A-Z Guide: Bookkeeping For Shopify Store Owners

Are you a Shopify store owner looking to keep your financial ducks in a row? Do you break a cold sweat when it comes to bookkeeping? 

It’s your lucky day! 

We’ve got the ultimate A-Z guide on bookkeeping for Shopify store owners. From A for “Accounts Payable” to Z for “Zero Balance,” this guide will explore tips, tricks, and insider knowledge you need to keep your books balanced and your sanity intact! 

Running a Shopify store is exciting, but tracking your sales, expenses, taxes, and profits can be time-consuming and sometimes overwhelming. Bookkeeping can help you stay organized and informed about your store’s financial health.

What Is Bookkeeping?

Bookkeeping involves recording and tracking all financial transactions of a business. This involves keeping accurate and up-to-date records of all income and expenses, cash flow, and balance sheet items such as assets, liabilities, and equity.

Why Is Bookkeeping Important For Shopify Store Owners?

Accurate bookkeeping is crucial for Shopify store owners to manage their financial resources effectively. It allows you to:

•  Understand your cash flow

Bookkeeping provides a clear picture of the cash flowing in and out of your business. This helps you track where your money is coming from and where it’s going, enabling you to make informed decisions about cash flow management.

•  Make informed financial decisions

Accurate records of all past and present financial transactions help you make informed decisions about your business. For example, bookkeeping data can help you determine when to invest in new equipment or reduce expenses.

• Comply with tax regulations

Accurate bookkeeping helps you keep track of your taxable income and deductions, which is vital for submitting accurate tax returns and avoiding penalties.

• Improve creditworthiness

Good bookkeeping practices can improve your creditworthiness by providing lenders with reliable financial statements and records. This can make it easier for you to secure funding for your business’s growth.

These are all reasons why  you should take your bookkeeping more seriously. Nobody enjoys accounting, so many entrepreneurs hire finance experts to handle their books. 

You can also choose to invest in accounting software. You might say, “Is it not expensive for me as a small business owner?” Most accounting software is free, but to access the entire package, you will be required to pay a small subscription fee.

Don’t worry; in this case, the benefits outweigh the cost, and you will get great value for your money. 

Why Do I Need Accounting Software?

As the world of e-commerce grows more and more each day, the need for efficient and effective tools for managing online businesses is also increasing. 

One of the essential tools for any Shopify business is accounting software. Accounting software is a computer program that manages a company’s financial processes and transactions, such as invoicing, bookkeeping, and payments.

Accounting software is an excellent tool for Shopify businesses for several reasons. Let’s find out why.

Helps Shopify businesses keep track of all their financial transactions easily

With an accounting software application, business owners can automate creating and sending invoices, making it easy to track and record sales and expenses in real time. This makes reconciling transactions and generating financial statements easier, faster, and more accurate. 

Helps save time and streamline processes via automation 

By automating creating invoices, tracking inventory, and managing expenses, Shopify business  owners can free up more time and resources to focus on growth and expansion. Without accounting software, businesses may have to spend hours every week manually inputting data. This is valuable time that could’ve been spent on core business operations. 

Shopify businesses can get a comprehensive overview of their financial status

This is especially important when making financial decisions that impact the business’s future. With a clear understanding of the company’s financial position, Shopify business owners can make informed decisions about investments, product launches, and expansion plans. 

It is a great tool for reducing the risk of errors and fraud 

By automating and reconciling financial transactions in real-time, accounting software can help businesses detect and prevent irregularities before they negatively impact the business. With regular audits and comprehensive financial reporting, Shopify business owners can identify potential risks and take corrective measures to prevent them from becoming larger issues. 

It is an affordable and accessible option for Shopify businesses

With various software options in the marketplace, businesses can find the best accounting software for their needs, no matter their budget. Moreover, most accounting software providers offer excellent customer support, ensuring that businesses can get the help they need when they need it. 

By automating financial processes, reducing errors and fraud, and providing comprehensive financial reporting, accounting software can help businesses streamline their operations and make informed decisions about their finances. 

With various software options available, businesses can find the best accounting software for their needs, making it an affordable and accessible option for any Shopify business owner.

Of course, not all software applies to all businesses and business owners. So what tools can you use as a Shopify business owner?

What Tools And Software Do You Need For Bookkeeping?

The good news is that you do not need to be an accounting expert to manage your Shopify store’s books efficiently. Many tools and software can help you streamline your bookkeeping and make the process easier.

Here are some of the most popular bookkeeping tools for Shopify store owners:

QuickBooks

QuickBooks is a very popular accounting software known for its user-friendly interface. It allows you to sync your Shopify store transactions with your accounting records, making reconciliation and reporting effortless.

Xero

Xero is another cloud-based accounting software that integrates seamlessly with Shopify. It lets you track your expenses, automatically reconcile your bank transactions, and generate financial reports.

Wave

 Wave is a free accounting software that is ideal for small businesses. It offers features such as expense tracking, invoicing, and payroll, which can help Shopify store owners manage their finances more efficiently.

Excel spreadsheets

Excel spreadsheets may not be as sophisticated as other accounting software, but they are a simple and effective way to create custom financial reports, manage budgets, and track transactions.

If you can get off these software options, you can be guaranteed that your  bookkeeping will be much more seamless. But it continues beyond the tools and technical aspects. 

Here are some tips and tricks to help you move from a total novice to a professional in no time.

Tips And Tricks For Managing Your Shopify Store’s Books

Once you have your bookkeeping tools in place, here are some tips to help you manage your books more efficiently:

• Set up automatic bank feeds

Use your bank’s automatic feed to import all transactions directly into your bookkeeping software. This will save you time and reduce the risk of manual entry errors.

• Stay organized

Ensure that all invoices and receipts are kept safe and organized. This will help you reconcile your accounts more efficiently and provide necessary proof in case of an audit.

• Reconcile your accounts regularly

Reconciling your accounts at least once a month will help you catch any financial inconsistencies, identify potential fraud, and prevent mistakes from slipping through the cracks. Make sure that all expenses are properly aligned with sales. This will help identify where the business is spending and if it is making a profit.

• Hire a bookkeeper

If bookkeeping is not your forte or you don’t have time, consider outsourcing to a professional bookkeeper. These experts have tons of experience managing and tracking the finances of businesses of different sizes and know what they’re doing. They also handle taxes, payroll, and even financial planning. Hiring one will save time and keep your financial records up-to-date and accurate.

• Keep track of taxes 

Shopify provides monthly summaries of fees and taxes. Make sure to record taxes and set aside funds for tax payments accurately.

• Regularly review financial reports

Review financial reports, such as profit and loss statements and balance sheets, to gauge business performance and identify areas where improvements can be made.

By following these tips and keeping accurate financial records, Shopify business owners can better manage their finances and remain profitable.

Final Thoughts

Keeping on top of your Shopify store’s finances is essential for business success. With the right tools and best practices, you can save time and money, make informed financial decisions, and stay on the path to long-term success. 

So, follow these tips to keep your books organized and your business financially healthy.