Shopify bookkeeping and accounting can take a toll on your patience. While Shopify is an excellent eCommerce platform, it doesn’t always make it easy to know how much you’re making and, just as importantly, how much you’re spending on things like shipping and fees. This can make it challenging to ascertain the viability of your business and determine how much money you’re actually making when all is said and done.
But if you’ve just started considering accounting software for Shopify or you want to find the right solution for your business, you probably have a few questions. For example, what specific features does accounting software need to work well with Shopify? Can accounting software reconcile Shopify payments? What is the best accounting and bookkeeping software for Shopify? Finally, how can you make Shopify accounting software even better?
In today’s guide, we will answer all of these questions and more, so let’s get started!
If you’ve worked with eCommerce accounting software before, then you probably understand the basic purpose: it integrates data from one or more selling channels so that you can better manage and automate financial tasks and bookkeeping. Since Shopify is a unique eCommerce platform, you’ll want to get accounting software that actually works with the way that Shopify provides and presents information to you. This way, you can easily track sales, costs, profits, taxes, and other financial data related to your Shopify store.
At a minimum, Shopify accounting software will need to include all of the following features:
● Shopify Integration - It may sound like a no-brainer, but if your accounting software doesn’t integrate with Shopify, you’re going to have a really hard time actually making it work to your advantage. Your software should be able to directly sync with Shopify and pull real-time data from your store related to sales, returns, shipping fees, and more.
● Automated Data Entry - Manual data entry is extremely time-consuming, risky, and simply not something you should have to do with paid accounting software. When you have automated updates, your accounting software can “react” to Shopify transactions in real time and change your financial statements and ledgers accordingly.
● Inventory Management - Your inventory-tracking needs may vary based on whether you manage your own inventory, you let Shopify do it, or you have a third-party logistics solution. Regardless of the path you’ve chosen, you’ll need accounting software that can, at the very least, tell you what you do and do not have in stock.
● Tax Compliance - Quality accounting software is one of the best ways to keep you on the right side of tax laws. Rather than taking unnecessary risks, you can allow the software to automatically calculate, track, and remit sales tax, even across multiple regions.
● Expense Tracking - Shopify has its own unique fees, so you’ll want to ensure that you’re keeping track of every penny you spend on the platform. Accounting software that integrates with Shopify should be able to report Shopify’s monthly fees, transaction costs, and shipping expenses.
● Financial Reporting - While this may not be specific to Shopify, good eCommerce accounting software must be able to provide P&L statements, balance sheets, and a breakdown of your cash flow. Accounting software for Shopify is no exception.
● Multi-Channel Support - Many Shopify stores sell through more than one channel, so even if you get software that works with Shopify, it may not allow you to integrate data from multiple channels. Even if you don’t sell on more than one channel right now, you may decide to do so in the future, which is why it’s important to have multi-channel accounting support from the start.
One of the most common issues that you may experience as a Shopify merchant is the disparity between sales data provided by Shopify and the deposits you see in your bank statements. This happens because Shopify doesn’t specify which deposit applies to which sale, nor does it tell you what (if any) fees were taken out. This can make it extremely difficult to reconcile what you see in your bank and what you see in Shopify, particularly if you offer multiple payment methods to your customers.
To make matters worse, reconciling Shopify payments isn’t always possible with accounting software alone. The good news is that you can fix the problem by automating payment reconciliation with third-party solutions like ConnectBooks. We’ll cover the perks of combining quality accounting software with ConnectBooks a little later on, but if you want to learn more about this issue, be sure to check out our guide on reconciling Shopify sales to bank deposits.
Now that we’ve gone into more detail about what accounting software should be able to do (and what it can’t do on its own), let’s look at some of the best accounting solutions available to Shopify merchants:
QuickBooks is such a great option for Shopify stores because it integrates seamlessly with the platform and offers some of the most comprehensive accounting tools on the market. There’s a reason that QuickBooks is the go-to solution for many businesses, both online and off. When you use QuickBooks with Shopify, you get intuitive software that syncs with Shopify to automate transaction entries, sales tracking, inventory management, and tax compliance. In short, if you’re a Shopify merchant and you want a reliable, efficient, and comprehensive accounting experience, QuickBooks is an excellent choice.
Though not as pervasive as QuickBooks, Xero is still a top choice for Shopify store owners seeking robust and easy-to-use accounting software. Renowned for its user-friendly design and powerful integration features, Xero works very smoothly with Shopify, giving you the power to manage all of your accounting needs in one place. Like QuickBooks, Xero allows you to generate a myriad of financial reports, automatically sync sales data, and centralize your eCommerce finances. Whether you just use Shopify or you want accounting software that can handle more than one selling channel, Xero is a great option.
While using the right Shopify accounting software like QuickBooks or Xero gives you a wide range of features to enjoy, integrating them with ConnectBooks can greatly enhance efficiency and functionality. ConnectBooks seamlessly connects your Shopify store with the accounting software of your choice, ensuring that you get real-time synchronization of all financial data. With features like automated transaction matching, consolidated multi-channel reporting, and in-depth financial reports, you will be able to keep an eye on every penny you spend or receive through Shopify (and any other channels you use). By leveraging ConnectBooks with your accounting software, you can transform your accounting experience and ensure that your financial processes are perfectly attuned to the nuances of Shopify.
As previously mentioned, Shopify accounting can also be particularly hard to do when you have more than one payment gateway to manage. Disparate formats and inconsistent data can make it seem as though you have little or no way to actually know how the numbers in your bank account relate to the payments you’re receiving through Shopify. Fortunately, with ConnectBooks, you can make sense of Shopify payments through various third-party payment platforms, giving you a much stronger grasp of your finances without reducing the quality of the customer experience.
Do you want to learn more about the best accounting software for Shopify? If so, reach out to the experts at ConnectBooks today!