Running a business is a hard job. There are so many things to think about and keep track of, from marketing and sales to production and logistics. But one of the most important – yet often overlooked aspects of running a business is accounting and bookkeeping.
If you’re not careful, sloppy bookkeeping can lead to missed opportunities, financial disaster, and even lawsuits. That’s why it’s essential to have a system in place for keeping your books in order. And luckily, Shopify makes it easy to do just that.
Here are some simple tips for doing Shopify accounting and Shopify bookkeeping for your online store.
On This Page
- Use Shopify’s Built-In Accounting Features
- Keep Track of Your Expenses
- Integrate Tax Tracking Into Your Accounting System
- Utilize Inventory Management Tools
- Review Your Numbers Regularly
- Best Accounting Software for Shopify Businesses
- Benefits of using Shopify Accounting Software
- Conclusion
Use Shopify’s Built-In Accounting Features
Shopify comes with a number of powerful tools for managing your finances. The first step is to take advantage of them.
Shopify’s built-in accounting features include:
- Invoicing
- Receipts
- Payments
- Reporting
These Shopify accounting features are fully integrated with Shopify, so you can easily keep track of your finances in one place. And if you ever need to hire an accountant or bookkeeper, they’ll be able to access your records easily.
Also, if you don’t like any of Shopify’s built-in features, you can also use Shopify Shipping apps. For example, Wave is an app that helps you manage your finances, including your invoices, expenses, and taxes. It’s perfect for small businesses and entrepreneurs who need to keep their books in order without spending a lot of money.
Keep Track of Your Expenses
Another important part of Shopify bookkeeping is tracking your expenses. This will help you track where your money is going and identify areas where you can cut costs.
There are a few different ways to track your expenses:
One way is to use Shopify’s built-in expense tracker. This tool lets you track your expenses by category, so you can see where most of your money is going.
Another way is to use a dedicated expense-tracking app. There are a number of apps available, such as Expensify and Xero, that let you track your expenses and generate reports.
Shopify Bookkeeping and Accounting apps can be a lifesaver for small business owners. They can help you save time and money by automating many of the tasks involved in accounting and bookkeeping. They can also help you avoid costly accounting and bookkeeping errors.
Some of the benefits of using accounting and bookkeeping apps include:
- Automated tracking of expenses: Apps like Expensify can automatically track your expenses, saving you time and hassle.
- Accurate financial reports: Accounting and bookkeeping apps can generate accurate financial reports, helping you keep tabs on your business’s finances.
- Easy access to financial data: With an accounting or bookkeeping app, you can easily access your business’s financial data from any device, anywhere in the world.
- Improved cash flow: An accounting or bookkeeping app can help improve your company’s cash flow by providing up-to-date information on your finances.
Integrate Tax Tracking Into Your Accounting System
As a Shopify business owner, it’s important to stay on top of your finances and pay your taxes on time. One way to do this is to integrate tax tracking into your Shopify accounting and bookkeeping. There are a number of different tools available that can help you with this, and they can be extremely beneficial in saving time and money and avoiding errors.
One of the most popular tax-tracking tools is TaxJar. TaxJar automatically calculates, files, and pays your sales tax for you, and it integrates with Shopify to make the process as simple and seamless as possible. With TaxJar, you can rest assured that your taxes are always up-to-date and accurate, and you’ll never have to worry about missing a deadline or making a mistake.
Another great option for tax tracking is Avalara. Avalara also offers automatic tax calculation, filing, and payment, and it integrates with Shopify to provide a hassle-free experience. In addition to sales tax, Avalara can also help you with VAT, excise tax, communications tax, luxury tax, and more. With Avalara, you can be confident that all of your taxes are being taken care of properly.
No matter which tool you choose, integrating tax tracking into your Shopify accounting and bookkeeping will save you time and money and help you avoid errors.
Utilize Inventory Management Tools
As an online retailer knows, inventory management is a critical part of running a successful business. Not only do you need to keep track of what products you have in stock, but you also need to be able to forecast future demand and plan your ordering accordingly. Fortunately, there are a number of great inventory management tools available to Shopify users.
One of the most popular options is SkuVault, which offers a comprehensive suite of features for managing inventory, including barcode scanning, real-time stock levels, order tracking, and more. Another popular option is Inflow Inventory, which offers similar features and is compatible with QuickBooks for streamlined accounting.
