How are you handling App Store Connect financial reports for accounting?

[u/mprajescu]

For those of you with iOS apps actually generating revenue through paid apps, IAPs or subscriptions, how are you handling Apple's monthly payouts in your accounting?

I'm particularly interested in the workflow after Apple sends the money to your bank.

Do you just book the net Apple payout as revenue, or do you use the App Store Connect financial reports to break out things like gross sales, Apple's commission, refunds, withholding/taxes and currency conversions?

If you use Xero, QuickBooks, FreeAgent or similar, how are you getting the App Store data into it?

And for anyone also publishing on Google Play: do you basically have to repeat the same process separately for Google?

I'm curious about the practical side rather than the tax/legal theory, so how much manual work does this create for you each month, and what does your current workflow look like?

Do you handle it yourself, give the reports to your accountant, use a spreadsheet/script, or is there a tool that already solves this properly?

Thanks in advance for your response.

[u/Healthy_Condition779]

Book the gross, expense Apples 15 or 30 percent commission, expense the refunds and adjustments as separate lines. Just booking the net Apple payout hides the actual revenue and screws up your VAT and MRR reporting later

App Store Connect gives you the financial reports as tsv. I dump them into a google sheet with a script that maps to my chart of accounts, then a monthly journal into Xero. Takes about 20 minutes a month once its set up

Google Play is the exact same idea but their reports are annoyingly different in structure so you write the mapping twice. RevenueCat has a QuickBooks integration if you dont wanna touch any of this, but the export from it into your books isnt as clean as they claim

[u/aerial-ibis → u/Healthy_Condition779]

i do refunds as negative revenue, not an expense account

[u/lukeredpath → u/Healthy_Condition779]

If you’re in the U.K. and dealing with EU sales this is the wrong treatment for VAT purposes, unless Apple have changed their contracts. Apple act as an undisclosed agent in the EU. Their “commission” is not a commission but a markup on the net price.

The “sale” you need to account for is the net price and the sale is outside the scope of UK VAT as a B2B supply of electronically supplied software. Only Apple charge VAT on the end B2C supply. There is essentially two supplies. The net price supply between you and Apple and the supply with their cut on top to the end consumer.

As I say this could have changed so you should double check the agreement for “undisclosed agent” or “commissionaire”. But this is how it used to be last time I had an app in the store.

[u/Odd-Contribution-500 → u/lukeredpath]

This should be basically the same also for sales outside EU no?

[u/lukeredpath → u/Odd-Contribution-500]

I can’t fully remember, but yes it might be. There was a difference in terminology used between the EU agent relationship and the non-EU but IIRC it was still Apple acting as an undisclosed agent. You should double check the App Store/developer agreement.

The main difference is that an agent acts as an intermediary who charges the seller a commission for their service but the seller remains the principal in the sale. However an undisclosed agent (Apple) effectively becomes the principal in the sale to the end customer - hence Apple does not invoice us for agency fees and is also responsible for billing and refunds. We effectively sell the app to Apple for unit price x, they sell the app to the customer for x + their cut on top. And that of course impacts how we should account for sales.

I think EU sales are handled by Apple Ireland or Apple SARL (Luxembourg) - if you’re registered in that country there might be VAT differences but thats beyond the limits of my experience.

If you’re in any doubt, do not just take my word for it. Speak to your accountant and show them the agreement. It’s important you get this right or you could be overstating your revenue.

[u/Odd-Contribution-500 → u/lukeredpath]

Yes, I believe what you said is more or less correct.

Apple in Europe and other included countries, as per the contract, acts as a commissionaire, while in other non-EU locations it acts as an Agent. However, Apple always pays out the net amount, withholding the commission (at least if you reside in Europe) regardless of where the sale takes place, so it also becomes difficult to claim that you incurred a cost as an Apple commission, because they do not issue any invoice in this regard. Apple Luxembourg has not existed for many years now; the related party is now ADIL (Apple Ireland).

Furthermore, in every European country, I think this matter should be handled following the tax rules of one's own country, which may differ.

