Running a successful Shopify business is not an easy feat. There is so much that goes into the success of your business and one large and often confusing aspect is managing your books. But unfortunately how you manage your finances has a direct impact on the success of your Shopify store. Accurate bookkeeping not only helps you understand your business’s financial health but also ensures your compliance with any tax regulations. In this blog post, we will be exploring some specific bookkeeping management tips tailored for Shopify store owners.
Take Advantage of Shopify’s Built-in Reports:
Shopify has many powerful built in reporting features that are designed to give you valuable insights into your store’s financial performance. Taking advantage of these built-in reports, like the Sales Report, Profit Report, and Inventory Report regularly allows you to have a good grasp on the financial performance and allows you to track your sales, revenue, expenses, and inventory levels. Analyzing these metrics will help you understand your store’s profitability and identify areas of change or improvement.
Use the Shopify-QuickBooks Integration: Shopify has built-in integrations with popular accounting software like QuickBooks Online. These integrations allow you to sync your sales data, expenses, and other financial information directly into your accounting system, eliminating the need for manual data entry. By automating this process, you can save your time, reduce data entry errors, and have an up-to-date view of your Shopify store’s finances.
Track and Categorize Expenses:
It is crucial to maintain a clear record of your expenses for accurate bookkeeping. Within Shopify, you have the ability to categorize expenses, making it easier to track different types of costs, such as advertising, shipping, inventory, and software subscriptions. You should be regularly reviewing your expenses and ensuring they are correctly categorized. This habit will help you understand and assess your spending patterns, identify areas of overspending, and make informed decisions to optimize your costs.
Monitor Inventory and Cost of Goods Sold:
Managing Inventory is a critical aspect of running a successful Shopify store. Accurate tracking of your inventory and cost of goods sold (COGS) is the key to determining your profitability and making informed pricing decisions. Shopify’s built-in inventory management system allows you to monitor stock levels, set alerts for low inventory, and track your COGS. Make it a habit to regularly reconcile your inventory records with your sales to ensure accuracy and identify any discrepancies promptly to prevent any major issues.
Stay on Top of Sales Tax Compliance:
Sales tax compliance can be complex, especially for Shopify store owners selling to customers in multiple provinces or countries. Depending on where your customers live and what your product is, different taxes may apply, such as PST, GST or HST. Shopify has built-in tools to help you calculate and collect sales tax automatically. However, it is still important to stay updated on the latest sales tax regulations and thresholds. Using apps like TaxJar or Avalara that integrate with Shopify will help you to accurately calculate and remit sales tax based on your customers’ locations.
Reconcile Payments and Payouts:
Shopify’s payment processing system can sometimes result in delayed or split payouts, especially if you use third-party payment gateways. For example, you can make several sales during a given day, and the total amount should be deposited to your bank account as a single payment. However, if there is a delay in processing or other unforeseen circumstances, the payout can be split into multiple smaller payouts. This scenario can create confusion and potentially impact your bookkeeping process. To ensure you are maintaining accurate financial records, reconcile your Shopify payouts with your bank statements regularly. Ensure that the payment amounts and timing are aligned correctly. If there are discrepancies, investigate and resolve them right away to avoid any confusion or misreporting.
Backup and Secure Your Data:
Protecting your financial data is very important for Shopify store owners. Ensure that your Shopify store and accounting software are backed up regularly and securely using the backup features provided by Shopify and your accounting software. You should also consider using an additional cloud storage document management software system such as LedgerDocs to back up any financial documents for added security. Make sure you are regularly testing your backups to ensure their integrity. This will provide peace of mind in case of any data loss or system failures.
LedgersOnline Can Help
Implementing efficient bookkeeping practices specific to your Shopify store is essential for maintaining accurate financial records and making informed decisions. LedgersOnline’s team of expert bookkeepers is technology agnostic and always looks for ways to master and embrace the newest technology to help your business stay competitive and thrive in the modern landscape of finance. Schedule a call with us today and discover how we can improve the way you do business, providing you with streamlined bookkeeping solutions tailored to your Shopify store’s needs.