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Detailed Guide to Shopify Accounting and Bookkeeping

In this article we will explore the various ways you can think about improving the management of your Shopify accounting. We’re aware that the accounting process for Shopify can get complicated, complex, confusing, and can be quite frustrating. However, having accurate financials is crucial in making more informed decisions regarding your Shopify store. Every day we see the potential that precise Shopify accounting can bring to sellers looking to increase their profits and grow their business. You’ll likely come across various techniques of tools, methods, and suggestions about how you can complete the Shopify accounting with Corporation Tax Services In London. The purpose of this post is to give you an in-depth understanding of what you need to think about and the various ways to do it to help you choose the one that is right for you. Then, we will guide you through the method you select.

How precise should you make it?

One of the most important things to consider in how you use your Shopify financials is the compromise on the volume of detailed financial data you receive and the time required to achieve the same level of accuracy. Each method you go over becomes more precise and, thus, time-consuming and complex. It is dependent on the size and stage of your company. There is the right timing and a place for every method. I’d suggest each approach for the following sizes of businesses:

What does Shopify Accounting differ from that of other companies?

Additionally, it would help to account for the transactions you make in your account at the bank and on credit cards. Like all other companies, Shopify sellers have additional complexity in accounting. A lot of financial transactions take place in your Shopify channel as well as your payment processors. It is possible to view the process in three stages (see the diagram below). So that the Shopify account you have on your bank account is a NET transfer of all the activities happening via Shopify and your processors for payment. The net deposit comprises activities like chargebacks, sales and refunds, shipping costs, taxes, sales taxes, merchant fees and many more.

In other words, by recording the Accounting Advisory Services In London, you view your bank accounts as sales, you’re not accurately stating the revenue, and you’re missing out on the other transactions going on. The bigger your company, the more significant the difference will be in this regard and the actual numbers. This is why larger firms should move to use the Shopify accounting guru system. They will have more in-depth details about what’s going on at the payment channel and processor levels to ensure they can improve their profits. Here are two customers (one smaller, one larger) and the extent to which they could be putting up false numbers for revenues by simply not recording the Shopify deposits into their account at the banks (deposits) as opposed to getting precise “sales” numbers through the Shopify accounting expert method (accuracy):

Shopify Accounting Methods

Be aware that the following methods will focus on different methods to keep track of all your transactions within Shopify and your payment processors. Keep in mind that you may still be making additional financial transactions on your credit and bank accounts, as well as cards that you’ll need to note down. (These other transactions are usually simpler to manage). Be aware that all of these methods is sufficient in obtaining an accurate estimate of net income and the necessary financials for tax season. However, some other major distinctions are crucial to be aware of!

The first method is Cash-deposit accounting with Shopify.

The primary Shopify accounting method we prefer to refer to as “cash-deposit accounting”. This option is designed ideal for small-scale sellers working hard to get their businesses up and running and expanding. In reality, marketing and other tasks are more crucial to your business’s growth now than working on your accounting. (Yes, I said it!) It’s not a good idea to spend a lot of time working the accounting. Yes, it would help if you were thinking about profitability and sales; however, you do not need to know this in-depth. If you have low sales, you likely have a good concept of where you’re at in financial terms.

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