This article delves into the nuances of integrating Shopify with QuickBooks, highlighting the importance of preparation, the pitfalls of manual data entry, and the benefits of using advanced integration tools like Link My Books.
Whether you're new to this integration or looking to refine your existing process, this guide offers valuable insights and practical steps to streamline your ecommerce accounting.
Key Takeaways from this Post
Most Integrations Fail Without This Key Step
When setting up a Shopify QuickBooks integration, most people dive right into choosing apps and syncing data.
But very few optimize the prep work that ensures seamless automated syncing.
Without proper upfront preparation, even the best apps end up syncing messy data leading to headaches down the line.
The key is comprehensively auditing and reconciling your historical Shopify and QuickBooks data. This step is overlooked by most, but it sets the foundation for automation success.
Reconciling historical transactions from the last financial year helps:
- Identify gaps or inaccuracies in existing data.
- Match transactions across both platforms.
- Fix incorrect or missing historical data.
- Ensure your financial baseline is error-free before integrating.
With clean baseline data, apps can seamlessly automate new transactions moving forward.
Without properly reconciling and auditing existing data beforehand, integrations often have to clean up inaccurate historical messes.
Don't skip this prep step. It might seem tedious but will prevent sync headaches later.
How to record Shopify sales in Quickbooks
Integrating Shopify with QuickBooks provides a centralized platform to manage your ecommerce finances.
How to Record Shopify Sales in QuickBooks Online
- Connect Shopify and QuickBooks Online accounts
- Configure synchronization
- Test and reconcile
- Optimize integration
- Monitor and update
- Run a payout report in Shopify
- Run a finance summary report in QuickBooks
- Create a journal entry in QuickBooks to record Shopify sales
Recording Shopify Sales in QuickBooks Online
1. Connect Shopify and QuickBooks Online accounts
Install a connector app like QuickBooks Sync Manager from the Shopify App Store. In your Shopify admin, open the app, click “Connect”, and log into your Shopify store and QBO account. This links both platforms via OAuth.
2. Configure synchronization
In the app, choose which data like orders, customers, inventory levels, and payments to sync between Shopify and QBO. Set the sync frequency - automatic real-time, hourly, or daily.
Configure other advanced options like mapping payment methods and adding order prefixes. Ensure you map your accounts correctly in QuickBooks to ensure the data syncs to the right place.
3. Test and reconcile
After configuring the app, run a test sync. Spot check transactions to ensure accurate data transfer. Regularly reconcile QBO accounts with bank/CC statements to identify any discrepancies. Check the results of the sync in both Shopify and QuickBooks to ensure the data matches.
4. Optimize integration
If needed, tweak the configuration in the app to improve data syncing. For optimal accuracy, enable two-way syncing so data updates in real-time in both systems. Regularly review and update the mapping of accounts as needed.
5. Monitor and update
Check for any new app updates to benefit from improvements and bug fixes. Adjust configuration if your Shopify or QBO workflows change.
Keep an eye on the sync error reports that the app provides, to catch and fix any issues early.
6. Run a payout report in Shopify
From your Shopify Admin, go to Settings > Payments.
In the Shopify Payments section, click the View payouts button.
Here you will see a breakdown of your previous and upcoming payouts and the orders that they relate to.
7. Run a finance summary report in QuickBooks
Go to Reports. Use the Find report by name search bar to search for reports by name. Select the report to open it. If you change the dates or add filters to the report, select Run report to apply them.
8. Create a journal entry in QuickBooks to record Shopify sales
Go to the Company menu and select Make General Journal Entries. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done. Select Save or Save & Close.
How to Record Shopify Sales in QuickBooks Desktop
- Install QuickBooks Connector
- Generate Integration Token
- Map Accounts and Data
- Choose Sync Mode
- Enter API Key
- Run Shopify Payout Report
- Run Shopify Finances Summary Report
- Import Data into QuickBooks
- Use Link My Books
- Reconcile Data
Recording Shopify Sales in QuickBooks Desktop
1. Install QuickBooks Connector
Start by installing the QuickBooks Connector app from the Shopify app store to your store. This will establish the necessary connection to QuickBooks Desktop.
2. Generate Integration Token
Next, navigate to App Management in QuickBooks Desktop and select the newly installed app. Generate a unique token by clicking “Generate Token” and make sure to copy this token for later use.
3. Map Accounts and Data
Now, go back to the Shopify app and paste the copied token to link QuickBooks Desktop. At this stage, you’ll need to map data fields such as orders and inventory to the corresponding accounts and items in QuickBooks.
