Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
There's a lot to think about when filing your taxes. The process can be even more complex for business owners like you because of the many tasks you need to accomplish. If you’re a beginner in the field, the lack of knowledge and the intricate details of calculating, collecting, and filing taxes can be overwhelming. Many tax rules and regulations, especially with sales taxes, are always subject to change.
That’s why it’s important to get organized. Doing taxes right will ensure you won’t get in trouble with the Internal Revenue Service (IRS), and your business can run smoothly. With that, here are nine tips you can apply and the help you can get from remote bookkeeping companies in case you’ll need to partner with one.
The first thing you need to do is to register as a taxpayer. You must ensure you get your basic information correctly, such as your name, address, and contact number. You should also determine your tax status or business type. Owners must determine whether your business type is a sole proprietorship, corporation, partnership, cooperative, or limited liability. What you declare will determine the taxes you need to pay.
As a business, you’ll be concerned with corporate taxes, sales taxes, your personal income tax, and the income taxes of your employees (if you have any).
Corporate income tax: These taxes are applied to all companies. Companies need to pay duties based on their total annual income.
Personal income tax: Owners and shareholders of a company should also declare their personal income tax. This is based on their total income for the year.
Employee income tax: And if you have employees, it is your duty to compute, deduct, and remit income taxes of your employees.
Sales taxes: All the goods you sell, unless classified as tax exempt, are subject to sales tax. Buyers pay this, but it is your duty to compute, collect, and remit them.
The paperwork does not stop after registering yourself as a taxpayer. It is only the beginning; the next step would be to familiarize yourself with these many different tax forms.
While some of the forms here don’t apply to you, it would be best to familiarize yourself with those that do.
While most individuals and transactions are taxable, there are also tax exemptions. For instance, a state defines a certain non-taxable income which, when satisfied , can exempt taxpayers from paying taxes. When organizations function solely for charity, religion, education, and scientific research, they are tax exempted.
Regarding sales taxes, there are also various tax exemption rules. For example, certain goods, like food and groceries, are classified as non-taxable as they are necessities. The regulations vary per region as sales taxes are determined per province or state. A financial transaction in one state may be exempted in a certain state but may be taxable in the other. Hence, as a business owner, you should check for specific rules on a grassroots level.
To give you a little more push to take taxes seriously, declare accurate values, and pay on time, you should also be aware of the repercussions you might face if you fail to become a good taxpayer.
So, instead of suffering these consequences, it’s in your best interest to be a responsible taxpayer. You can also make use of various tax assistance from the IRS. Some of these are as follows:
One important part of tax preparation is to begin bookkeeping and accounting early. Bookkeeping tracks all financial business transactions and organizes them into categories. When tax season comes, you’ll have all the data you need for the tax declaration.
Meanwhile, accounting can help you understand how much tax you’ll be paying. Your accountant can generate tax and financial reports for you, so you can set aside tax payments immediately and not spend them on business operations. Business owners like you know very well that the after-tax income is your real income, and the money you should spend to make your business thrive or grow.
In case you cannot squeeze these tasks on your plate, you can always rely on a remote bookkeeper or sign up for a virtual bookkeeping service.
Not only should you collect financial data, but you should also ensure that you get all the details accurately. One way to achieve this is to invest in software that captures financial statements and documents and converts them into usable text data. This method takes away the possibility of human error in manual data entry. You can rely on Dext Prepare, Shoeboxed, and Wave for this task.
Meanwhile, don’t fall short of reliable, investment-worthy online bookkeeping and accounting software. Check out Quickbooks Online, Xero, Sage50 Cloud, and Freshbooks. These tools can help you track the income and expenses of your business; they allow bank reconciliation, the creation of invoices, inventory management, and report generation. Experts in a virtual bookkeeping service company also use these tools to ensure accuracy and efficiency in bookkeeping for your business.
Getting ready for tax season doesn’t only mean minding how much you need to pay for the current tax year. You can always enact tax planning to forecast how much you’ll spend for the next quarter or even in the next tax year. You can make this area a part of your business forecasting.
When you see how much you need to pay in advance, you can plan how you can lower your taxes. You can also ensure that you set aside the tax amount you have calculated to avoid using it for other expenses. Finally, you can also plan how you will spend your after-tax income to scale your business.
You will be faced with a lot of costs when running a business. So, you may think that doing accounting and bookkeeping on your own is the way to go. Besides, it is one way to save some costs. If you have experience, then you can probably handle these yourself. However, for those who aren’t trained for it, it is still best to seek help from experts because of the following reasons:
As a small business owner, it’s important to know everything there is to know about taxes. It’s beneficial to know the different tax laws and regulations that apply to your industry. You can avoid costly mistakes and penalties by understanding the basics of tax preparation and filing. The tips we’ve shared should give you a good starting point, but if you need more assistance, don’t hesitate to reach out to a virtual bookkeeper, accountant, or tax specialist.
What is remote bookkeeping? Remote bookkeeping services is what we do. At Unloop, we provide:
We’re experts in the field and we can help you get a head start on your business’s taxes. Have more questions? Contact us today for a free consultation!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
There's a lot to think about when filing your taxes. The process can be even more complex for business owners like you because of the many tasks you need to accomplish. If you’re a beginner in the field, the lack of knowledge and the intricate details of calculating, collecting, and filing taxes can be overwhelming. Many tax rules and regulations, especially with sales taxes, are always subject to change.
That’s why it’s important to get organized. Doing taxes right will ensure you won’t get in trouble with the Internal Revenue Service (IRS), and your business can run smoothly. With that, here are nine tips you can apply and the help you can get from remote bookkeeping companies in case you’ll need to partner with one.
The first thing you need to do is to register as a taxpayer. You must ensure you get your basic information correctly, such as your name, address, and contact number. You should also determine your tax status or business type. Owners must determine whether your business type is a sole proprietorship, corporation, partnership, cooperative, or limited liability. What you declare will determine the taxes you need to pay.
As a business, you’ll be concerned with corporate taxes, sales taxes, your personal income tax, and the income taxes of your employees (if you have any).
Corporate income tax: These taxes are applied to all companies. Companies need to pay duties based on their total annual income.
Personal income tax: Owners and shareholders of a company should also declare their personal income tax. This is based on their total income for the year.
Employee income tax: And if you have employees, it is your duty to compute, deduct, and remit income taxes of your employees.
Sales taxes: All the goods you sell, unless classified as tax exempt, are subject to sales tax. Buyers pay this, but it is your duty to compute, collect, and remit them.
The paperwork does not stop after registering yourself as a taxpayer. It is only the beginning; the next step would be to familiarize yourself with these many different tax forms.
While some of the forms here don’t apply to you, it would be best to familiarize yourself with those that do.
While most individuals and transactions are taxable, there are also tax exemptions. For instance, a state defines a certain non-taxable income which, when satisfied , can exempt taxpayers from paying taxes. When organizations function solely for charity, religion, education, and scientific research, they are tax exempted.
Regarding sales taxes, there are also various tax exemption rules. For example, certain goods, like food and groceries, are classified as non-taxable as they are necessities. The regulations vary per region as sales taxes are determined per province or state. A financial transaction in one state may be exempted in a certain state but may be taxable in the other. Hence, as a business owner, you should check for specific rules on a grassroots level.
To give you a little more push to take taxes seriously, declare accurate values, and pay on time, you should also be aware of the repercussions you might face if you fail to become a good taxpayer.
So, instead of suffering these consequences, it’s in your best interest to be a responsible taxpayer. You can also make use of various tax assistance from the IRS. Some of these are as follows:
One important part of tax preparation is to begin bookkeeping and accounting early. Bookkeeping tracks all financial business transactions and organizes them into categories. When tax season comes, you’ll have all the data you need for the tax declaration.
Meanwhile, accounting can help you understand how much tax you’ll be paying. Your accountant can generate tax and financial reports for you, so you can set aside tax payments immediately and not spend them on business operations. Business owners like you know very well that the after-tax income is your real income, and the money you should spend to make your business thrive or grow.
In case you cannot squeeze these tasks on your plate, you can always rely on a remote bookkeeper or sign up for a virtual bookkeeping service.
Not only should you collect financial data, but you should also ensure that you get all the details accurately. One way to achieve this is to invest in software that captures financial statements and documents and converts them into usable text data. This method takes away the possibility of human error in manual data entry. You can rely on Dext Prepare, Shoeboxed, and Wave for this task.
Meanwhile, don’t fall short of reliable, investment-worthy online bookkeeping and accounting software. Check out Quickbooks Online, Xero, Sage50 Cloud, and Freshbooks. These tools can help you track the income and expenses of your business; they allow bank reconciliation, the creation of invoices, inventory management, and report generation. Experts in a virtual bookkeeping service company also use these tools to ensure accuracy and efficiency in bookkeeping for your business.
Getting ready for tax season doesn’t only mean minding how much you need to pay for the current tax year. You can always enact tax planning to forecast how much you’ll spend for the next quarter or even in the next tax year. You can make this area a part of your business forecasting.
When you see how much you need to pay in advance, you can plan how you can lower your taxes. You can also ensure that you set aside the tax amount you have calculated to avoid using it for other expenses. Finally, you can also plan how you will spend your after-tax income to scale your business.
You will be faced with a lot of costs when running a business. So, you may think that doing accounting and bookkeeping on your own is the way to go. Besides, it is one way to save some costs. If you have experience, then you can probably handle these yourself. However, for those who aren’t trained for it, it is still best to seek help from experts because of the following reasons:
As a small business owner, it’s important to know everything there is to know about taxes. It’s beneficial to know the different tax laws and regulations that apply to your industry. You can avoid costly mistakes and penalties by understanding the basics of tax preparation and filing. The tips we’ve shared should give you a good starting point, but if you need more assistance, don’t hesitate to reach out to a virtual bookkeeper, accountant, or tax specialist.
What is remote bookkeeping? Remote bookkeeping services is what we do. At Unloop, we provide:
We’re experts in the field and we can help you get a head start on your business’s taxes. Have more questions? Contact us today for a free consultation!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Amazon has made it easier than ever for business owners to sell their products. Selling your goods on Amazon is a great way to increase revenue and reach new customers.
