Shopify is a fantastic ecommerce platform for startup businesses and it integrates well with the accountancy software Quickbooks. Shopify is much favoured by small and medium-sized businesses thanks to being low-cost and easy to set up. Many of these sellers may be looking to automate more of their bookkeeping process, including recording their Shopify sales in Quickbooks.
Recording Shopify sales in Quickbooks online is a vital task for any Shopify seller. If you set it up incorrectly, you could be misreport your income from the platform, a big issue when it comes to submitting a tax return.
However, keeping track of the different sources of income including deductions and payment processor fees inside and outside Shopify can get tricky, even for experienced ecommerce sellers.
This introduction will help you find and record the data you need so you can stay on top of your Quickbooks and Shopify integration for flawless bookkeeping.
Here’s how to get started recording your Shopify sales in Quickbooks.
1. Run Shopify Payout report
Start by running a Shopify payout report:
- On the Shopify home screen, look for payouts.
- Next, scroll down and find the payout schedule located on the right.
- Now select view all payouts.
You’ll see a list of all your Shopify payouts in date order. Select the date of any payout to see more details including gross, fees, charges including any refunds or adjustments, and the total amount received in your bank account.
2. Run Shopify Finances Summary report
Next, you’re going to run a finances summary report. Find the reports tab under analytics and scroll down until you find finances.
Under report, click on finances summary. You’ll need to select the transaction dates you need from the payout report to get the information you need. Enter your date range and the finances report appears, showing:
- Sales including gross and net sales, discounts and returns.
- Liabilities including gift card sales and tips
- Shopify payments
It’s worth bearing in mind that the amount shown for Shopify payments on the finance report is different to the total amount of the Shopify payout received in your bank account.
Here’s why. The Shopify payout that is paid into your bank = your Shopify payment minus any fees, and plus or minus any adjustments.
This is where things can start to get complicated and you’ll need to make some adjustments when you enter the amount into Quickbooks. Let’s take a look at how you create a journal entry to record Shopify sales.
3. Import into Quickbooks
You’ll need data from the Shopify payout and finances report to start creating your journal entry. From the finance report you’ll record:
- Sales income
- Shipping income
- Sale tax payable
- Shopify fees
From the payout report you’ll need the Shopify clearing amount – in other words the amount that was deposited in your account.
Laying the data out as a journal entry allows you to account for the adjustments shown in the finance report so the transaction matches the incoming bank feed.
4. Record your payment processors
If you use other payment processors, including Amazon and PayPal, the fees will need to be recorded in your journal entry.
The problem is, Shopify reports only include information about Shopify Payments. You’ll need to get the data on Amazon, PayPal or other fees directly from the payment processor.
Ultimately, you need the following information for each Quickbooks journal entry:
The trick is keeping your eye on the different sources of data and pulling them all together so that Quickbooks can reconcile your entries with the payments you receive in your bank account.
The Bottom Line
As we said at the beginning, keeping all these plates spinning when it comes to tracking down sources of income, deduction and payment processor fees can be tricky. And although it takes work, and can get complicated, the journal entry method is worth a try if you’re looking to streamline your accounts using Quickbooks.
If you are struggling with any aspect of recording Shopify sales in Quickbooks, we can help. We are specialist ecommerce accountants that help online businesses including Shopify sellers with their accounting every day.
Get in touch today for a free 30 minute consultation on the accounting for your Shopify business.