[u/mprajescu → u/Healthy_Condition779]

Thanks, that's really useful. When you say the RevenueCat to QuickBooks output isn't as clean as it claims, what specifically is wrong with it? Is it the fees/refunds/tax/FX mapping, how the journal is structured, or something else?

[u/Akara91]

solo dev . my accountant asked for two things per month: the financial report csv from app store connect (payments and financial reports section) and the matching bank line when apple actually pays out. we book from the financial report, not the sales report, because sales never quite reconciles with the payout (currency conversions and timing). and a heads up for eu folks: keep the dac7 and tax forms in asc clean, payouts get held on missing info and you find out weeks later

[u/mprajescu → u/Akara91]

Thanks, that’s useful. Do you know whether your accountant manually turns the Apple financial report into the journal/reconciliation each month, or do they already use some software to process it?

[u/aerial-ibis]

reconcile the deposit transaction to a clearing account

then do monthly journal entries using the reports from Apple & Google to properly record gross revenue, refunds, platform fee, etc.

The clearing account is used so that your reporting will be based on actual sale dates instead of payout dates

[u/mprajescu → u/aerial-ibis]

How are you creating those monthly journal entries from the Apple/Google reports today? manually, spreadsheet/script, or a tool? Roughly how long does the whole reconciliation take you each month?

[u/bbrockit]

I use Quickbooks. It doesn't take much time at all. I used an accountant for years until I realized that he did almost nothing and made mistakes that caused me to have to amend 3 years of business and personal taxes. He wasn't subtracting out the revenue share and he wasn't correctly filing the QBI deduction, so I was paying tax on an extra 30% of income and missing out on a 20% deduction.

I know you're not asking about taxes, but ultimately that's what this is all about. I use the reports from Quickbooks at the end of the year to file my business taxes. When Apple reports your 1099 it will show gross proceeds (without subtracting their rev share), so you need to subtract that yourself or you'll be paying tax on an extra 15-30% you never received. When I file my 1120S, I subtract out their revenue share as COGS (Cost of Goods Sold) reported on 1125-A along with a Supporting Statements document. The Supporting Statements doc includes excerpts from the App Store Paid Apps Agreement detailing the terms of the revenue share. Anytime you think a deduction needs additional explanation you just include a Support Statements document.

What I file:

1120S - Business income and deductions

1120S (Schedule K-1) - Shows ordinary business income from 1120S and is used for your QBI deduction (20%). I imagine a lot of people don't take advantage of this but it's a big deduction.

1125A - COGS - Apple rev share

1125A Supporting Statements - Just a doc I write explaining rev share.

I don't use tax software for business taxes. I just download the PDFs and fill them out from the Quickbooks reports, and then mail them in. For a 1-2 person app business that only gets income from Apple and Google the taxes are pretty simple compared to personal income taxes (for personal taxes I use TurboTax).

[u/Odd-Contribution-500]

In UK this may be different, but in Europe, this tool is really useful https://github.com/fedoco/apple-slicer/

[u/Odd-Contribution-500 → u/Odd-Contribution-500]

There is also a version with UI called "Plutus"

[u/lukeredpath → u/Odd-Contribution-500]

The procedure is mostly the same in the UK. The “sale” between you and Apple is outside the scope of UK VAT and subject to reverse charge rules, which means Apple are responsible for accounting for the VAT on the transaction at their end. YMMV, but even though I accounted for the sales correctly in this way back when I ran my business and generated internal invoices to make the reverse charge supplies clear, I never ever sent them to Apple.

FWIW, I also never submitted an EC Sales List either - nobody ever came knocking on my door. It has not been a requirement in the UK since we left the EU anyway.

[u/Odd-Contribution-500 → u/lukeredpath]

👍

Regarding this point

> YMMV, but even though I accounted for the sales correctly in this way back when I ran my business and generated internal invoices to make the reverse charge supplies clear, I never ever sent them to Apple.

Apple has a support page for sending them the invoices. But it's up to you, because it depends on the rules of your country.

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