4. Choose Sync Mode
Depending on the volume of your transactions, choose the appropriate sync mode. If you have over 14,500 combined transactions, it’s recommended to choose the summary mode which sends aggregated data. However, if you prefer more detailed data, you can opt for the detailed mode.
5. Enter API Key
To enable real-time syncing of inventory levels, you’ll need to input the API key from your QuickBooks inventory management app.
6. Run Shopify Payout and Finances Summary Reports
Before you start recording sales, run the Shopify Payout report to get a list of all your Shopify payouts in date order.
This report includes details such as gross, Shopify seller fees, charges including any refunds or adjustments, and the total amount received in your bank account.
Also, run the Shopify Finances Summary report to get information on sales including gross and net sales, discounts and returns, liabilities including gift card sales and tips, and Shopify payments.
7. Import Data into QuickBooks
With the data from the Shopify payout and finances report, you can now start creating your journal entry in QuickBooks.
Record sales income, shipping income, discounts, sale tax payable, and Shopify fees from the finance report.
From the payout report, record the Shopify clearing amount, which is the amount that was deposited in your account.
8. Use Link My Books for a Smooth Integration Process
Since QuickBooks Desktop doesn’t have a built-in way to track your Shopify sales, you’ll need to use Link My Books. After installing the app, connect it to your QuickBooks Desktop account by providing your QuickBooks username and password.
9. Reconcile Data
Finally, make it a habit to regularly reconcile QuickBooks Desktop reports with Shopify transactions and your bank accounts. This will help you spot and fix any discrepancies.
How to categorize Shopify in Quickbooks
1. Install Link My Books
First, you need to install Link My Books from the Shopify app store and add it to your store. This will establish the necessary connection to QuickBooks.
2. Configure Link My Books
After installing Link My Books, you’ll need to configure it according to your needs. This includes setting up your account timezone, integration starting date, and email sync report options.
3. Set Up Synchronization Options
Next, you’ll need to set up your synchronization options. This includes deciding how sales from Shopify will be sent to QuickBooks Online (as an invoice or sales receipt), how payouts from Shopify will be sent (as deposits), and how products from Shopify will be created in QuickBooks Online.
4. Set Up Invoice Creation Workflow
In this step, you’ll set up filters based on order status, assign sales to class/location, assign sales to the customer record, and set up automatic invoice numbers. You’ll also need to configure your tax settings and match Shopify products with QuickBooks Online products by name or SKU.
5. Set Up Payouts Sync Workflow
For the payouts sync workflow, you’ll need to map the “Into Bank Account” field and assign an account for the deposits from all payment methods. You’ll also need to use the income and expense accounts section.
6. Set Up Product Creation Workflow
In the product creation workflow, select the income and expense accounts for your inventoried and non-inventoried items.
7. Set Up Stock Update Workflow
For the stock update workflow, match items to QuickBooks Online items by name or SKU and select the store location where the stock should be updated.
8. Reconcile Data
Finally, make it a habit to regularly reconcile QuickBooks reports with Shopify transactions and your bank accounts. This will help you spot and fix any discrepancies.
The Problems with Manually Recording Shopify Sales in QuickBooks
Manually entering Shopify sales data into QuickBooks leads to a host of issues that can be mitigated through proper integration:
Manually entering hundreds or thousands of orders from Shopify into QuickBooks is extremely labor intensive. An employee has to manually type in sales details like date, amount, products, customer, etc for each order. This repetitive manual work takes away time from more impactful tasks like customer service, product development, and marketing.
Shopify-QuickBooks integrations automatically and seamlessly transfer order details into QuickBooks in real-time without any manual work. This saves countless hours of repetitive manual data entry.
Risk of Data Entry Errors
Humans make mistakes. Typos, incorrect dollar amounts, wrong account or tax classifications, mismatched dates, and other errors can easily occur when manually entering data. Even a minor error can undermine the accuracy of financial reports.
Automated integration eliminates the risk of human error in data entry. Order details flow directly from Shopify to QuickBooks without any manual typing. This improves the reliability of reports.
Delayed Insights on Performance
With manual processes, there is always a gap between an order occurring on Shopify and being recorded in QuickBooks. This significantly delays visibility into key performance metrics like sales volumes, profits, margins, etc.
Real-time syncing through integration provides immediate insights into sales and order activity. This enables quicker identification of issues or opportunities.
Inventory Level Inaccuracies
Stock levels get outdated in QuickBooks if order details are manually entered after a delay. This inaccuracy can lead to overselling inventory if stock is not deducted in real-time.
Integration syncs order data and inventory deductions rapidly across both platforms. This prevents inventory mismanagement issues like stock-outs or overselling.
