth pursuing. We also reconcile per-order platform charges against monthly supplier statements, because double-billed and never-shipped orders are a real leak at volume. Where suppliers bill in USD or yuan-linked prices, costs convert at transaction dates, so cost trends are real movement rather than currency noise.
Landed cost after de minimis
The end of the US $800 de minimis exemption in 2025 changed dropshipping economics permanently: parcels entering the US now attract duties and carrier brokerage or disbursement fees on shipments that used to cross free. Whether you ship DDP — duty built into what the supplier or carrier bills you — or the charges arrive later as surcharges, they belong in landed cost per unit, not in a miscellaneous expense account. A SKU that made sense at a US$4 product cost may not survive its own duty line, and the books should be the first place you find that out.
Refunds, chargebacks, and reserves
Long shipping times make dropshipping a dispute-heavy business, and disputes hit three ways at once: the refunded revenue, a dispute fee on top, and a product cost you almost never recover because nothing comes back. We track a refund and chargeback allowance by SKU, so a product with great gross margin and a 9% dispute rate is exposed for what it is. High dispute rates also invite gateway rolling reserves — cash held back for months — which we carry as a receivable so your true cash position is never a mystery.
Timing matters as much as amount: a chargeback can land 60 to 90 days after the sale, in a month when the profit is already spent. The allowance smooths that shock, and its trend line warns you when a product's dispute pattern is about to become a gateway problem.
GST/HST when the goods never touch Canada
When a supplier ships directly from overseas to a US customer, the goods never enter Canada, and those sales generally sit outside GST/HST — but Canadian-customer orders, your registration status once revenue passes $30,000, and ITCs on Canadian expenses like software and agency fees all still need proper handling. The drop-shipment rules have sharp edges, and the analysis belongs with our cross-border accountants for dropshippers; the monthly ledger that makes their job possible is the bookkeeping engagement described here.
We run it on accrual in QuickBooks Online, receipts captured through Dext, books closed by mid-month with a SKU margin sheet you can read in five minutes — fixed fee, quoted after a discovery call. Testing months with heavy ad spend and no winners will look bad on accrual, and they should, because that is what happened.
Common questions.
Why do my supplier costs never line up with my sales month?
Because you pay suppliers when orders ship, not when customers buy, and statements arrive on their own cycle. We match product cost to the orders it belongs to on accrual, so each month shows true margin.
Should the sales tax my US supplier charges go into COGS?
Yes — if you cannot provide a resale certificate, that tax is part of your product cost. We book it as its own COGS component so you can measure what a US registration would save.
Do I charge GST/HST on dropshipped orders to US customers?
Generally no — goods shipped from an overseas supplier to a US buyer never enter Canada, so GST/HST does not apply to those sales. Canadian orders and your registration status are a different story worth reviewing.
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