However, with this convenience comes tax responsibilities. Thus, it is best to remain compliant with state sales tax laws or else risk steep penalties.
As an Amazon seller, you know that tax compliance can be tricky. With so many different state laws on the matter, it is easy to make a mistake.
Let us help you ensure your business stays compliant with Amazon-specific requirements. In this blog post, we will discuss seven important reminders on Amazon seller sales tax collection.
There are no shortcuts to taxation. You need to learn the basics of Canadian sales tax rates and even know how to compute them.
Canada has General Sales Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST). Different provinces may charge GST only, GST plus PST, HST only, or GST plus QST.
In computing, make sure to use the sales tax rate of the province you are delivering orders to. For instance, multiply the order cost by 5%, Alberta’s GST, when delivering to the province.
After knowing the ins and outs of Canadian sales tax, you should also know US tax laws.
The USA has no federal tax; instead, the country follows a per-state sales tax rate. States may charge sales taxes based on the destination, the source, or a combination of the two.
When selling on Amazon, you need to charge sales tax whether you drop-ship or use Fulfillment By Amazon. Warehousing and using state roads when using different shipping methods constitute having a sales tax nexus.
The Marketplace Facilitator (MPF) legislation delegates sales tax collection and remittance to a “marketplace facilitator” like Amazon. If you sell on the ecommerce platform, they are responsible for collecting and remitting sales tax as long as a state or province is under their jurisdiction.
In Canada, all provinces except British Columbia are under MPF jurisdiction. For British Columbia, you need to collect and remit taxes on your own.
In the USA, meanwhile, Amazon does not collect sales tax from orders bound for Delaware, Missouri, Montana, New Hampshire, and Oregon. These states do not charge sales taxes. For the other states, Amazon has your sales tax collection and remittance covered.
You can apply for a sales tax exemption through the Amazon Tax Exemption Program (ATEP) if you are not the product's end user. You must provide a tax exemption certificate, an exemption number, or an exemption form (whichever applies).
Applications are made on Amazon’s website. If you have supplied the necessary documents, Amazon can confirm your tax exemption application within 24 hours. If you apply for this exemption, you can skip the hassle of tax refunds for your purchases.
MPF is already convenient. But you can still get another service to make sales tax collection, remittance, and monitoring more efficient—the Amazon Tax Collection Service (TCS). This service is available to individuals with a professional Amazon account, although it is optional.
TCS stores all your sales tax data and configurations. Amazon already has default tax settings, but you can still optimize, review, or update the following:
Amazon seller sales tax report data like sales tax collected, withheld tax, and order reports are available on TCS. You can link these to your books for accounting.
Amazon vendor sales tax collection is only a part of the tasks you need to accomplish when selling on Amazon. You still need to file for your corporate income tax and your employees' income tax if you run a company.
With this, you need to track all the income and expenses from sales, inventories, supplies, investments, and taxes. Only when you monitor all these can you get a complete picture of your business's financial health. Utilize the reports you get from Amazon TCS to know how much you’ve remitted and paid in taxes and get an idea of your after-tax income.
You can delegate accounting and tax preparation to experts. Doing this allows you to focus on other essential parts of your business, like maintaining product quality, getting to know your target customers, or planning your business expansion.
Here are some of the assistance you can get.
Although some of these tasks look like something you can handle, it is still best to get assistance from experts and individuals who are experienced in doing the job.
As an Amazon seller, you want to ensure that you don’t get penalized for not paying taxes or charging too much for your products.
Thus, your business needs to be compliant with both US and Canadian sales tax laws. You should know about the tax rates in both countries and where MPF applies. It will also be of great help to utilize TCS and get help from experts.
Unloop has got your back in tracking all your income and expenses to prepare for tax season. We also track your sales taxes and Amazon financial statements to provide you with a complete view of your business's financial health before and after taxation.
We have a team of expert bookkeepers who use reliable software like Quickbooks, A2X, and Hubdoc for data accuracy and safety. If you’re interested, give us a call at 877-421-7270. We’d love to discuss our offers with you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Amazon has made it easier than ever for business owners to sell their products. Selling your goods on Amazon is a great way to increase revenue and reach new customers.
However, with this convenience comes tax responsibilities. Thus, it is best to remain compliant with state sales tax laws or else risk steep penalties.
As an Amazon seller, you know that tax compliance can be tricky. With so many different state laws on the matter, it is easy to make a mistake.
Let us help you ensure your business stays compliant with Amazon-specific requirements. In this blog post, we will discuss seven important reminders on Amazon seller sales tax collection.
There are no shortcuts to taxation. You need to learn the basics of Canadian sales tax rates and even know how to compute them.
Canada has General Sales Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST). Different provinces may charge GST only, GST plus PST, HST only, or GST plus QST.
In computing, make sure to use the sales tax rate of the province you are delivering orders to. For instance, multiply the order cost by 5%, Alberta’s GST, when delivering to the province.
After knowing the ins and outs of Canadian sales tax, you should also know US tax laws.
The USA has no federal tax; instead, the country follows a per-state sales tax rate. States may charge sales taxes based on the destination, the source, or a combination of the two.
When selling on Amazon, you need to charge sales tax whether you drop-ship or use Fulfillment By Amazon. Warehousing and using state roads when using different shipping methods constitute having a sales tax nexus.
The Marketplace Facilitator (MPF) legislation delegates sales tax collection and remittance to a “marketplace facilitator” like Amazon. If you sell on the ecommerce platform, they are responsible for collecting and remitting sales tax as long as a state or province is under their jurisdiction.
In Canada, all provinces except British Columbia are under MPF jurisdiction. For British Columbia, you need to collect and remit taxes on your own.
In the USA, meanwhile, Amazon does not collect sales tax from orders bound for Delaware, Missouri, Montana, New Hampshire, and Oregon. These states do not charge sales taxes. For the other states, Amazon has your sales tax collection and remittance covered.
You can apply for a sales tax exemption through the Amazon Tax Exemption Program (ATEP) if you are not the product's end user. You must provide a tax exemption certificate, an exemption number, or an exemption form (whichever applies).
Applications are made on Amazon’s website. If you have supplied the necessary documents, Amazon can confirm your tax exemption application within 24 hours. If you apply for this exemption, you can skip the hassle of tax refunds for your purchases.
MPF is already convenient. But you can still get another service to make sales tax collection, remittance, and monitoring more efficient—the Amazon Tax Collection Service (TCS). This service is available to individuals with a professional Amazon account, although it is optional.
TCS stores all your sales tax data and configurations. Amazon already has default tax settings, but you can still optimize, review, or update the following:
Amazon seller sales tax report data like sales tax collected, withheld tax, and order reports are available on TCS. You can link these to your books for accounting.
Amazon vendor sales tax collection is only a part of the tasks you need to accomplish when selling on Amazon. You still need to file for your corporate income tax and your employees' income tax if you run a company.
With this, you need to track all the income and expenses from sales, inventories, supplies, investments, and taxes. Only when you monitor all these can you get a complete picture of your business's financial health. Utilize the reports you get from Amazon TCS to know how much you’ve remitted and paid in taxes and get an idea of your after-tax income.
You can delegate accounting and tax preparation to experts. Doing this allows you to focus on other essential parts of your business, like maintaining product quality, getting to know your target customers, or planning your business expansion.
Here are some of the assistance you can get.
Although some of these tasks look like something you can handle, it is still best to get assistance from experts and individuals who are experienced in doing the job.
As an Amazon seller, you want to ensure that you don’t get penalized for not paying taxes or charging too much for your products.
Thus, your business needs to be compliant with both US and Canadian sales tax laws. You should know about the tax rates in both countries and where MPF applies. It will also be of great help to utilize TCS and get help from experts.
Unloop has got your back in tracking all your income and expenses to prepare for tax season. We also track your sales taxes and Amazon financial statements to provide you with a complete view of your business's financial health before and after taxation.
We have a team of expert bookkeepers who use reliable software like Quickbooks, A2X, and Hubdoc for data accuracy and safety. If you’re interested, give us a call at 877-421-7270. We’d love to discuss our offers with you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
The revenue from e-commerce retail sales in Canada has seen an upward trend since 2017. According to Statista, from $21.975 billion in 2017, it rose to $32.442 billion in 2021. The data company forecasts this upward trend to continue until 2025, with predicted revenue of $40.352 billion.
Behind these numbers are millions of eCommerce sellers like you who have ventured into the industry and opened businesses to fellow Canadians and clients worldwide. If you have just begun selling online, you have plenty of tasks on your plate, but one thing you should prioritize is taxation.
Let us help you make your workload lighter by providing you with knowledge about Canada's online sales tax for businesses.
To avoid getting lost, familiarize yourself with the different terms for Canadian taxes. You need to remember four: Goods and Services Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST).
Let’s check their definitions one by one.
GST is Canada’s federal tax applied to almost all products sold in physical stores and online. Only those tagged as zero-rate are exempted from this taxation.
Prepare to charge this sales tax if your buyers are from Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Quebec, and Yukon. All these provinces have GST either independently or together with PST or QST.
GST sales tax is at 5%, and the rate will still increase when PST or QST is added.
As the name suggests, this is the additional tax imposed by provinces like British Columbia, Manitoba, and Saskatchewan. The tax rate varies per province.
So when computing the sales tax, adding the 5% GST to the given PST rates results in the following final rates:
An example transaction goes like this: let’s say you sold a pair of rubber shoes at $29.99 to a customer living in British Columbia. For this sale, you have to charge a 12% sales tax.
$29.99 × 0.12 = $3.60
Collect the $3.60 sales tax, and remit it during tax season.
To skip the hassle of computing federal and provincial taxes separately, lawmakers have passed the harmonization of the two through HST. Five provinces, namely, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, follow this taxation system, and the rates vary per province.
When you make sales from these provinces, you do not need to look for the GST and PST rates; simply apply the HST rate.
In Quebec, the sales tax consists of the GST and QST, with the QST at 9.975% and GST still at 5%. However, you do not have to remit QST if you satisfy any of the following conditions:
For instance, a nonresident supplier operates in Ontario and does not have a physical store in Quebec. However, they supply to Quebec businesses. In this case, the only tax they should charge the customers is the 5% GST. On the other hand, for individual orders delivered to Quebec residents, sellers need to charge both GST and QST.
