hey it's patti scharf CPA and co-founder of catching clouds the leader in
e-commerce accounting and today we're going to talk about Shopify it seems
like every single day I see on some kind of forum or something where somebody is
asking me hey what is the best integration to use with Shopify and Xero
or QuickBooks Online and I always kind of cringe because I want to make sure
that everybody understands what the potential problems are with there
because there are like seven different issues and I never know which one
somebody's gonna have so let's go through this pretty quickly if you log
in as Shopify and you go to the payout screen you'll see this total here and
this total is the amount that actually lands in your bank account this is the
amount that you want to make sure that you got because these are the orders
that were made and this is the amount that landed in your bank people who are
less familiar with accounting they will just see these deposits in their bank
account and just go sales sale sale sale sale sales done and that's actually not
right as you can see it's broken out between your the gross sales and their
refunds in there there are adjustments for the refunds there are fees
associated with this and all of that needs to be recorded separately in your
accounting so that it makes sense so then people are like okay then I'll just
record these boom boom boom boom boom it's also not quite that easy because if
you look at any one of these payout dates so let's say April 10th you will
look and see that there are like a gazillion orders in here and some of
them were made yesterday and some are on Sunday and some were on Saturday and you
really need to record those in the right period and the the gross charges that
they have here there might be shipping income that you want to keep track of
that's in addition to the cost of the product or something like that so you
you really want to break these out into more detail okay
but I don't care how much you love accounting nobody wants to go in and
record these one-by-one I mean that is just too much brain damage for anybody's
let's say you're really simple you're just starting out you have maybe one
sale a day or a few sales a week it's really easy to stay on top of you would
just go into your payout screen you you click on your specific order and in your
quickbooks online file or your Xero file you can setup let's say for quickbooks
online you would set up a recurring sales receipt that has the basic
information that you typically are selling and then you just have to update
the amounts and the date you have the the payee go to Shopify and you're done
boom in Xero you would set up a repeating invoice same thing have your
customer be Shopify and just record the details of your sale the way you want it
done if you want to keep track of your inventory in there great if you don't
don't it does it it doesn't really matter but let's say you are now up to
ten transactions a day and it's kind of starting to take some time and it's
annoying you and and you want to automate it some way I think this is
where most of the questions come from how do i automate it and I would say at
10 orders a day or less okay you could probably use the Shopify integration if
you go to the App Store you'll see something for Xero you'll also see one
for into a QuickBooks Online and you'll notice that when you go through the
reviews you get lots of ones twos ones 5/5 like they either love it or hate it
and this is for both both systems the reason is it really depends on the
complexity of the store whether it's going to work for you well or not if you
have a lot of payment processors so if you're using stripe and Shopify payments
and PayPal the integration is only going to reconcile Shopify payments the others
it'll record the orders but then you still have to reconcile the other stuff
by hand you have to record the other fees by hand
and people who don't understand that get this kind of jumbled mess and they don't
know how to reconcile it and don't know what to do with it accountants might be
able to handle that more easily than say just somebody who's never touched
accounting before but that's something to be aware of
the other problem is if you're selling more than a thousand orders a day zero
in particular will not pull in more than a thousand orders a day and even if
QuickBooks Online does which I'm not convinced that it does it will start
overloading the system because neither systems were built to be a database like
that they weren't built to hold that much data all that information already
lives in Shopify you don't need it in your accounting system also so you
should really just be recording everything as a summary amount of
information the other problem is if you're selling like 3,000 SKUs a stock
keeping unit so the different types of products you're selling if you're
selling like a gazillion different different types of product then it's
going to overwhelm QuickBooks Online it's gonna overwhelm 0 so what do you do
the short answer is that you should really be recording everything as
summary information we have yet to find a tool that really handles this well
except for in unique circumstances but we have a method that we've created that
works pretty well if you want to get more information about that you can look
down below in our links we've included a link to our accounting for Shopify
course it's about four and a half hours long and covers the cost of goods sold
in addition to post how to post income from your Shopify store so I hope you
like this video if you did please hit the like button share it with your
friends comment and subscribe if you haven't already and we'll catch you next
time
you