A recent study revealed that over 1.75 million merchants are selling on Shopify. Are you one of them, and tired of dealing with complicated and time-consuming bookkeeping tasks?
You don't need to dread bookkeeping any longer. Automating your Shopify seller accounting system is incredibly simple. We'll show you how to set up an effective, organised, and easy-to-manage Shopify accounting system in just a few steps.
Shopify bookkeeping has never been easier. With this system, you can easily track income and expenses across multiple channels. You will also be able to categorise transactions for tax season, reconcile payments, and more.
Automating your bookkeeping process helps streamline your operations. Here's how to create an effective Shopify seller accounting system. Check out our guide today to find out more.
What Is Bookkeeping?
Bookkeeping is the process of recording financial transactions into the appropriate accounts. This helps you make informed decisions about the future of your business.
To track your company's finances, your accounting software will list different transactions. These are done under one of these five basic accounts:
- Assets refer to anything your business owns that has economic value
- Liabilities refer to money that is owed to someone such as a loan
- Revenue refers to payments made to the business
- Expenses refer to outgoings for running your business
- Equity refers to how much of the business you own
Best Practices Shopify Seller Accounting
As your Shopify store grows and you start to receive more orders, it can become difficult to keep track of payments. It will also get more challenging to track any refunds, fees, or other related information. To better manage your books and stay organised, here are some useful Shopify bookkeeping best practices to follow.
Integrate Your Online Store With Accounting Software
Manually logging all your online transactions takes too much time and effort, and can lead to inaccuracies.
To save time and provide greater accuracy, sync your accounting software with your Shopify store. Utilising a tool like Link My Books Shopify QuickBooks integration will help reconcile your Shopify orders. Using accounting software will make the process much easier.
Review Financial Reports Frequently
It is essential to track your financial data closely to make informed decisions in business. Your accounting software will help you organise your Shopify transactions into a chart of accounts. This categorises expenses, revenue, assets, and liabilities.
Make sure to routinely review your financial statements and key metrics.
This includes the Profit and Loss Statement, Balance Sheet, Cash Flow Forecast, and Inventory Forecast. This will help you stay on top of your finances.
The items you should stay on top of are:
- Profit and Loss Statement
- Balance Sheet
- Cash Flow Forecast
- Inventory Forecast
Regularly Reconcile Your Account
Reconciling your accounts each month can help you ensure that your financial records are accurate and up-to-date. Mistakes can happen, so it will help highlight any inconsistencies sooner rather than later.
It's also useful to have a clear and comprehensive understanding of your cash position so potential fraud can be prevented.
It Helps You Manage Your Stock and Price of Products
Keeping track of your inventory is essential for maintaining a successful business. However, it can be difficult when you sell through multiple channels.
An inventory forecast will help ensure you have the right products in stock, and see what's popular and not popular. This will help you determine what products to invest further in. Knowing how things sell well is also a great way to check the price of your products.
Additionally, remember to factor in the cost of packaging and shipping as part of the cost of goods sold. This will help you to calculate gross profit and produce an accurate financial report.
It Makes Returns and Refunds and Chargebacks Easier to Manage
Your company probably has some sort of return policy. This might be divided into categories, such as damaged or faulty and the customer changing their mind. This will help to track customer satisfaction through the reasons for returns. Data from this can also be used to improve your all-around user experience.
It also helps to ensure that inventory is not double-charged. A chargeback is a type of expense or fee that occurs when a customer disputes the transaction or returns the purchase. The credit card company requests a refund of the funds.
Ensures you are Tax Compliant
Business finances require time and effort, especially for those without prior bookkeeping experience. It often gets left or forgotten about, partially because it's not a very exciting job, but also because it can seem complicated.
Owners of online stores have to be especially conscious of default reports, fraud prevention, financial reports, and tax compliance. To make sure their business is running smoothly and you're not going to get any unanticipated fines, it is essential to have a well-thought-out e-commerce bookkeeping strategy in place.
Automate Bookkeeping With Quickbooks
QuickBooks is an ideal accounting app for your Shopify store. This cloud-based platform offers features such as expense management, reports, and insights. Your data is secure with SSL encryption and bank data importation can be automated.
QuickBooks can be used to automate all your bookkeeping needs, while you can receive invoice details, accounts aging, sales tax summaries, and more. Not only does it help you stay tax compliant, but it always allows you to track your business growth in the easy-to-understand dashboard.
Looking To Improve Your Accounts?
Shopify bookkeeping can be a daunting and time-consuming task, but it doesn't have to be. By automating your Shopify seller accounting system, you can easily track income and expenses across multiple channels, categorize transactions for tax season, reconcile payments, and more.
If you're looking to take control of your finances and streamline your operations, visit the team at Link My Books and get started for free today!