Did the different sales tax classifications confuse you? Here are some reminders to help you know how much to pass onto your client or whether to charge them at all. Also, get to know the department where you need to submit the sales tax you collected.
The first step is to determine the buyer’s address. Remember that the basis of sales tax is not where the package came from but where it is going. For instance, an order coming from Ontario will be delivered to a customer in Manitoba. The sales tax rate to follow is Manitoba’s 12% sales tax rate.
The standard procedure in British Columbia, Manitoba, and Saskatchewan is that orders sent to residents of these provinces should be taxed accordingly. However, specific rules on who should pay taxes and who are exempted differ. If you deliver in these locations, it is best to get into the specifics of the local tax regulations.
While almost all goods have sales tax and some individuals have to pay additional tax for their purchases, some products are zero-rated. These are the goods you can buy without paying any sales tax.
These specific groups are also not required to pay sales taxes.
If you sell these goods or to these groups, remember not to apply sales tax.
For individual orders, it is clear that sales tax is based on the location of the buyer. But what if you are a raw materials manufacturer and sell not to end users but to product developers? Should you also charge sales tax to your customers?
The levels of resales are a common scenario in the production of goods. A resale certificate will save the business buying your raw materials from paying sales tax as they are not the end user of the final product.
In Canada, Internet sales tax regulations state that online sellers are required to charge sales tax on their orders. With that, there is no confusion about whether you should be collecting taxes from your buyers or not. Regardless if you’re selling in a mall, a stand-alone boutique, or online, sales tax applies if you made a taxable sale to a Canadian customer.
However, as mentioned earlier, it’s best to know the specific ecommerce sales tax rules per province to understand and abide by them correctly.
In Canada, you should be familiar with these two offices to pay your taxes: Revenu Quebec for the province of Quebec and the Canadian Revenue Agency (CRA) for the rest of the country.
These two offices implement tax laws and handle all tax-related transactions, from income tax, value-added tax, and excise tax to sales tax. After collecting the sales tax, you need to remit all the sales tax you collected to these agencies.
Everyone says taxation is a complicated task, but it is relatively easy when done right. Here are the steps to guide you.
Included in your order slips’ delivery details is the specific location where you need to send the package. Use this information to determine the applicable sales tax rate.
Apply the sales tax rate according to the package’s destination, and collect the tax charged. Make sure not to spend these taxes for your business as you need to remit them to the government.
Set the frequency of sales tax remittance with the CRA. You can send the collected sales tax on a monthly, quarterly, or annual basis either physically or online.
You can do your sales tax on your own if you are still beginning your business, but can you imagine the increase in the workload when your sales boom? Ecommerce sales tax solutions make your business processes more efficient and lessen your work. Here are some of them!
Rely on sales tax software like QuickBooks, Xero, A2X, and Hubdoc. They collate sales transaction details and compute sales tax per order. They also store all transactions in the system, so you can run reports to check how much sales tax you’ve collected and other key performance indicators that will help you in decision-making.
Doing the bookkeeping yourself is still manageable at the beginning of your business. Still, you need to delegate this complex task to a trained bookkeeper to ensure the proper tracking and categorization of all transactions.
You can also be sure of data accuracy because one team member focuses on this task only. Meanwhile, you can focus on business operations, product quality checks, and customer service with more free time.
Taxation is an essential task that can determine your business's success or failure, especially if you do not know how it works. Thus, it is best to have someone well-versed in tax laws and regulations—an ecommerce sales tax accountant.
Your accountant will check your sales tax compliance and create reports from the information gathered by the bookkeeper. Let them take care of tax management and payment on your business too.
As a business owner, you are now one of the millions of Canadian ecommerce sellers contributing to the growth of the industry in the country and worldwide. Thus, you should know that the Canadian government requires all physical and digital businesses to charge sales tax on their products.
Depending on the province or territory you send the orders to, different tax rates may apply. To avoid fines for not complying with these regulations, it’s essential to know precisely what types of taxes apply where and how to remit them on time.
We at Unloop offer bookkeeping business solutions. Our team of experienced bookkeepers will help you track and prepare your sales tax information before tax season. Delegate the task to us so that you can focus on scaling your business.
Give us a call now at 877-421-7270. We’d love to hear from you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
The revenue from e-commerce retail sales in Canada has seen an upward trend since 2017. According to Statista, from $21.975 billion in 2017, it rose to $32.442 billion in 2021. The data company forecasts this upward trend to continue until 2025, with predicted revenue of $40.352 billion.
Behind these numbers are millions of eCommerce sellers like you who have ventured into the industry and opened businesses to fellow Canadians and clients worldwide. If you have just begun selling online, you have plenty of tasks on your plate, but one thing you should prioritize is taxation.
Let us help you make your workload lighter by providing you with knowledge about Canada's online sales tax for businesses.
To avoid getting lost, familiarize yourself with the different terms for Canadian taxes. You need to remember four: Goods and Services Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST).
Let’s check their definitions one by one.
GST is Canada’s federal tax applied to almost all products sold in physical stores and online. Only those tagged as zero-rate are exempted from this taxation.
Prepare to charge this sales tax if your buyers are from Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Quebec, and Yukon. All these provinces have GST either independently or together with PST or QST.
GST sales tax is at 5%, and the rate will still increase when PST or QST is added.
As the name suggests, this is the additional tax imposed by provinces like British Columbia, Manitoba, and Saskatchewan. The tax rate varies per province.
So when computing the sales tax, adding the 5% GST to the given PST rates results in the following final rates:
An example transaction goes like this: let’s say you sold a pair of rubber shoes at $29.99 to a customer living in British Columbia. For this sale, you have to charge a 12% sales tax.
$29.99 × 0.12 = $3.60
Collect the $3.60 sales tax, and remit it during tax season.
To skip the hassle of computing federal and provincial taxes separately, lawmakers have passed the harmonization of the two through HST. Five provinces, namely, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, follow this taxation system, and the rates vary per province.
When you make sales from these provinces, you do not need to look for the GST and PST rates; simply apply the HST rate.
In Quebec, the sales tax consists of the GST and QST, with the QST at 9.975% and GST still at 5%. However, you do not have to remit QST if you satisfy any of the following conditions:
For instance, a nonresident supplier operates in Ontario and does not have a physical store in Quebec. However, they supply to Quebec businesses. In this case, the only tax they should charge the customers is the 5% GST. On the other hand, for individual orders delivered to Quebec residents, sellers need to charge both GST and QST.
Did the different sales tax classifications confuse you? Here are some reminders to help you know how much to pass onto your client or whether to charge them at all. Also, get to know the department where you need to submit the sales tax you collected.
The first step is to determine the buyer’s address. Remember that the basis of sales tax is not where the package came from but where it is going. For instance, an order coming from Ontario will be delivered to a customer in Manitoba. The sales tax rate to follow is Manitoba’s 12% sales tax rate.
The standard procedure in British Columbia, Manitoba, and Saskatchewan is that orders sent to residents of these provinces should be taxed accordingly. However, specific rules on who should pay taxes and who are exempted differ. If you deliver in these locations, it is best to get into the specifics of the local tax regulations.
While almost all goods have sales tax and some individuals have to pay additional tax for their purchases, some products are zero-rated. These are the goods you can buy without paying any sales tax.
These specific groups are also not required to pay sales taxes.
If you sell these goods or to these groups, remember not to apply sales tax.
For individual orders, it is clear that sales tax is based on the location of the buyer. But what if you are a raw materials manufacturer and sell not to end users but to product developers? Should you also charge sales tax to your customers?
The levels of resales are a common scenario in the production of goods. A resale certificate will save the business buying your raw materials from paying sales tax as they are not the end user of the final product.
In Canada, Internet sales tax regulations state that online sellers are required to charge sales tax on their orders. With that, there is no confusion about whether you should be collecting taxes from your buyers or not. Regardless if you’re selling in a mall, a stand-alone boutique, or online, sales tax applies if you made a taxable sale to a Canadian customer.
However, as mentioned earlier, it’s best to know the specific ecommerce sales tax rules per province to understand and abide by them correctly.
In Canada, you should be familiar with these two offices to pay your taxes: Revenu Quebec for the province of Quebec and the Canadian Revenue Agency (CRA) for the rest of the country.
These two offices implement tax laws and handle all tax-related transactions, from income tax, value-added tax, and excise tax to sales tax. After collecting the sales tax, you need to remit all the sales tax you collected to these agencies.
Everyone says taxation is a complicated task, but it is relatively easy when done right. Here are the steps to guide you.
Included in your order slips’ delivery details is the specific location where you need to send the package. Use this information to determine the applicable sales tax rate.
Apply the sales tax rate according to the package’s destination, and collect the tax charged. Make sure not to spend these taxes for your business as you need to remit them to the government.
Set the frequency of sales tax remittance with the CRA. You can send the collected sales tax on a monthly, quarterly, or annual basis either physically or online.
You can do your sales tax on your own if you are still beginning your business, but can you imagine the increase in the workload when your sales boom? Ecommerce sales tax solutions make your business processes more efficient and lessen your work. Here are some of them!
Rely on sales tax software like QuickBooks, Xero, A2X, and Hubdoc. They collate sales transaction details and compute sales tax per order. They also store all transactions in the system, so you can run reports to check how much sales tax you’ve collected and other key performance indicators that will help you in decision-making.
Doing the bookkeeping yourself is still manageable at the beginning of your business. Still, you need to delegate this complex task to a trained bookkeeper to ensure the proper tracking and categorization of all transactions.
You can also be sure of data accuracy because one team member focuses on this task only. Meanwhile, you can focus on business operations, product quality checks, and customer service with more free time.
Taxation is an essential task that can determine your business's success or failure, especially if you do not know how it works. Thus, it is best to have someone well-versed in tax laws and regulations—an ecommerce sales tax accountant.
Your accountant will check your sales tax compliance and create reports from the information gathered by the bookkeeper. Let them take care of tax management and payment on your business too.
