Accounting is a part of managing an ecommerce business. No matter how much you hate understanding your financial data, it is an essential process to keep your business running smoothly. So it is understandable for beginners in the business to get frazzled easily.
But don't worry! The following best practices can assist you in managing your accounting requirements. Additionally, we’ve selected the top accounting software to assist you in managing your money.
Shopify Accounting Best Practices You Should Know
Learning to handle your business’s accounting has a steep learning curve, but by sticking to the best practices, managing your finances won't cause so much of a headache. Here are some practices every business owner should do.
Always keep your books up-to-date
Keeping track of your business transactions and organizing them is the first step to a successful and easy accounting process. If you have a small business, experts recommend keeping your books updated at least on a monthly basis. But if you want accuracy on your records, you can practice updating your books weekly.
Most business owners stick to manual bookkeeping at the start of their business. This is fine as long as the volume of business transactions is manageable. But as your business grows, we recommend getting bookkeeping software to make recording more convenient.
Monitor your account receivables and payables closely
Money goes in and out of your business. Remember that if you have sales, your business also has bills to pay. Sales and expense tracking is crucial for every business. A big revenue is a good sign that your business is doing well. But your payables keep your business running, so don't overlook them.
It's always best to keep ahead of your deadlines. Expenses like paying your suppliers, buying raw materials, or production costs should be noted ahead of time. Delays in your payments can slow down your business and interrupt your cash flow.
Expand your payment channels and automate invoices
Shopify store owners should set up multiple payment channels for their business. There are different ways your customers can pay. Be sure your Shopify store can accept debit and credit card payments, ApplePay, Google Pay, Paypal, and other payment methods. Moreover, automating invoices will make income and expense tracking easier.
Automated invoicing tools can make sending invoices to your clients easier if you have recurring invoices. You can also get notifications for recurring billings. This feature will ensure that your cash flow is going smoothly.
Give ample time for tax preparation
Shopify businesses also have tax obligations, so you must file and pay your taxes at the end of the taxation year. Small businesses should not have difficulty preparing for their taxes because their financial reports are less complex than medium to big enterprises. However, if you are not familiar with taxes, allow your company more time to get ready.
It is always to have everything on hand two weeks before the start of tax filing. This way, you can still make the necessary adjustments or even forward accounting tasks to professionals to ensure you get everything done correctly.
Develop inventory management
Monitoring your inventory levels will help you make important decisions for your business. Of course, there will be times when some of your products will not sell as fast as your other products. Inventory tracking will help you see which of your products you should invest in to generate more sales.
You also tell which products you can reduce to slash your budget, allowing you to allocate funds to other aspects of your business. You can create strategies and budgets for your organization with the aid of effective inventory management.
Best Accounting Software for Shopify Businesses
Small business accounting is made easier with the proper accounting solution. There are several software choices, but we have chosen the best Shopify accounting software to help you. So let's examine these accounting apps and determine which one best suits your requirements.
FreshBooks Accounting Software
One of the most well-liked accounting programs for small businesses is FreshBooks. It can easily automate basic accounting processes and has a reliable bookkeeping feature. Additionally, the program can produce standard financial reports for businesses like balance sheets, income statements, and cash flow statements.
In addition, you can regulate the people accessing the software. For example, you can grant limited access to some people and full access for you and your business accountants so you can ensure your data is always secured. However, FreshBooks has a limited number of users, so we don't recommend this for larger businesses.
Wave Accounting Software
Wave is the best free accounting software you can use for Shopify. We understand that small business owners are reluctant to spend on accounting solutions. Wave accounting has expense management, bank reconciliation, payroll features, and automated invoicing—all for free. These features are the basic accounting needs of small businesses.
Wave is the best accounting software for you if you want something free and reliable. However, Wave software does not have advanced features or plans for upgrading the software. So, this accounting software only works for the early stages of your business.
QuickBooks Online Accounting Software
QuickBooks software has a user-friendly interface. Even with little accounting knowledge, it's easy to understand. The top feature of QuickBooks is its bookkeeping, but it also has accounting features such as generating business health reports, sales reports, tax tools, and third-party app integrations.
Other functions, like inventory management, increasing the number of users, and a dedicated support manager, comes at an additional cost. Although the bundles and features of QuickBooks are worth the investment, it's more expensive than other accounting software. However, if you have the budget, we highly recommend it.
Online businesses are all the rage right now, and a Shopify store is a great way to make your business boom. However, ecommerce businesses are not exempted from handling business accounting. We hope these practices and the Shopify accounting apps we recommend help you navigate your finances.
If accounting becomes too overwhelming, you can always get professional help. Unloop offers professional and reliable services for ecommerce accounting. We have bookkeeping, accounts payable management, forecasting, payroll, and tax filing. Book a call with us today and talk to our experts.