Whichever tool you choose, utilizing an inventory management system can save you a lot of time and hassle in keeping track of your inventory. It can also help you avoid errors in your accounting and bookkeeping, as all of your inventory information will be stored in one central location.
Review Your Numbers Regularly
Finally, it’s not enough to keep track of your income and expenses. You also need to review your numbers on a regular basis.
This will help you identify any problems or areas where you can improve. It will also help you keep on top of your bookkeeping and make sure everything is going smoothly.
Jim Pendergast, Senior Vice President at altLINE Sobanco, recommends, “Review your numbers regularly, at least monthly if not weekly. This will help you identify any issues early on and make sure your bookkeeping is on track.”
Reviewing your numbers regularly is an essential part of effective bookkeeping. Make sure you’re taking the time to do it, and you’ll be on your way to keeping your finances in order.
Best Accounting Software for Shopify Businesses
If you are running a brand new business with less than six figures in total sales, you might be able to get by with the default reports in Shopify as well as a spreadsheet or two.
However, once you are doing six figures in sales, it is in your best interest to use Shopify Accounting Software. It will save you a ton of time and can ensure that your finances are up-to-date and accurate.
Here are a few of the best ones:
Wave
Wave is a popular Shopify accounting software that offers free bookkeeping and accounting services for small businesses. It can be integrated with Shopify to automatically import sales data and expenses, and it can also generate financial reports like profit and loss statements, balance sheets, and sales tax reports.
Xero
Xero is another accounting software for Shopify that offers a free plan for small businesses. It can integrate with Shopify to automatically import sales and expense data, and it also offers features like bank reconciliation, invoicing, and financial reporting.
QuickBooks Online
QuickBooks Online is one of the best Shopify accounting software that offers a free plan for small businesses. It can integrate with Shopify to automatically import sales and expense data, and it also offers features like invoicing, bill payment, and financial reporting.
ZipBooks
ZipBooks is a cloud-based accounting software that offers a free plan for small businesses. It can integrate with Shopify to automatically import sales and expense data, and it also offers features like invoicing, expense tracking, and financial reporting.
Ultimately, the best free Shopify accounting software for your business will depend on your specific needs and preferences. It’s a good idea to compare features and read user reviews before choosing software.
Benefits of using Shopify Accounting Software
Some of the benefits of using cloud accounting software in conjunction with Shopify are as follows:
Seamless Integration
Cloud accounting software, such as QuickBooks Online or Xero, integrates smoothly with Shopify, allowing for automatic data synchronization between your e-commerce platform and accounting software. This eliminates the need for manual data entry, reducing errors and saving time.
Real-Time Data
With cloud accounting software, you can access up-to-date financial information in real-time. This enables you to make informed business decisions based on accurate data, such as tracking sales, monitoring inventory levels, and analyzing profitability.
Automated Bookkeeping
Cloud accounting software automates various bookkeeping tasks, such as recording sales, tracking expenses, and managing invoices. This automation streamlines the financial process, reduces manual effort, and improves accuracy.
Inventory Management
By integrating your Shopify store with cloud accounting software, you can effectively manage your inventory. The software automatically updates stock levels as sales are made, providing you with accurate inventory information and preventing overselling or stockouts.
Tax Compliance
Cloud accounting software simplifies tax compliance by automatically calculating taxes based on your e-commerce transactions. It helps ensure accurate tax calculations and facilitates the preparation of tax reports, making tax time less stressful.
Collaboration and Accessibility
Cloud accounting software allows multiple users to collaborate simultaneously, facilitating teamwork among accountants, bookkeepers, and business owners. Additionally, since it is cloud-based, you can access your financial data from anywhere with an internet connection, providing flexibility and mobility.
Data Security and Backup
Cloud accounting software providers prioritize data security, employing encryption and other measures to protect your financial information. They also regularly back up your data, reducing the risk of data loss due to hardware failures or other issues.
Conclusion
Bookkeeping and accounting are essential parts of running a successful Shopify business. By following these tips, you can make the process a lot easier and less stressful.
Don’t forget to keep track of your income and expenses, review your numbers regularly, and hire an accountant or bookkeeper if you need help. With a little effort, you can keep your finances in order and focus on running your business.
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