As a business owner, you are now one of the millions of Canadian ecommerce sellers contributing to the growth of the industry in the country and worldwide. Thus, you should know that the Canadian government requires all physical and digital businesses to charge sales tax on their products.
Depending on the province or territory you send the orders to, different tax rates may apply. To avoid fines for not complying with these regulations, it’s essential to know precisely what types of taxes apply where and how to remit them on time.
We at Unloop offer bookkeeping business solutions. Our team of experienced bookkeepers will help you track and prepare your sales tax information before tax season. Delegate the task to us so that you can focus on scaling your business.
Give us a call now at 877-421-7270. We’d love to hear from you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Taxes are burdensome for businesses, but they are a significant obligation. We all need to comply with it to build a strong business foundation and tap on limitless opportunities.
However, tax compliance is easier said than done. It's a complex system that can cause you deep financial trouble when you don’t take it seriously and carefully. What's more, it gets even more confusing in e-commerce.
If you're new to Amazon sales tax and want to minimize financial trouble in the long run, let this article serve as your guide.
Before we get to sales tax on Amazon, here are a few things you should know about e-commerce sales taxes.
(Item Cost) × (State-Mandated Sales Tax Rate) = Total Sales Tax.
Undoubtedly, Amazon is a massive and popular marketplace. It presents an exciting but challenging opportunity for online sellers.
You need to comply with Amazon sales taxes to stay in business. But which tax-related duties should you handle, and which are for Amazon to manage? Familiarize yourself with these things to save time and increase productivity.
Determine Crucial Tax Variables
First, you must know three important variables before tax collection takes place:
Without these, it is impossible to comply with consistent accuracy.
Configure Your Store for Tax Collection
If you're a US seller and want Amazon to collect sales tax for you, go to the Seller Central tax settings. There you can view or edit tax collection, shipping and handling, and gift wrap tax obligation settings.
Note that Amazon charges 2.9% per transaction to collect sales tax. However, letting Amazon collect sales tax on your behalf is only optional; you can pay out of your profits as an alternative.
Customizing Your Tax Receipts
You might need different sales tax receipt formats depending on the location and customers you sell to (for example, the B2B sector).
On Amazon, you can customize the logo and information of your receipts. However, it doesn't allow you to change all information. Therefore, you need an extension or a third-party service to help you automate your tax receipts.
Monitor Your Tax Registration Threshold
Suppose you surpass the sales threshold limit required in a specific state. In that case, you get an economic nexus. As a result, it changes your sales tax calculations.
Unfortunately, Amazon doesn't notify you about it, so make sure to monitor your sales constantly. Installing an automated alert system can help reduce the time and effort it takes to work on this.
Gather Necessary Data for Tax Returns
Amazon doesn't give you detailed information for tax returns. You will have access to an Amazon sales tax report, but it might not have all the data you need. However, you can still find the rest of the information you need within your Amazon account, albeit it can be a hassle.
Collect Sales Taxes (For US Sellers Only)
As briefly mentioned, you can let Amazon take over sales tax collection in exchange for a 2.9% charge per transaction.
However, let's say you're collecting Amazon sales tax in Canada. Amazon won't pay or file sales taxes, but they can collect and send tax as an inclusion in your regular settlement. Still, you will need to conduct tax return filing and tax remittance to your tax authorities.
Provide a Sales Tax Report
Amazon gives you access to a sales tax report. It shows you (1) the states where Amazon collects tax on your behalf, (2) the states where you are obligated to collect and remit tax, and (3) the amount of sales tax required for states where you have a nexus.
Go to Seller Central, find Reports, and click Tax Document Library to view the report. From there, you may choose which of the following reports to generate:
Then, you may explore the available information from these reports and modify them according to your needs.
Amazon Sales Tax Exemption
Amazon allows tax exemption for individuals or organizations through the Amazon Tax Exemption Program (ATEP). They support tax-exempted items sold through Amazon.com and Amazon Services LLC, Amazon Digital Services, Warehouse Deals, and third-party sellers.
An Amazon Business seller is qualified for this program, while ATEP participants automatically get tax exemptions.
Tax compliance on Amazon can be challenging. You need to understand what Amazon can help you with and which aspects you're solely responsible for. We hope this article has helped clarify these matters. However, if you're still a little lost, Unloop can be your reliable bookkeeping and accounting service provider.
Our sales tax filing services apply to Amazon sellers in Canada and the USA. We help you determine nexuses, register for tax permits, set up and manage sales tax platforms, and continuously monitor compliance.
Contact us today for more information.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Taxes are burdensome for businesses, but they are a significant obligation. We all need to comply with it to build a strong business foundation and tap on limitless opportunities.
However, tax compliance is easier said than done. It's a complex system that can cause you deep financial trouble when you don’t take it seriously and carefully. What's more, it gets even more confusing in e-commerce.
If you're new to Amazon sales tax and want to minimize financial trouble in the long run, let this article serve as your guide.
Before we get to sales tax on Amazon, here are a few things you should know about e-commerce sales taxes.
(Item Cost) × (State-Mandated Sales Tax Rate) = Total Sales Tax.
Undoubtedly, Amazon is a massive and popular marketplace. It presents an exciting but challenging opportunity for online sellers.
You need to comply with Amazon sales taxes to stay in business. But which tax-related duties should you handle, and which are for Amazon to manage? Familiarize yourself with these things to save time and increase productivity.
Determine Crucial Tax Variables
First, you must know three important variables before tax collection takes place:
Without these, it is impossible to comply with consistent accuracy.
Configure Your Store for Tax Collection
If you're a US seller and want Amazon to collect sales tax for you, go to the Seller Central tax settings. There you can view or edit tax collection, shipping and handling, and gift wrap tax obligation settings.
Note that Amazon charges 2.9% per transaction to collect sales tax. However, letting Amazon collect sales tax on your behalf is only optional; you can pay out of your profits as an alternative.
Customizing Your Tax Receipts
You might need different sales tax receipt formats depending on the location and customers you sell to (for example, the B2B sector).
On Amazon, you can customize the logo and information of your receipts. However, it doesn't allow you to change all information. Therefore, you need an extension or a third-party service to help you automate your tax receipts.
Monitor Your Tax Registration Threshold
Suppose you surpass the sales threshold limit required in a specific state. In that case, you get an economic nexus. As a result, it changes your sales tax calculations.
Unfortunately, Amazon doesn't notify you about it, so make sure to monitor your sales constantly. Installing an automated alert system can help reduce the time and effort it takes to work on this.
Gather Necessary Data for Tax Returns
Amazon doesn't give you detailed information for tax returns. You will have access to an Amazon sales tax report, but it might not have all the data you need. However, you can still find the rest of the information you need within your Amazon account, albeit it can be a hassle.
Collect Sales Taxes (For US Sellers Only)
As briefly mentioned, you can let Amazon take over sales tax collection in exchange for a 2.9% charge per transaction.
However, let's say you're collecting Amazon sales tax in Canada. Amazon won't pay or file sales taxes, but they can collect and send tax as an inclusion in your regular settlement. Still, you will need to conduct tax return filing and tax remittance to your tax authorities.
Provide a Sales Tax Report
Amazon gives you access to a sales tax report. It shows you (1) the states where Amazon collects tax on your behalf, (2) the states where you are obligated to collect and remit tax, and (3) the amount of sales tax required for states where you have a nexus.
Go to Seller Central, find Reports, and click Tax Document Library to view the report. From there, you may choose which of the following reports to generate:
Then, you may explore the available information from these reports and modify them according to your needs.
Amazon Sales Tax Exemption
Amazon allows tax exemption for individuals or organizations through the Amazon Tax Exemption Program (ATEP). They support tax-exempted items sold through Amazon.com and Amazon Services LLC, Amazon Digital Services, Warehouse Deals, and third-party sellers.
An Amazon Business seller is qualified for this program, while ATEP participants automatically get tax exemptions.
Tax compliance on Amazon can be challenging. You need to understand what Amazon can help you with and which aspects you're solely responsible for. We hope this article has helped clarify these matters. However, if you're still a little lost, Unloop can be your reliable bookkeeping and accounting service provider.
Our sales tax filing services apply to Amazon sellers in Canada and the USA. We help you determine nexuses, register for tax permits, set up and manage sales tax platforms, and continuously monitor compliance.
Contact us today for more information.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
You decided to join Shopify and wonder what makes an e-commerce business successful in a massive marketplace. You've heard incredible success stories here and there, but you also know that it doesn't just happen to anyone.
Most sellers who fail to do so or are inexperienced would only focus on implementing effective strategies. Of course, that's not wrong and is a much-needed aspect of a business. However, there's another overlooked aspect: financial management.
You can have the best e-commerce strategy, but things will not work without a good cash flow. It's the core point of it all. Therefore, as you begin your journey as a Shopify seller, you must first build a well-rounded bookkeeping and accounting system. Then, you can focus on other important aspects, such as digital marketing strategies.
If you're still lost in all of this Shopify accounting fuss, take a seat and allow us to guide you with the dos and don'ts of e-commerce accounting in detail. Understand how transactions work on the platform, find good accounting software, look for mistakes to avoid, and take note of accounting tips that work.
In case you're not convinced enough as to why bookkeeping and accounting are as important (or more) than your e-commerce strategy, we've enumerated the reasons why. Before that, here's a quick refresher on the difference between bookkeeping and accounting.
Bookkeeping and accounting can be confusing because their tasks are associated with each other. In addition, some sources would even use them interchangeably. As a result, most people would think they have a similar meaning.
However, it's important to know that there's a significant difference between the two. It's a crucial point in your decision-making when managing your Shopify accounting.
Bookkeeping records and manages financial data. Examples include account reconciliation, organizing transactions, maintaining balance sheets, income statements, and cash flow statements.
Meanwhile, accounting focuses on analyzing collected data to ensure the good financial health of a business. Examples include tax compliance planning, Shopify accounting reports and auditing, and forecasting future costs.
Now that we're clear with the difference, let's hear the reasons why they matter greatly to your online business.
Without the ability to track these accurately, your business could end up in immeasurable heaps of trouble. Of course, no company wants to fail, but those who do often lack focus and management skills in the financial aspect.
Moreover, e-commerce accounting is different from offline management, which makes it a lot more complicated.
