Setting up a small ecommerce business on Shopify is a big undertaking. It involves product research and development, website design and hosting, marketing and advertising—not to mention the actual selling! And once you’ve finally got everything up and running, you still have to keep on top of it all to ensure it continues running smoothly.
One area that small business owners often overlook is accounting, but keeping on top of your finances is essential to the success of any business. The good news is that some great accounting software options are now available for small businesses using Shopify.
In this blog post, we’ll look at two of the best accounting software options for Shopify to help you keep up with your finances and avoid any nasty surprises come tax time.
Shopify Accounting: The Battle Between Xero and QuickBooks Online
Deciding which is the best accounting software to use for your Shopify store can be tough. You need to consider a lot of factors, and choosing the right option for your business is very important. If you’re trying to decide between Xero and QuickBooks Online, here are the essential things you need to consider when deciding between the two software options.
Ease of Use
Xero makes Shopify accounting software integration a breeze. With it, you can automatically import your Shopify sales data and organize it into easy-to-read reports. You can also connect your Shopify account to your bank account, which allows automatic bank reconciliation.
Plus, you can easily navigate the software with its user-friendly dashboard.
QuickBooks Online easily integrates with Shopify, making it simple to keep track of your shop’s finances and inventory levels in one place. In addition, it has a simple yet customizable layout, so you can keep track of your income and expenses without any complications.
QuickBooks Online also makes it easy to track payments and invoices, so you can see where your money is going. Plus, it offers a variety of features that are specifically designed for small businesses, such as automatic bank reconciliation and invoicing.
Xero offers a wealth of features designed to streamline the accounting process for shop owners on Shopify. And it’s a flexible software that seamlessly adapts to your business scale, schedule, and scope of operations.
Xero’s data import and export features make it easy to connect your Shopify store to your accounting records. And once you’re set up, its automation features can help eliminate the hassles of data entry and reporting. Additionally, Xero helps you monitor your stock levels with its basic inventory management features.
QuickBooks Online’s software features make it easy to monitor your finances and lessen the time you spend on accounting.
With it, you can simply void and delete transactions with a couple of clicks and easily jump to management reports and charts of accounts. The software also helps you manage your inventory, customers, vendors, and employees. So you can track your sales, expenses, and profits with ease.
Security and Safety
One of Xero’s main features is its security and safety features. Its software uses an end-to-end encryption system that protects user data from being accessed by unauthorized parties.
QuickBooks Online’s software is designed to protect your data while keeping your accounting processes running smoothly. The security features keep your data safe from hacks and fraud, while the software’s safety features protect your data from accidental deletion or corruption.
Xero puts the power of small business management in your pocket, so you can work on the go.
Its mobile experience includes a streamlined interface that makes it easy to view your financial data. You can also quickly add and edit transactions and view invoices and bills. Plus, you can access your Xero account from anywhere, using any mobile device.
QuickBooks Online’s mobile experience is optimized for Shopify accounting integration. The app provides an easy way to track sales and expenses, reconcile accounts, and create invoices on the go. QuickBooks Online also offers a handy set of tools for managing inventory, tracking customers, and running reports.
Plus, the mobile app syncs seamlessly with the desktop version of QuickBooks Online, so you can always access your financial data no matter where you are.
Xero offers a couple of plan options to meet your business needs.
Their most basic plan is Early, and it costs $9 per month. The plan includes features like reconciling bank transactions, entering bills, and sending invoices and quotes. However, this plan is very limited, allowing only five invoices and quotes to be sent and 20 bank transactions to be reconciled.
For most businesses, the Growing plan will be a better fit. This mid-priced option includes all of the features of the Early plan plus additional functionality, such as multi-currency support and expense management.
The Established plan is the way to go for online shops that need all of Xero’s accounting functionalities. This top-tier option includes everything in the Growing plan, plus features like time and project tracking. The Established plan is priced at $60 per month.
QuickBooks Online provides a lot of features at a reasonable price.
The Essentials plan starts at $25 per month and includes everything you need to get started, from tracking income and expenses to issuing invoices and accepting payments. You also get access to basic reporting, which can be very helpful in getting an overview of your business’s finances.
However, the main limitation of the Essentials plan is that it only allows for one user, so if you have multiple people working on your accounting, you’ll need to upgrade to the Plus plan.
The Plus plan starts at $70 per month and includes all of the features of the Essentials plan, plus access for up to five users, time tracking, inventory, and more reporting.
Finally, you can subscribe to the Advanced plan for more accounting functionalities. It starts at $150 per month and includes features such as batch invoicing and expenses, automated approvals and reminders, and more.
Accounting for Shopify: Which Software Is Better for My Business?
Deciding on the right accounting software for Shopify can be tough, but we’re here to help you determine which software best suits your needs! With our guidance, you can be confident that you’re making the right choice for your Shopify business.
When Should You Choose Xero?
- If You Plan on Expanding Your Business
The complexity of your financial situation increases as your business expands. That’s why it’s crucial to choose the best accounting software that can cater the growing needs of your business.
Xero is an excellent accounting solution for small businesses that need the functionality of an accounting software with more advanced features. The product has great core functions, such as processing invoices and payments, but it also offers add-ons like time or project tracking, which help you keep track in different areas!
- If You Prefer a Simple and Minimalist User Experience
Xero offers an enjoyable user experience with its user-friendly and sleek interface. So even with its countless features, you can easily navigate through the software and perform accounting tasks seamlessly.
- If Your Business Is Based Outside the US
Xero is the perfect choice for businesses based outside the US because it can be accessed from anywhere in the world. It’s handy if you have employees or customers in different time zones or if you need to travel for business. The software also offers a great feature that allows businesses to easily manage transactions in multiple currencies.
When Should You Choose QuickBooks Online?
- If You Want Affordable Yet Well-Rounded Features
QuickBooks Online’s standard plan may seem costly at first glance, but it comes with all the essential features you need to run an ecommerce business. For instance, you can send limitless bills and invoices without any worries. You can also track both your income and expenses. Plus, you can keep up with taxes.
- If You Need More Extensive Reporting
With an excellent reporting suite, QuickBooks Online offers enhanced reports and project profitability analysis with its Advanced plan. It also offers exceptional customization for various features, including forecasting, budgeting, and profitability analysis.
- If Your Business Is Based in the US
QuickBooks is a popular accounting solution for accountants due to its GAAP and IAS compliance. So no wonder it’s the market leader in the United States. It also means that US-based accountants are more experienced in using the software, leaving little to no room for accounting issues.
Stay on Top of Ecommerce Accounting With Unloop
It’s crucial to have a good accounting software in place if you’re using Shopify to run your online business. After all, it’s difficult to manage your business effectively without accurate financial information.
In this blog post, we looked at two of the most popular options for Shopify accounting software: Xero and QuickBooks Online. We hope that this information has helped you determine which accounting tool is best for your store.
If you still have questions or would like help getting set up with accounting for your Shopify store, book a call with Unloop today. Our team of experts will be more than happy to answer any queries, and help you find the best accounting software for your ecommerce business.