If you are a regular Etsy seller, you probably already know how hard it can be to compile accurate financial data and keep your books straight. If you don't keep track of your Etsy fees and sales, you are at risk of overpaying sales tax or VAT. Even if you have accounting software or other accounting tools in place, Etsy only provides basic financial reports, which often means you are solely responsible for entering your Etsy sales, returns and fees into your accounting solution.
Luckily, there's a better way. You can use integrations to turn your accounting software into Etsy accounting software. In this article, we'll show you how ecommerce sellers can take charge of their Etsy accounting needs with ease.
Many Etsy sellers and other small businesses start off using good old-fashioned Excel or Google Sheets to keep track of their business operations. In principle, there's nothing wrong with using spreadsheets for expense tracking or bookkeeping, but it may become untenable for a growing business over time.
If your Etsy business grows from a small online store to a fully-fledged VAT-registered business, it's time to switch to a specialist small business accounting software solution that can meet your needs come tax time. Switching to the right tools can be an immense help and reduce the time you spend trying to figure out your finances. Being able to review the accounting data behind your tax returns is also an important legal requirement under HRMC's Making Tax Digital rules.
Here are a few of the tools we can recommend to manage your Etsy Finances:
Xero is one of the most popular software tools for managing and monitoring your financial information online. You can use Xero's built-in reports to enter the sales from your Etsy accounts and calculate profit and loss statements, balance sheets, and VAT returns. If you just use Xero on its own, data entry is a manual process, but if you use an Etsy integration like Link My Books, you can automatically import information from Etsy and your bank accounts to make things a lot easier.
Pricing starts at just £12 for the Xero starter package, but it's a good idea to go for the Standard or Premium package as you aren't as limited in terms of the number of transactions, invoices, and bills you can enter into it. Etsy businesses that use multiple currencies definitely need the Xero Premium package to manage their business.
Quickbook is a secure, full accounting solution, which means you can enter all of your transactions and expenses into the program, and it will do the hard work for you behind the scenes. It comes with a host of reports, from your standard balance sheet to more advanced bank reconciliation tools, so you can manage your books.
If you sell artisan crafts on the Etsy platform, chances are you use other marketplaces as well, which is why the QuickBooks Online Essentials package is highly recommended. It starts at just £20 per month and will track your expenses, transactions, and information with ease.
Both Xero and Quickbooks are great tools for Etsy sellers. They are pretty similar in terms of their features. Both offer great support and expert advice through blogs and knowledge base articles, come with detailed reports that provide more insight into your Etsy store, and are MTD compliant. You can also use either tool to submit your VAT return directly to HMRC. However, these tools haven't been built specifically for Etsy, and without the right integration, they may fall short of your expectations.
If you've already chosen Xero or QuickBooks, you should consider an integration that connects your Etsy account to your bookkeeping solution. Link My Books was designed for Etsy sellers or other ecommerce businesses. It will help improve the accuracy of your accounting, including your sales, refunds, Etsy fees, shipping fees, and VAT.
Link My Books will also support your other stores, including Amazon, eBay, and Shopify. The process is easy to set up, with guided wizards that will show you exactly how to get started.
With Link My Books, Etsy bookkeeping becomes simpler, faster, and easier. Link My Books will assist with categorizing transactions so that exports and zero-rated goods don't incur VAT unnecessarily. Getting your VAT right every time means you could save money in the long run.
If you own an Etsy store, you definitely need to sign up for Link My Books today. Start your 14-day trial now!