It's for these reasons that you need to meticulously work on the bookkeeping and accounting aspects of your e-commerce business.
Now that you understand the essence of financial management in e-commerce, let's move on to the core part of this article: how to do Shopify e-commerce accounting. Start by finding the right tools to kickstart your accounting duties.
The wide range of accounting software and tools on Shopify might be overwhelming. Avoid making the wrong choices and save time and money with this guide.
Growing an e-commerce business means working on massive data. Since you're extending your reach to various regions, states, and countries, you will take in more and more transactions. Accounting software offers cloud-based and automated technology, making financial management easier and less error-prone.
Accounting software allows the seller to:
Experts and most e-commerce sellers usually recommend QuickBooks, Sage, and NetSuite for Shopify. Here's what you need to know about these programs.
QuickBooks is a popular choice for Shopify sellers because it's easy to learn and has advanced features for accounting. You get a user-friendly dashboard for quick references and in-depth accounting reports. In addition, there are customizable options for invoice templates and reports. What's more is that you can integrate multiple apps within and outside of their product range.
Sage incorporates time-saving and industry-specific features. It is a top provider in the UK, but sellers from across the globe can use it. The platform includes an automatic transaction matching system and uses AI to remember your data selections. In addition, it provides in-depth financial reports and has a nice interface too.
NetSuite is relatively more expensive than the two. It's an enterprise resource planning system that allows you to automate financial transactions such as orders, billing, and inventory management. Forms, records, and workflows are customizable with industry-specific options. NetSuite is a good choice for large businesses with a complex accounting system.
Your accounting software must be the primary tool for all your bookkeeping and accounting tasks. However, you may also add other Shopify tools to maximize seamless accounting for your business. Check out these free and simple tools.
You can only pick the right accounting software if you've identified your business needs. Before you look into these tools, analyze your business status first. What's the current financial situation? What do you need right now to improve, and what are your plans? Will you introduce new products? Will you switch to omnichannel marketing?
Setting your knowledge and expectations of your business will help determine which features you're going to look for in software. In addition, think of the bigger picture and seek long-term solutions.
Keep your books up-to-date to make way for accurate business decisions. You must always have correct financial information to avoid discrepancies in the long run. Do this on a weekly to monthly basis.
Moreover, include basic financial transactions and reports, such as profit and loss statements, cash flows, inventory forecast, and balance sheets. All these details will help you make a better evaluation, forecasting of costs, and budgeting decisions.
A report states that organizations lose 5% of revenue every year due to fraud. The main reasons are that businesses aren't careful enough when hiring someone or don't have effective security systems to prevent incidents like this. Moreover, it takes a lot of time and effort to recover the stolen finances, and most companies fail to do so.
Ensure to keep a close eye on vital financial information. Fortunately, accounting software gives you control over who can access a certain file, such as bank accounts or bank statement reconciliations. Therefore, you can prevent or minimize the risk of fraud with the right tools and meticulous hiring processes.
Since the South Dakota v. Wayfair, Inc. decision in 2018, online retailers were required to pay sales taxes in the states they're associated with. The current system is very extensive and confusing, especially if you're not yet familiar with it. Each country, state, and even local areas have different sales tax rates that you have to be aware of.
Tax compliance is a significant part of a seller's obligations, so you must not overlook it. Learn about your associated locations' tax rates and rules in advance and seek effective solutions to comply with them. You can always ask the help of an accounting team to help you with your e-commerce sales taxes.
To maximize your preventive measures on accounting for Shopify sales, you must also know what mistakes to avoid. People learn from mistakes, but you don't have to make it yourself to understand.
Some things never change. Unfortunately, many Shopify sellers still make these mistakes despite warnings and clarifications. Naturally, you wouldn't want to be a part of that, so learn from these errors before making them yourself.
First off, many sellers do not have an accounting system in the first place. They think that the Shopify dashboard and the little data from their account balance will do all the work. Unfortunately, that can only cost you huge financial losses in the long run.
You can't properly evaluate and organize your finances without an accounting system. You have to track and record all transactions, assets, liabilities, and other expenses. Missing one of these can result in incorrect compliance and creation of your statements. If you're serious about growing your business, do yourself a favor and build a good foundation from the start.
Inexperienced sellers would record all deposits entirely to the Sales category. This creates some issues because tracking them needs some classification. Aside from sales, deposits also include discounts, returns, account fees, shipping income, and sales taxes. You have to code each batch to the correct categories for proper tracking purposes.
Additionally, some sellers record sales in the wrong timeline. For example, one batch might belong to the previous month, but you included them in the current month instead. It becomes difficult to manage, and you're going to screw up your monthly sales data.
You should learn how to put a clear line between personal and business matters. In the financial aspect, this is very crucial. Unfortunately, most start-ups or companies with few employees make this mistake often, leading to inaccurate business data and improper compliance.
Some examples are using the wrong bank account for a certain transaction or the same Shopify account for personal and business books. These only put you at risk of financial trouble, so avoid merging the two matters as much as possible. Learn to keep the right records to the correct places.
If you are switching to automated software, don't expect it to handle all transactions effortlessly. While there is truth in what the tools are capable of from that statement, one thing you should know is that it doesn't work on excessive volumes. Just like you, the software can get overwhelmed, too.
If you're running up to thousands of transactions regularly, it can be difficult and time-consuming to reconcile them. This is why instead of one-by-one, you should post your Shopify sales data in summary form and incorporate a cloud system to house it.
Bookkeeping and accounting might not be the main reasons why you wanted to join Shopify at first. Instead, you're thrilled to implement digital marketing strategies and expand your customer base to a global scale. However, you must also understand that bookkeeping and accounting are the foundations of a profitable business.
Regardless of whether you like Shopify bookkeeping and accounting or not, you have to do your books properly. Think of it as a long-term preventive measure. Don't make e-commerce harder than it already is. Do everything you can to make the work easier and 100% accurate.
If you feel this will take up too much of your time, you can work with the Unloop Team to manage your books. Our services include bookkeeping, sales tax, and income tax (together with our partner accounting firms) for Shopify, Amazon, and multichannel sellers. Moreover, we use the best accounting tools like QuickBooks Online, TaxJar, and A2X. Gear up for a seamless accounting on Shopify today.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
You decided to join Shopify and wonder what makes an e-commerce business successful in a massive marketplace. You've heard incredible success stories here and there, but you also know that it doesn't just happen to anyone.
Most sellers who fail to do so or are inexperienced would only focus on implementing effective strategies. Of course, that's not wrong and is a much-needed aspect of a business. However, there's another overlooked aspect: financial management.
You can have the best e-commerce strategy, but things will not work without a good cash flow. It's the core point of it all. Therefore, as you begin your journey as a Shopify seller, you must first build a well-rounded bookkeeping and accounting system. Then, you can focus on other important aspects, such as digital marketing strategies.
If you're still lost in all of this Shopify accounting fuss, take a seat and allow us to guide you with the dos and don'ts of e-commerce accounting in detail. Understand how transactions work on the platform, find good accounting software, look for mistakes to avoid, and take note of accounting tips that work.
In case you're not convinced enough as to why bookkeeping and accounting are as important (or more) than your e-commerce strategy, we've enumerated the reasons why. Before that, here's a quick refresher on the difference between bookkeeping and accounting.
Bookkeeping and accounting can be confusing because their tasks are associated with each other. In addition, some sources would even use them interchangeably. As a result, most people would think they have a similar meaning.
However, it's important to know that there's a significant difference between the two. It's a crucial point in your decision-making when managing your Shopify accounting.
Bookkeeping records and manages financial data. Examples include account reconciliation, organizing transactions, maintaining balance sheets, income statements, and cash flow statements.
Meanwhile, accounting focuses on analyzing collected data to ensure the good financial health of a business. Examples include tax compliance planning, Shopify accounting reports and auditing, and forecasting future costs.
Now that we're clear with the difference, let's hear the reasons why they matter greatly to your online business.
Without the ability to track these accurately, your business could end up in immeasurable heaps of trouble. Of course, no company wants to fail, but those who do often lack focus and management skills in the financial aspect.
Moreover, e-commerce accounting is different from offline management, which makes it a lot more complicated.
It's for these reasons that you need to meticulously work on the bookkeeping and accounting aspects of your e-commerce business.
Now that you understand the essence of financial management in e-commerce, let's move on to the core part of this article: how to do Shopify e-commerce accounting. Start by finding the right tools to kickstart your accounting duties.
The wide range of accounting software and tools on Shopify might be overwhelming. Avoid making the wrong choices and save time and money with this guide.
Growing an e-commerce business means working on massive data. Since you're extending your reach to various regions, states, and countries, you will take in more and more transactions. Accounting software offers cloud-based and automated technology, making financial management easier and less error-prone.
Accounting software allows the seller to:
Experts and most e-commerce sellers usually recommend QuickBooks, Sage, and NetSuite for Shopify. Here's what you need to know about these programs.
QuickBooks is a popular choice for Shopify sellers because it's easy to learn and has advanced features for accounting. You get a user-friendly dashboard for quick references and in-depth accounting reports. In addition, there are customizable options for invoice templates and reports. What's more is that you can integrate multiple apps within and outside of their product range.
Sage incorporates time-saving and industry-specific features. It is a top provider in the UK, but sellers from across the globe can use it. The platform includes an automatic transaction matching system and uses AI to remember your data selections. In addition, it provides in-depth financial reports and has a nice interface too.
NetSuite is relatively more expensive than the two. It's an enterprise resource planning system that allows you to automate financial transactions such as orders, billing, and inventory management. Forms, records, and workflows are customizable with industry-specific options. NetSuite is a good choice for large businesses with a complex accounting system.
Your accounting software must be the primary tool for all your bookkeeping and accounting tasks. However, you may also add other Shopify tools to maximize seamless accounting for your business. Check out these free and simple tools.
You can only pick the right accounting software if you've identified your business needs. Before you look into these tools, analyze your business status first. What's the current financial situation? What do you need right now to improve, and what are your plans? Will you introduce new products? Will you switch to omnichannel marketing?
Setting your knowledge and expectations of your business will help determine which features you're going to look for in software. In addition, think of the bigger picture and seek long-term solutions.
