Over 75% of our eCommerce customers come to us for the same reason: they are lacking integrated applications resulting in unreliable accounting information.
Almost all of our customers use Shopify as their storefront. Shopify is one of the easiest ways to open an online storefront and comes with a lot of powerful tools for you to help manage your eCommerce business. Those tools help you attract new customers which is great. What it doesn’t focus on is how that activity flows into your accounting system. That may not be a problem in the beginning, but as you continue to grow, the data will become overwhelming.
If you’ve already started reconciling your batch deposits against the fees, refunds, and other items netted against your total sales you understand how frustrating and time consuming this will be as you continue to grow.
The two most common cloud-based accounting applications are QuickBooks Online and Xero. We’ve found that Xero is the easiest to use for the non-accountant so we’ll use that as the example here.
Shopify Settings
shopify settings
You’ll spend most of your time navigating around in the other parts of the Shopify administration settings, but for our purposes, click Apps. This is where you will add Apps (right) to do things Shopify doesn’t do out of the box or do well.
Once there, filter the Apps so you can see “Accounting & taxes” under “Finances” and Sort by “Most installed” (below). You’ll see the most common apps to integrate either Xero or QuickBooks Online are from Bold and OneSaaS. Notice the reviews are not great for some of them.
most installed
We often see configurations where every sales transaction for every customer is feeding into the accounting system. That works when you have a low volume of customers but you can imagine how quickly that will bog any system down when you have 1,000s or more a month. An accounting system doesn’t need every customer name for all of the low dollar purchases coming through your store. Think of your accounting system as a base layer with summary data and systems like Shopify that contain the detail.
When you set up your integrations, choose to push summary information into the accounting system. The most typical scenario is to push in daily summary information for each sales channel you sell on - Shopify is just one; Amazon is another.
To keep this post brief, the reviews of the Bold and OneSaaS are that way for a reason. They will get you most of the way there but are not the best at a complete, summary reconciliation of the batch deposit reconciliation process. We recommend A2X as the best of breed application.
Other Shopify Configuration Tip: Remember to configure your Products with proper Costs and setup your SKUs using logical patterns. Additionally, Sales Tax is another important area for eCommerce businesses. We recommend TaxJar (note that is also a “Most installed” App) to automate your sales tax.
A2X
A2X is a wonderful application for integrating Shopify with Xero or QuickBooks. It’s even better if you sell on Amazon. The system will push in the summary information (like we suggest you do) to Xero as an invoice or as a Journal Entry for QuickBooks. The information pushed in will match the batch deposit amount saving you a ton of time. This will keep your accountants happy as well as all sales, fees, sales tax will be in the right place.
Below is an example of how that will look within A2X. The Status column will tell you where it’s tracking against deposits and if it’s been “Sent” to the accounting system or not.
latest payouts
Next Steps
If you are tired of reconciling your Shopify sales activity yourself, look into A2X (https://www.a2xaccounting.com/shopify). You may need to do a little cleanup in Shopify before it will work properly. A2X will also need to be configured to map into the right accounts in your accounting system. Reach out to an accountant who knows these systems and they can set it all up for you.
Rhett Molitor
Author Bio:
Rhett Molitor is a cofounder at Basis 365 Accounting, who provides a cloud-based accounting and bookkeeping services for eCommerce, Software, and Service-based businesses. We play a leading role in mapping out efficient workflows and implementing solutions. Business owners understand what drives their financials and what they need to achieve their goals. Follow him on Twitter: @rhettmolitor