Recording Shopify sales in QuickBooks has its challenges because of how Shopify operates.
Shopify is an online sales platform perfect for small businesses. It also acts as a holder for payments from your customers. Shopify will pay the available funds into your business bank account based on the amount reflected in your payout schedule.
The only concern when using Shopify is that customers pay using different methods. Shopify can receive payments through numerous different payment gateways and in multiple currencies.
Because of this, it can be tricky to track different transaction fees and sales so that you can reconcile your accounts and get an accurate understanding of your profit.
The reconciliation process can therefore be overwhelming - especially for new Shopify store owners using QuickBooks with little to no accounting experience. This is why we have established a guide to simplify the recording of sales for merchants who use QuickBooks. We also have a nifty tool that can help streamline this process for you - but we’ll get to that later!
First, we give a brief overview of the accounting software and explain how to record Shopify sales in QuickBooks.
What Is QuickBooks?
QuickBooks is accounting software that is used by small businesses to keep track of all the income and expenses made.
It is useful for a variety of reasons, including preparing invoices and creating financial reports. It is available online, or you can use the versions available for Windows and Mac.
QuickBooks was created by Inuit, which means it can be integrated with other Inuit software. However, it is not limited to Inuit software. You can also integrate QuickBooks with software that manages documents, payment processing, and many more.
4 Simple Steps To Record Shopify Sales In QuickBooks
Step 1: Find Out What Your Payouts Consist Of
The first step to recording Shopify sales in QuickBooks is to look at your payout schedule. You can find your payout schedule by selecting “view all payouts” on your Shopify home screen.
You can select a payout on a specific day that matches the amount in your bank account. By viewing all your payouts on a specific date, you can view all the details of the various transactions you made on that day. That includes viewing the total of the payout, the Gross amounts, and Fees amounts.
You will also be able to determine your beginning balances by looking at the payouts on a specific date. If the payouts reflect balances from sales made the previous month, that is added to your beginning balance of the current month.
You can also see if you have made any refunds or adjustments to a transaction on that day.
QuickBooks can help you keep track of your transactions by allowing you to separate your transactions into Merchandise Sales, Processing Fees, and Refunds.
Step 2: Run A Finance Summary Report
To run a finance summary in Shopify, you will find it under “Reports” and then “Finances”. To obtain an accurate finance summary report, you will need to enter the relevant transaction dates that match the transaction reflected in your bank account.
The finance summary will display sales, liabilities, payments, and gross profit.
However, it is important to note that the amount reflected in your bank account will often be different from the amount in the summary.
The amount in your bank account will reflect the total payments net of fees and adjustments from Shopify payouts. You will then need to manually enter adjustments into QuickBooks in order to reconcile each sale, transaction fee, and refund so that you can see how everything adds up.
Step 3: Record Shopify Sales In A Quickbooks Journal Entry
To create a journal entry, you need to know the details of the Shopify transaction. QuickBooks has sections for:
- Journal entry date
- Journal entry number
- Account description (this indicates where the transaction was taken from)
- The account itself (this is the account affected)
- The debit and credit entries
- The class and name
Creating journal entries on a deposit-by-deposit basis is difficult to do as you receive so many at a given time, and you receive them from different payment processors. This means you have to enter the relevant details into the relevant column according to the finance summary.
The finance summary will display a group of transactions that are:
- Sales income
- Shipping income
- Sales tax payable
- Shopify fees
These adjustments should all be recorded in the journal entry, which will total to a transaction that equals the amount of the item in your bank feed.
Be sure to also include the Shopify clearing amount from the payout report, as this is the amount that was deposited into your bank account.
Step 4: Record Payments Received From The Various Payment Gateways
When you record your journal entries, you will also need to record payments received from the payment gateways.
Since Shopify allows you to receive payments from multiple processors, it is difficult to process the details of payments that are not directly from Shopify. This means you will have to retrieve those details, such as fees, from the relevant processor.
There will be a lot of details you have to record in QuickBooks such as:
- Fees for the relevant payment gateway
By recording this information into QuickBooks, you will then be able to reconcile the amounts reflected in your bank account.
How Reconcilely Makes Recording Shopify Sales In QuickBooks Easier
Reconciling Shopify sales in QuickBooks takes some manual effort and can be quite time-consuming and frustrating when the numbers don’t add up.
So, you’ll be pleased to hear that Reconcilely can help! Reconcilely is a tool that automatically reconciles Shopify orders in QuickBooks. This way, you have more time to focus on more important aspects of your Shopify business instead of spending hours trying to reconcile your orders in QuickBooks.
Reconcilely makes your Shopify accounting a breeze! It will automatically track sales, refunds, and fees in QuickBooks so that you can get a clear and accurate view of your finances.
Level up your Shopify accounting with a free Reconcilely trial today.