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A Guide to Shopify Bookkeeping: How to Manage Finances Like a Pro

Running an online store can be very fulfilling, but it also requires a lot of hard work. One of the crucial aspects of running a successful Shopify store is bookkeeping. Without proper bookkeeping, you'll have difficulty keeping track of your expenses, revenues, and profits. In this guide, we'll delve into the details of Shopify bookkeeping, including why it's important, what you need to do, and how you can do it like a pro.

Why Is Shopify Bookkeeping Important?

Bookkeeping involves the process of recording, classifying, and organising financial transactions. It's important for any business, whether it's a brick-and-mortar store or an online store. Shopify bookkeeping helps you keep track of your store's income and expenses, which is essential for making informed business decisions. With accurate bookkeeping, you can identify areas of your business that need improvement, cut costs, and increase profits.

What Do You Need to Do for Shopify Bookkeeping?

To manage your Shopify store's finances, you'll need to perform the following tasks:

1. Record All Transactions

Every sale, refund, shipping cost, and other expenses must be recorded accurately. You can use Shopify's built-in reports to track your sales, refunds, and taxes. You can also use third-party apps to track your expenses, such as shipping costs, payment processing fees, and marketing expenses.

2. Categorise Transactions

Once you've recorded all your transactions, you need to categorise them. Categorising your transactions helps you understand where your money is going and how much you spend on each category. For example, you can categorise your expenses into advertising, inventory, shipping, and office expenses.

3. Reconcile Accounts

Reconciling your accounts ensures that your records match those of your bank or payment processor. It's important to reconcile your accounts regularly to avoid errors and discrepancies.

4. Generate Financial Reports

Financial reports give you an overview of your store's financial health. They include profit and loss statements, balance sheets, and cash flow statements. You can use Shopify's built-in reports or third-party apps to generate financial reports.

How Can You Do Shopify Bookkeeping Like a Pro?

Now that you know what Shopify bookkeeping involves, let's dive into how to do it like a pro.

  • Use Accounting Software: Shopify integrates with various accounting software, such as QuickBooks, Xero, and Wave. Accounting software automates many bookkeeping tasks and makes it easy to generate financial reports. It also reduces the chances of errors and saves you time.

  • Set Up Automatic Bank Feeds: Automatic bank feeds allow you to import your bank transactions into your accounting software automatically. This saves you time and reduces the chances of errors.

  • Use Categories: Categorising your transactions makes it easy to understand where your money is going. It also helps you identify areas where you can cut costs. Make sure you're consistent with your categories and use subcategories if necessary.

  • Reconcile Your Accounts Regularly: Reconciling your accounts regularly ensures that your records match those of your bank or payment processor. This helps you avoid errors and discrepancies. It's recommended to reconcile your accounts at least once a month.

  • Set Up a Chart of Accounts: A chart of accounts lists all the accounts you use for your business. It includes your assets, liabilities, equity, income, and expenses. Setting up a chart of accounts makes it easy to categorise your transactions and generate financial reports.

  • Keep Your Records Up-to-Date: Keeping your records is crucial for accurate bookkeeping. Record all your transactions as soon as possible and reconcile your accounts regularly.

Take Control of Your Shopify Store's Finances

Shopify bookkeeping may initially seem daunting, but it's essential for running a successful online store. By recording all your transactions, categorising them, reconciling your accounts, and generating financial reports, you'll better understand your store's finances. Using accounting software, setting up automatic bank feeds, and keeping your records up to date can help you do Shopify bookkeeping like a pro. Don't let your finances get out of control—take control of them today.

The ECommerce Accountant is a team of business advisors for online stores and influencers across Australia, dedicated to helping online entrepreneurs minimise tax and increase profit. We specialise in everything online, including traditional production stores, subscription-based, dropshipping and Amazon retailers. If you need Shopify bookkeeping services, we’ve got you covered! Get in touch with us today and let us know how we can help!

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