Keep your books up-to-date to make way for accurate business decisions. You must always have correct financial information to avoid discrepancies in the long run. Do this on a weekly to monthly basis.
Moreover, include basic financial transactions and reports, such as profit and loss statements, cash flows, inventory forecast, and balance sheets. All these details will help you make a better evaluation, forecasting of costs, and budgeting decisions.
A report states that organizations lose 5% of revenue every year due to fraud. The main reasons are that businesses aren't careful enough when hiring someone or don't have effective security systems to prevent incidents like this. Moreover, it takes a lot of time and effort to recover the stolen finances, and most companies fail to do so.
Ensure to keep a close eye on vital financial information. Fortunately, accounting software gives you control over who can access a certain file, such as bank accounts or bank statement reconciliations. Therefore, you can prevent or minimize the risk of fraud with the right tools and meticulous hiring processes.
Since the South Dakota v. Wayfair, Inc. decision in 2018, online retailers were required to pay sales taxes in the states they're associated with. The current system is very extensive and confusing, especially if you're not yet familiar with it. Each country, state, and even local areas have different sales tax rates that you have to be aware of.
Tax compliance is a significant part of a seller's obligations, so you must not overlook it. Learn about your associated locations' tax rates and rules in advance and seek effective solutions to comply with them. You can always ask the help of an accounting team to help you with your e-commerce sales taxes.
To maximize your preventive measures on accounting for Shopify sales, you must also know what mistakes to avoid. People learn from mistakes, but you don't have to make it yourself to understand.
Some things never change. Unfortunately, many Shopify sellers still make these mistakes despite warnings and clarifications. Naturally, you wouldn't want to be a part of that, so learn from these errors before making them yourself.
First off, many sellers do not have an accounting system in the first place. They think that the Shopify dashboard and the little data from their account balance will do all the work. Unfortunately, that can only cost you huge financial losses in the long run.
You can't properly evaluate and organize your finances without an accounting system. You have to track and record all transactions, assets, liabilities, and other expenses. Missing one of these can result in incorrect compliance and creation of your statements. If you're serious about growing your business, do yourself a favor and build a good foundation from the start.
Inexperienced sellers would record all deposits entirely to the Sales category. This creates some issues because tracking them needs some classification. Aside from sales, deposits also include discounts, returns, account fees, shipping income, and sales taxes. You have to code each batch to the correct categories for proper tracking purposes.
Additionally, some sellers record sales in the wrong timeline. For example, one batch might belong to the previous month, but you included them in the current month instead. It becomes difficult to manage, and you're going to screw up your monthly sales data.
You should learn how to put a clear line between personal and business matters. In the financial aspect, this is very crucial. Unfortunately, most start-ups or companies with few employees make this mistake often, leading to inaccurate business data and improper compliance.
Some examples are using the wrong bank account for a certain transaction or the same Shopify account for personal and business books. These only put you at risk of financial trouble, so avoid merging the two matters as much as possible. Learn to keep the right records to the correct places.
If you are switching to automated software, don't expect it to handle all transactions effortlessly. While there is truth in what the tools are capable of from that statement, one thing you should know is that it doesn't work on excessive volumes. Just like you, the software can get overwhelmed, too.
If you're running up to thousands of transactions regularly, it can be difficult and time-consuming to reconcile them. This is why instead of one-by-one, you should post your Shopify sales data in summary form and incorporate a cloud system to house it.
Bookkeeping and accounting might not be the main reasons why you wanted to join Shopify at first. Instead, you're thrilled to implement digital marketing strategies and expand your customer base to a global scale. However, you must also understand that bookkeeping and accounting are the foundations of a profitable business.
Regardless of whether you like Shopify bookkeeping and accounting or not, you have to do your books properly. Think of it as a long-term preventive measure. Don't make e-commerce harder than it already is. Do everything you can to make the work easier and 100% accurate.
If you feel this will take up too much of your time, you can work with the Unloop Team to manage your books. Our services include bookkeeping, sales tax, and income tax (together with our partner accounting firms) for Shopify, Amazon, and multichannel sellers. Moreover, we use the best accounting tools like QuickBooks Online, TaxJar, and A2X. Gear up for a seamless accounting on Shopify today.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Canada collects one of the highest tax rates, and its tax system can be confusing for new business owners. How much do you know about how income tax in Canada works? Do you know how to compute your income tax manually? If you do not understand how the tax system works, you will never know your rights or the requirements for income tax returns.
That is why you have to educate yourself and become a responsible citizen and business owner. It is essential to equip yourself with information about the tax system, its brackets, and how to file and compute your income tax.
Cheer up because this article is what you need! Keep scrolling and be informed about the things you need to know about the Canadian tax system.
After World War I in 1918, Canada needed funds to rebuild the nation, pay debts, and secure pensions for war veterans. Thus, it replaced the temporary Income Tax War Act of 1917 with the Income Tax Act in 1948, mandating all Canadian citizens to pay taxes.
Today, Canada has a marginal or progressive tax system that increases your tax rate as your income grows. Canadians need to pay two forms of taxes. One is the federal tax, and the other is the provincial tax. Each of them has different tax rates.
The Canada Revenue Agency (CRA) collects taxes and sets Canada’s income tax brackets. As of 2021, the federal income tax brackets are as follows:
Meanwhile, the provincial tax rates may vary between the different Canadian provinces. For example, Ontario has the following provincial tax rates:
If you want to learn more about Canada's income tax rate for each province, you may visit the government website to explore each province’s income tax rates.
A common misconception is that if you are earning $80,000, you need to pay a federal tax with a 20.5% rate, thus leaving you with a $16,400 tax. However, the tax brackets are designed to lower your total tax.
Here are the correct steps to follow in computing your income tax.
Income tax filing involves filling an income tax return form to determine if you owe the government federal or provincial income taxes.
No one can fill out your income tax return for you, so even if you have an accountant, you must still fill out everything correctly from your side. That said, accountants can help you determine your income tax return.
The main reason why most people don't do their own income tax returns is that they can't find the information they need to fill out the tax forms correctly. You can do your income tax return yourself if you can get your hands on the following:
You are still the one who needs to file your income tax return, and you can do it several ways. You can send your files by mail or online with the help of NETFILE, EFILE, or Auto-fill My Return. Non-residents can only file tax returns by mail.
Income tax returns in Canada are filed every 30th of April. The deadline for settling outstanding income tax is also on the same day. However, CRA collects taxes monthly, and they appear in your payslip.
Here are the steps you need to do in order to file your income tax returns.
If you need help with your tax preparation, you can always rely on and consult with an accountant or tax preparation services who have the expertise when it comes to all your tax concerns.
These agencies can help you compute your tax and apply the deductions so that you can be eligible for tax returns. They can also help you file your tax returns properly. Remember: you have to hire someone you can trust and will offer you confidentiality. Allowing other experts to work on your tax means that you will provide sensitive information about yourself.
Aside from accountants and tax preparation firms, many free applications are available on the Internet to help you do both basic and complex tax computations. Just provide the accurate numbers required by these apps, and you can know how much taxes to pay without spending a single cent.
You can still validate the result you get from free online tax calculators by showing it to accountants. If it is accurate, you can use that online app for the next tax collection.
Income tax brackets indeed help to lower your tax, especially if you’re not yet earning a lot of money. In case you can't find all your receipts and get a lower tax accumulation (even if it's just by a few percentage points), then hiring an accountant can be beneficial.
Do you have an online business, but you are afraid to file your tax? If you need professionals, you can contact us at Unloop and let our team help you with your taxes. We partner with certified accountants for online businesses.
Give us a call at 877-421-7270 as soon as you can to learn more about our tax and accounting services.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Canada collects one of the highest tax rates, and its tax system can be confusing for new business owners. How much do you know about how income tax in Canada works? Do you know how to compute your income tax manually? If you do not understand how the tax system works, you will never know your rights or the requirements for income tax returns.
That is why you have to educate yourself and become a responsible citizen and business owner. It is essential to equip yourself with information about the tax system, its brackets, and how to file and compute your income tax.
Cheer up because this article is what you need! Keep scrolling and be informed about the things you need to know about the Canadian tax system.
After World War I in 1918, Canada needed funds to rebuild the nation, pay debts, and secure pensions for war veterans. Thus, it replaced the temporary Income Tax War Act of 1917 with the Income Tax Act in 1948, mandating all Canadian citizens to pay taxes.
Today, Canada has a marginal or progressive tax system that increases your tax rate as your income grows. Canadians need to pay two forms of taxes. One is the federal tax, and the other is the provincial tax. Each of them has different tax rates.
The Canada Revenue Agency (CRA) collects taxes and sets Canada’s income tax brackets. As of 2021, the federal income tax brackets are as follows:
Meanwhile, the provincial tax rates may vary between the different Canadian provinces. For example, Ontario has the following provincial tax rates:
If you want to learn more about Canada's income tax rate for each province, you may visit the government website to explore each province’s income tax rates.
A common misconception is that if you are earning $80,000, you need to pay a federal tax with a 20.5% rate, thus leaving you with a $16,400 tax. However, the tax brackets are designed to lower your total tax.
Here are the correct steps to follow in computing your income tax.
Income tax filing involves filling an income tax return form to determine if you owe the government federal or provincial income taxes.
No one can fill out your income tax return for you, so even if you have an accountant, you must still fill out everything correctly from your side. That said, accountants can help you determine your income tax return.
The main reason why most people don't do their own income tax returns is that they can't find the information they need to fill out the tax forms correctly. You can do your income tax return yourself if you can get your hands on the following:
You are still the one who needs to file your income tax return, and you can do it several ways. You can send your files by mail or online with the help of NETFILE, EFILE, or Auto-fill My Return. Non-residents can only file tax returns by mail.
Income tax returns in Canada are filed every 30th of April. The deadline for settling outstanding income tax is also on the same day. However, CRA collects taxes monthly, and they appear in your payslip.
Here are the steps you need to do in order to file your income tax returns.
If you need help with your tax preparation, you can always rely on and consult with an accountant or tax preparation services who have the expertise when it comes to all your tax concerns.
