5 Steps to Streamline Your Shopify Bookkeeping
Shopify bookkeeping is an essential but often time-consuming process. Streamlining your shop’s bookkeeping can save you time and money in the long run. Here are five steps you can take to streamline your Shopify bookkeeping process.
Why Should You Streamline Your Shopify Bookkeeping Process?
The first question you might ask yourself about streamlining your Shopify bookkeeping process is why? Consider: every business owner wants to make as much profit as possible. A streamlined bookkeeping process will help you track your incoming and outgoing money so you can make better business decisions. It also helps you avoid potential legal issues related to misreported taxes. You can use accounting software to automate some of the tasks involved in bookkeeping, such as tracking expenses and generating reports.
If you adhere to these five steps to streamline your Shopify bookkeeping, you’ll be able to focus your time and resources towards running your business.
Establish a Separate Business Bank Account
Having a separate business bank account is important for a Shopify business for several reasons. First, it allows you to track your business expenses separately from your expenses. That is important for tax purposes and understanding where your business stands financially.
Second, a dedicated business bank account can help you build business credit. That can be helpful if you ever need to take out a business loan or line of credit. Finally, having a separate bank account makes it easier to keep detailed financial records.
Opening a business bank account is similar to opening a personal account, but there are a few key differences. You’ll need to provide some documentation about your business, such as your business licence or articles of incorporation. You may be able to get certain perks with a business account that you wouldn’t get with a personal account, such as higher interest rates or waived fees. When selecting a business bank account, be sure to look for one that meets the specific needs of your business.
Once you have a dedicated bank account set up for your Shopify business, keeping careful records and regularly reconciling your account is essential. That will ensure that your financial records are accurate and up-to-date. By taking the time to streamline your bookkeeping from the outset, you’ll save yourself time and hassle down the road.
Set Up Shopify Accounting Software
Shopify accounting software can be a useful tool for streamlining the bookkeeping process for a Shopify business. Having an efficient Shopify accounting process is vital to your company’s success, because regular human limitations mean that you won’t be as efficient and accurate as a machine. The right accounting software can help you save time and money by automating tasks and providing accurate financial reports.
Shopify is a great eCommerce platform that offers users a variety of features to help them run their businesses. However, when it comes to accounting, Shopify’s default processes have room for improvement. That’s where accounting software comes in. Many different accounting software programs are available, but not all are created equal. When choosing accounting software for your Shopify business, there are a few things you should keep in mind:
Ease of Use
The last thing you want is to spend hours figuring out how to use your new software. Look for a program that is easy to navigate and understand.
Make sure the accounting software you choose is compatible with Shopify. Otherwise, you’ll likely run into problems down the road.
One of the biggest benefits of using accounting software is the ability to automate tasks. That can save you a lot of time in the long run, so be sure to look for a program that offers this feature.
Accurate financial reports are essential for making sound business decisions. Be sure to choose accounting software that offers robust reporting options
Don’t break the bank when choosing an accounting software program. If you set up Shopify accounting software, you’ll be able to save yourself time and energy in the long run. That will allow you to focus on other aspects of running your business and growing your sales, which in turn can lead to more money.
Keep Detailed Digital Records of Your Shopify Sales
Keeping detailed records of your Shopify sales is important for several reasons. First, it helps you track your income and expenses. That information is critical for preparing accurate financial reports. It also helps you identify trends in your business. For example, if you notice that sales are increasing during a certain period, you can adjust your marketing or inventory accordingly. You can use detailed records to calculate the correct amount of sales tax you should be paying.
There are a few different ways to access your Shopify sales data. The first is through your Shopify admin panel’s “Orders” section. Here, you can view all past orders and information such as the order total, shipping address, and payment method. You can also search for specific orders using the search bar.
Another way to access your Shopify sales data is through the “Reports” section of your Shopify admin panel. Here, you can generate reports showing detailed information about your sales, such as total revenue, average order value, and top-selling products. You can also use the “Reports” section to export your Shopify sales data into a CSV file.
Using accounting software like Link My Books, you can connect your Shopify store to QuickBooks or Xero to automatically import your sales data. That is a great way to save time and ensure that your records are always up-to-date.
No matter how you access it, keeping track of your Shopify sales data is an important part of running a successful business. By reviewing your records regularly, you can ensure your finances are in order and identify any areas where You could improve.
Review Your Financial Reports Frequently
It’s important to review your financial reports frequently to ensure you’re staying on top of everything. That will help you track your progress, identify areas of improvement, and make the necessary changes to improve your bottom line.
When reviewing your financial reports, there are a few things you should keep in mind:
- Compare your current period’s financial reports to previous periods to monitor your progress and identify any trends.
- Make sure your income and expenses are accurate. You can do this by reconciling your bank statements and reviewing your accounting records.
- Identify any areas of improvement. That could include reducing costs, increasing revenue, or improving efficiency.
- Make the necessary changes to improve your bottom line. That could involve changing your pricing, marketing strategy, or operations.
By regularly reviewing your financial reports, you can make informed decisions that will help improve your business’s bottom line.
Get your taxes right
Last but certainly not least is getting your taxes right. Keeping on the right side of your tax authority can not only save you a lot of money in penalties avoided but also a lot of time. If you ever get an audit from your tax authority due to mistakes with your tax filings then you can end up spending lots of time going back and forth with them providing documents galore. Not something anyone wants to do.
For US Businesses
Make Sure You’re Collecting Sales Tax Based on the Regulations in Your Specific Area. It’s important to ensure you’re collecting sales tax based on the regulations in your specific area to avoid facing any penalties and fines. The sales tax rate could be different depending on the products and the areas you sell to. It’s important to charge the correct sales tax rate for each type of product and area you sell to avoid any penalties or fines from your state’s Department of Revenue.
To find the contact information for your state’s Department of Revenue, you can visit their website or give them a call. Once you have the contact information, you can ask about the specific sales tax rates for the products and areas you sell to. Keep this information up-to-date, as sales tax rates can change over time.
To charge the correct sales tax rate for each type of product and area you sell to, you should find an effective Shopify accounting software. This plugin will automatically calculate and charge the appropriate sales tax rate for each order based on the customer’s location and the products ordered.
For UK Businesses
Make sure you are accounting for your sales and fees correctly to ensure that you pay the right amount of VAT on them to HMRC. You should be separating your sales revenue into sales shipped to the UK and sales shipped outside the UK to ensure that you pay the correct amount of VAT on them.
The same goes for your products, some may be subject to standard VAT at 20% but some may be eligible for reduced VAT at 5% or they could even be eligible to be zero rated. It’s important to check with your accountant or the HMRC directly which VAT rate applies to your products as it could help you save thousands of pounds in VAT in the long run.
Link My Books is perfect if you’re looking for an effective Shopify bookkeeping tool. It won’t just help you with your Shopify bookkeeping. It will also automate your accounting process and manage store fees and taxes. Try it today!