Audit and Compliance Issues
Lack of audit trail for manually entered transactions increases tax errors and the chances of triggering IRS audits. Errors also arise when keeping data across systems consistent.
Proper integrations provide detailed audit trails and transaction histories, improving compliance. Data consistency across systems also increases through automation.
How Link My Books Makes Recording Shopify Sales in QuickBooks Automatic (& Simple)
If you’re running an ecommerce business on Shopify and managing your accounts with QuickBooks, you know that recording sales can be a complex and time-consuming process. But what if there was a way to make Shopify Bookkeeping simple and automated?
Enter Link My Books, a third-party app that automates the process of recording Shopify sales in QuickBooks. Here’s how it works:
1. Seamless Integration
Link My Books seamlessly integrates with both Shopify and QuickBooks. Once you install the app from the Shopify app store, it establishes a connection to QuickBooks.
You then configure it according to your needs, including setting up your account time zone, integration starting date, and email sync report options.
2. Synchronization Options
Link My Books offers various synchronization options. You can decide how sales from Shopify will be sent to QuickBooks Online (as an invoice or sales receipt), how payouts from Shopify will be sent (as deposits), and how products from Shopify will be created in QuickBooks Online.
3. Invoice Creation Workflow
With Link My Books, you can set up filters based on order status, assign sales to class/location, assign sales to the customer record, and set up automatic invoice numbers.
You can also configure your tax settings and match Shopify products with QuickBooks Online products by name or SKU.
4. Payouts Sync Workflow
For the payouts sync workflow, you can map the “Into Bank Account” field and assign an account for the deposits from all payment methods. You can also use the income and expense accounts section.
5. Product Creation Workflow
In the product creation workflow, you can select the income and expense accounts for your inventoried and non-inventoried items.
6. Stock Update Workflow
For the stock update workflow, you can match items to QuickBooks Online items by name or SKU and select the store location where the stock should be updated.
7. Automated Reconciliation
One of the standout features of Link My Books is its automated reconciliation process. It generates one settlement summary report for each payout you receive from Shopify.
This means that the invoices you send to QuickBooks from Link My Books will match exactly the amount Shopify deposited into your bank account. So these are nice and easy to reconcile directly on your bank reconciliation page in QuickBooks.
Key Takeaways for Recording Shopify Sales in QuickBooks
Running an ecommerce business on Shopify while managing finances in QuickBooks can be a real headache without proper integration. Manually recording Shopify sales data in QuickBooks is extremely time-consuming, prone to errors, and causes inventory and reporting inaccuracies.
This article outlined the right steps to integrate Shopify with both QuickBooks Online and Desktop. Following best practices like reconciling historical data, mapping accounts accurately, testing synchronization, and monitoring integration health ensures your systems stay in sync.
Leveraging a bi-directional integration app makes the process automatic. Key features like real-time syncing, reconciliation reports, workflow configuration, and automated inventory updates eliminate manual data entry and provide up-to-date financial insights.
Properly integrating your ecommerce and Shopify accounting software is crucial for scaling. Automating the recording of Shopify sales in QuickBooks saves massive amounts of time, minimizes errors, improves insights, and enhances order fulfillment. With clean baseline data and the right app, you can seamlessly manage orders and finances across systems.
Focus on high-value tasks knowing your books are automatically up to date. Integration helps grow your business today while optimizing back-office workflows for the future.
Here's the key takeaways you need to focus on:
- Manually recording Shopify sales in QuickBooks is extremely tedious, inaccurate, and causes reporting issues.
- Properly integrating Shopify and QuickBooks via automatic syncing apps eliminates these problems.
- Follow best practices like reconciling historical data, mapping accounts, testing synchronization, and monitoring app performance.
- Bi-directional apps provide real-time syncing, configurable workflows, reconciliation reports, and inventory automation.
- Automated Shopify-QuickBooks integration saves massive time, minimizes errors, improves insights, and optimizes order fulfillment.
- With a solid integration foundation through data audits and the right app, managing systems becomes easier.
- Focus on high-value tasks knowing your books stay automatically up-to-date.
- Integration helps efficiently grow your ecommerce business now while optimizing back-office workflows.
Get Started with Link My Books Today for Free!
Ready to streamline your ecommerce accounting? Say goodbye to the headache of manual data entry and hello to hassle-free financial management with Link My Books. This powerful tool effortlessly integrates your Shopify sales into QuickBooks, ensuring precision, saving time, and providing invaluable insights into your business performance. Don't let outdated methods hold you back. Embrace the future of ecommerce accounting software.
Try our 14 day free trial and feel the power of automated ecommerce bookkeeping for yourself!