These agencies can help you compute your tax and apply the deductions so that you can be eligible for tax returns. They can also help you file your tax returns properly. Remember: you have to hire someone you can trust and will offer you confidentiality. Allowing other experts to work on your tax means that you will provide sensitive information about yourself.
Aside from accountants and tax preparation firms, many free applications are available on the Internet to help you do both basic and complex tax computations. Just provide the accurate numbers required by these apps, and you can know how much taxes to pay without spending a single cent.
You can still validate the result you get from free online tax calculators by showing it to accountants. If it is accurate, you can use that online app for the next tax collection.
Income tax brackets indeed help to lower your tax, especially if you’re not yet earning a lot of money. In case you can't find all your receipts and get a lower tax accumulation (even if it's just by a few percentage points), then hiring an accountant can be beneficial.
Do you have an online business, but you are afraid to file your tax? If you need professionals, you can contact us at Unloop and let our team help you with your taxes. We partner with certified accountants for online businesses.
Give us a call at 877-421-7270 as soon as you can to learn more about our tax and accounting services.
If you have recently decided to start an online business or migrate your physical store to online platforms, you are probably already acquainted with online business accounting. But it's also understandable if you are not as most new online sellers prioritize their business's daily operations more than anything else—even something as important as accounting.
As a business owner, cash flow is what keeps your business afloat. This is one of the key indicators that your online business is profiting or losing money. One way for you to keep solid track of it without missing anything is through online business accounting.
If you're still not familiar with how online business accounting works, along with the different software you can use and their corresponding benefits to your business, then this article will serve as a comprehensive guide. Read on to learn more about the process and why you must invest in your accounting.
Running a business is more than just knowing what and how to sell, it's also learning about the technicalities that come with it. Aside from learning how selling online works, it would help to familiarize yourself with different accounting terms.
Two of the most common terminologies you may come across are accounting and bookkeeping. Although these two terms are associated with cash flow and are usually used interchangeably, they are different processes.
Accounting pertains to the overall system of processing information derived from bookkeeping. Thus, accounting refers to the entire process, while bookkeeping is just a segment of it.
Bookkeeping refers to the process of organizing financial data while accounting focuses on its interpretation. Looking at the workflow, the process starts with bookkeeping first, followed by accounting.
So if you want your books to be accounted for seamlessly, you should first see to it that your business's financial records are organized properly. Your cash flow will not tally properly as a result of unclear and unorganized data.
Online business accounting refers to two interconnected processes. For example, one pertains to accounting for online businesses. It can also mean using internet technology to carry out the accounting process. Although these are two very different meanings, you can integrate these by opting to use online business accounting software in your business’s accounting methods.
Let's focus on online accounting software. You may be familiar with traditional accounting practices wherein you have to hire a bookkeeper or accountant and meet with them. But gone are those days when you had to schedule meetings with your accountants and give them your business's financial data personally.
Online accounting (or e-accounting) completely removes the need to meet with your bookkeepers or accountants personally since it uses internet technology to help perform accounting functions. Essentially, this means that all of your accounting operations are done and saved online through the cloud, making it more accessible for you, your team, and your accountants.
But don’t worry, e-accounting can do everything traditional accounting can do. If you have an online business, it’s best that you also keep your accounting online. This way, the process will be more seamless, efficient, and accurate.
Before knowing how online business accounting works, you must first learn the basics. Learning the basics means you have to be familiar with how traditional accounting works.
Accounting starts with partnering with the right accountant or accounting firm. From there, schedule a meeting to discuss your business's books personally. But before going to that meeting, you should have all of your financial data printed and ready. These are the files you're going to hand over to your accountant. They will then organize the data accordingly and analyze them depending on the financial statements you will need.
Online business accounting works almost the same way. However, the main difference is you don't have to personally meet with your bookkeeper or accountant to hand over the data. You're going to save so much time and energy as now, you can have your books set up and accounted for through phone and email.
Some accountants and firms use online accounting software to have a smoother process. But, this is also the best choice for you especially if you don't have the budget to hire an accountant to do everything for you.
You can choose to partner with an online third-party service to handle your books. Usually, these services use QuickBooks Online and A2X, which are the gold standards in online accounting. With these, you can access your financial statements any time you want to.
Now that you are familiar with what online business accounting is, the terms associated with it, and how it works, the next question to ask is, "What's in it for me?" Knowing the benefits of online accounting services can help you decide whether this kind of technology is suited to you or not. With that said, here are some ways how using online accounting for your business can help you.
Suppose you are selling online on Amazon, Shopify, or other e-commerce platforms, it would only be logical that you do all of your processes online too! Given that most of your operations are online, it’s easier to consolidate information this way.
Perhaps you’ve been in situations wherein you had to do a quick run-through of how well your business was performing. These instances usually happen when you are thinking about scaling your business and planning to let investors in. You have to show them that you're profitable, and accurate data will back this up. Accessing your accounting data immediately would be impossible, especially if you do your books traditionally. However, with e-accounting, you may access your books from your phone or computer, and you can instantly give an updated and accurate status of the business’s finances!
Picture this: you have your cash flow and all your other numbers online. Then you either print these data or write them down manually on your ledger so you can submit them personally to your bookkeeper and accountant. Sounds tiring right? Imagine doing that on top of all your other tasks! Add the fact that finishing your books is not only time-consuming, but it's also time-sensitive. These data have to be consolidated accurately for them to be analyzed properly.
Of course, the accuracy of your financial statements will depend on how well you can keep track of your business's cash flow. With online accounting and bookkeeping services, you don't have to scramble through dozens of purchase receipts for your inventory or check how many sales went in each of your revenue streams for that month.
Aside from these, you can set up trigger payments for payables, which are directly logged into your system. Doing this will be so much more efficient, not just for you but for your whole team as well. Research shows that automating tasks makes things more efficient and reduces the chances of making mistakes. So don’t take the risk of getting your financial statements wrong just because of human clerical errors.
If you have an online business, you probably have all of your customer's order information, along with their data, on your database. It only makes sense to have all of your business's data online, and that should include accounting work.
Unfortunately, aside from accounting being tedious, it also deals with a ton of paperwork. You will literally deal with heaps of documents detailing your financial data.
Printing all of these and noting them by hand is not only time-consuming but also costly. In addition, you would have to include office supplies such as paper and printer ink in your expenses.
Although it might not seem like it’s a lot of money, they can amount to a considerable price when added up. . These are the expenses that you can reduce if you switch to online business accounting.
Aside from this, most businesses, whether online or physical, are now practicing sustainability in the workplace. There are numerous ways on how you can adapt to sustainability, but if you want to do something that can make a considerable impact, go digital.
By going digital, you can proudly say that you're a sustainable and environmentally-conscious online business too! Nowadays, consumers are more aware of a brand's values and the practices that they support. Purchase decisions are not just all about the product anymore, but also about the brand's values. So take advantage of online accounting to further reduce costs and connect with your customers.
You might consider your business as "small'' today. But in a fast-growing platform such as e-commerce, you will never know how quickly you can grow in just a few weeks. If you're stuck on traditional accounting to sort your financial data and have just one bookkeeper or accountant to help you out, it may not be efficient in the nearby future
When your business is growing, your sales are not only skyrocketing—your inventory is too! Since scaling entails catering to a larger number of SKUs or ordering more stock, you're going to have to deal with a lot of cash coming in and out.
In addition, you're ordering more from your manufacturers, so you will also make additional payments here and there. As a result, it will be a lot harder for you to keep track of these manually once you've scaled up.
Scalability won't be a problem when you partner with the best online business accounting service. For example, suppose you unexpectedly receive a lot of orders. In that case, you won't have to think about how you can keep track of all the money coming in and out since your processes are automated and synced together.
Even if you're not at your desired business size at the current time, it's one less problem to worry about in the future, all because you made the switch to online accounting services for small businesses today!
One of the main benefits of choosing cloud over traditional accounting is its accuracy and the ability to give you a real-time overview of your business's financial data. For example, how many times do you check your sales and expenses tally once a month? Most companies that still use traditional accounting may only be provided with this data at the end of the month.
But if you want to be updated on how well your business is doing, it’s best to check your daily sales against your expenses. Because traditional accounting methods are fairly limited, it may take at least a week to provide you with an almost accurate financial status.
With e-accounting, you are assured that you won't only get the real-time position of your finances, but that they’ll be accurate as well; as we mentioned earlier, automated tasks are less prone to errors and are generally more accurate.
Accurate and updated data play a crucial role in making business decisions. This way, you are not making rash decisions that are not supported by data. When you use e-accounting, you are already provided with an updated overview of your business's finances, making it a lot easier for you to adjust if needed.
With the rise of e-commerce businesses comes numerous online accounting services. Now that you know how online accounting works and the advantages it can bring to your business, the next thing you should focus on is how to choose the best service that will cater to your needs. With that, here are some key points you should consider.
Before signing with an online small business bookkeeping service, you should first have your monthly revenue data with you. Online accounting services base their pricing on how much your business earns.
For example, a company is considered "small" in the US if its average annual revenue is about $44,000 or around $3,700 monthly. But this can further be extended to the $20,000 per month range, and it will still fall under the small business classification.
It’s reasonable for online accounting services to price services based on your earnings because their workload will depend on your business's revenue. It is expected that the more money your business makes, the more work that needs to be done.
Aside from your monthly revenue, an online accounting service may also charge you depending on the number of accounts and transactions you will let them handle. The package inclusions vary depending on the accounting company, so it's best to clear this up. Some charge per account enrolled in the service, while others offer unlimited transactions, with the pricing depending mostly on your monthly revenue.
If you're a small business, you might think it best to start working with an accounting service that charges per account or transaction. Although this is a good way to start, especially if you have a fairly limited cash flow, it might not be sustainable and scalable.
So even if you are just starting and don't have much cash to work with, you will eventually realize that it is a lot cheaper for you to invest in a service that offers unlimited transactions than to opt for those that charge per transaction.
Online accounting services use software that will make bookkeeping and accounting activities a lot easier to facilitate. There are different accounting software available, and each of them has its set of pros and cons.
Before hiring them, ask what kind of software they use to do your books and financial statements. You can look these up and check on their pros and cons and other features.
Aside from seamless syncing and accurate computations, it would help if you also considered software’s security. Although the accounting service will help you set up the software so it's integrated with your business's systems, the security of your data will depend mostly on the software.
It's understandable not to be too familiar with the various accounting software in the market. Just know that QuickBooks Online with the A2X integration is an excellent choice.
Quickbooks Online is the gold standard for cloud-based accounting of small to large-sized businesses. When you choose to work with an accounting service that uses Quickbooks Online, you can easily track your cash flow anytime and anywhere. In addition, they are one of the most secure accounting software, with your data backed up safely on the cloud.
The integration of A2X, on the other hand, allows you to easily connect your e-commerce platforms such as Shopify and Amazon to Quickbooks. So if you've made a sale on Amazon, you don't have to go to Quickbooks manually to log that sale. Instead, A2X seamlessly syncs that over, making the process more efficient and accurate!
Before choosing an online small business accounting service to work with, see to it that they can help you integrate this software into your system.
Accounting is a complex process, especially if you don't have any background in it. With all these technicalities in software and process flow, it might be too overwhelming for you to learn it all in one go. There is a significant learning curve but this shouldn't be a problem for you since an excellent online business accounting service also comes with exceptional customer service.
It's already a given that there are dozens of accounting services you may choose from. However, not every one of them can guarantee to guide you from onboarding your files up until you receive your financial statements.
Since this is a fairly complicated and crucial process, you must keep in touch with someone from the team. Therefore, when choosing an accounting service to work with, ask if they have experts you can ask questions to if you need to clarify some things. This line of communication between you and their team can help you understand more of how the process works, and how you can further maximize it to your advantage.
The short answer is yes and no. Yes, you'll need to hire an accountant for filing taxes. But working with an online bookkeeping service expedites the process. Most online accounting and bookkeeping services do not file your taxes since you have to work with a CPA firm for these. What these services do, however, is produce the most accurate financial statements with the help of the different accounting software mentioned above.
Unloop is one of these online accounting services that recognizes how hard it is for online sellers to find an accountant within their budget. With that, our services don’t stop after we’ve provided you with your statements; we also partner with CPA firms at a discounted partner rate, so you won't have to worry about finding one.
Accounting is a complicated yet crucial part of any business, may it be an online or physical store. However, online businesses may have difficulty in compiling all of their sales and generating reports, having them analyzed for interpretation, and filed. This is because selling on multiple online channels makes it harder for you to organize your financial data. As an online business owner, you need to recognize this bottleneck and solve it right away.
Getting accurate data about your business's finances is one way for you to make sound decisions. This way, you can base any decisions you make now and in the future on actual data derived from your business. Never second guess your decisions when you work with a reputable online business accounting service like Unloop.
Unloop offers unlimited transactions and access to Quickbooks Online and A2X. Get all of these and more when you sign on with us! Focus more on your business, and let us handle your books. Schedule a call with us today!
If you have recently decided to start an online business or migrate your physical store to online platforms, you are probably already acquainted with online business accounting. But it's also understandable if you are not as most new online sellers prioritize their business's daily operations more than anything else—even something as important as accounting.
As a business owner, cash flow is what keeps your business afloat. This is one of the key indicators that your online business is profiting or losing money. One way for you to keep solid track of it without missing anything is through online business accounting.
If you're still not familiar with how online business accounting works, along with the different software you can use and their corresponding benefits to your business, then this article will serve as a comprehensive guide. Read on to learn more about the process and why you must invest in your accounting.
Running a business is more than just knowing what and how to sell, it's also learning about the technicalities that come with it. Aside from learning how selling online works, it would help to familiarize yourself with different accounting terms.
Two of the most common terminologies you may come across are accounting and bookkeeping. Although these two terms are associated with cash flow and are usually used interchangeably, they are different processes.
Accounting pertains to the overall system of processing information derived from bookkeeping. Thus, accounting refers to the entire process, while bookkeeping is just a segment of it.
Bookkeeping refers to the process of organizing financial data while accounting focuses on its interpretation. Looking at the workflow, the process starts with bookkeeping first, followed by accounting.
So if you want your books to be accounted for seamlessly, you should first see to it that your business's financial records are organized properly. Your cash flow will not tally properly as a result of unclear and unorganized data.
Online business accounting refers to two interconnected processes. For example, one pertains to accounting for online businesses. It can also mean using internet technology to carry out the accounting process. Although these are two very different meanings, you can integrate these by opting to use online business accounting software in your business’s accounting methods.
Let's focus on online accounting software. You may be familiar with traditional accounting practices wherein you have to hire a bookkeeper or accountant and meet with them. But gone are those days when you had to schedule meetings with your accountants and give them your business's financial data personally.
Online accounting (or e-accounting) completely removes the need to meet with your bookkeepers or accountants personally since it uses internet technology to help perform accounting functions. Essentially, this means that all of your accounting operations are done and saved online through the cloud, making it more accessible for you, your team, and your accountants.
But don’t worry, e-accounting can do everything traditional accounting can do. If you have an online business, it’s best that you also keep your accounting online. This way, the process will be more seamless, efficient, and accurate.
Before knowing how online business accounting works, you must first learn the basics. Learning the basics means you have to be familiar with how traditional accounting works.
Accounting starts with partnering with the right accountant or accounting firm. From there, schedule a meeting to discuss your business's books personally. But before going to that meeting, you should have all of your financial data printed and ready. These are the files you're going to hand over to your accountant. They will then organize the data accordingly and analyze them depending on the financial statements you will need.
Online business accounting works almost the same way. However, the main difference is you don't have to personally meet with your bookkeeper or accountant to hand over the data. You're going to save so much time and energy as now, you can have your books set up and accounted for through phone and email.
Some accountants and firms use online accounting software to have a smoother process. But, this is also the best choice for you especially if you don't have the budget to hire an accountant to do everything for you.
You can choose to partner with an online third-party service to handle your books. Usually, these services use QuickBooks Online and A2X, which are the gold standards in online accounting. With these, you can access your financial statements any time you want to.
Now that you are familiar with what online business accounting is, the terms associated with it, and how it works, the next question to ask is, "What's in it for me?" Knowing the benefits of online accounting services can help you decide whether this kind of technology is suited to you or not. With that said, here are some ways how using online accounting for your business can help you.
Suppose you are selling online on Amazon, Shopify, or other e-commerce platforms, it would only be logical that you do all of your processes online too! Given that most of your operations are online, it’s easier to consolidate information this way.
Perhaps you’ve been in situations wherein you had to do a quick run-through of how well your business was performing. These instances usually happen when you are thinking about scaling your business and planning to let investors in. You have to show them that you're profitable, and accurate data will back this up. Accessing your accounting data immediately would be impossible, especially if you do your books traditionally. However, with e-accounting, you may access your books from your phone or computer, and you can instantly give an updated and accurate status of the business’s finances!
Picture this: you have your cash flow and all your other numbers online. Then you either print these data or write them down manually on your ledger so you can submit them personally to your bookkeeper and accountant. Sounds tiring right? Imagine doing that on top of all your other tasks! Add the fact that finishing your books is not only time-consuming, but it's also time-sensitive. These data have to be consolidated accurately for them to be analyzed properly.
Of course, the accuracy of your financial statements will depend on how well you can keep track of your business's cash flow. With online accounting and bookkeeping services, you don't have to scramble through dozens of purchase receipts for your inventory or check how many sales went in each of your revenue streams for that month.
Aside from these, you can set up trigger payments for payables, which are directly logged into your system. Doing this will be so much more efficient, not just for you but for your whole team as well. Research shows that automating tasks makes things more efficient and reduces the chances of making mistakes. So don’t take the risk of getting your financial statements wrong just because of human clerical errors.
If you have an online business, you probably have all of your customer's order information, along with their data, on your database. It only makes sense to have all of your business's data online, and that should include accounting work.
Unfortunately, aside from accounting being tedious, it also deals with a ton of paperwork. You will literally deal with heaps of documents detailing your financial data.
Printing all of these and noting them by hand is not only time-consuming but also costly. In addition, you would have to include office supplies such as paper and printer ink in your expenses.
Although it might not seem like it’s a lot of money, they can amount to a considerable price when added up. . These are the expenses that you can reduce if you switch to online business accounting.
Aside from this, most businesses, whether online or physical, are now practicing sustainability in the workplace. There are numerous ways on how you can adapt to sustainability, but if you want to do something that can make a considerable impact, go digital.
By going digital, you can proudly say that you're a sustainable and environmentally-conscious online business too! Nowadays, consumers are more aware of a brand's values and the practices that they support. Purchase decisions are not just all about the product anymore, but also about the brand's values. So take advantage of online accounting to further reduce costs and connect with your customers.
You might consider your business as "small'' today. But in a fast-growing platform such as e-commerce, you will never know how quickly you can grow in just a few weeks. If you're stuck on traditional accounting to sort your financial data and have just one bookkeeper or accountant to help you out, it may not be efficient in the nearby future
When your business is growing, your sales are not only skyrocketing—your inventory is too! Since scaling entails catering to a larger number of SKUs or ordering more stock, you're going to have to deal with a lot of cash coming in and out.
In addition, you're ordering more from your manufacturers, so you will also make additional payments here and there. As a result, it will be a lot harder for you to keep track of these manually once you've scaled up.
Scalability won't be a problem when you partner with the best online business accounting service. For example, suppose you unexpectedly receive a lot of orders. In that case, you won't have to think about how you can keep track of all the money coming in and out since your processes are automated and synced together.
Even if you're not at your desired business size at the current time, it's one less problem to worry about in the future, all because you made the switch to online accounting services for small businesses today!
One of the main benefits of choosing cloud over traditional accounting is its accuracy and the ability to give you a real-time overview of your business's financial data. For example, how many times do you check your sales and expenses tally once a month? Most companies that still use traditional accounting may only be provided with this data at the end of the month.
But if you want to be updated on how well your business is doing, it’s best to check your daily sales against your expenses. Because traditional accounting methods are fairly limited, it may take at least a week to provide you with an almost accurate financial status.
With e-accounting, you are assured that you won't only get the real-time position of your finances, but that they’ll be accurate as well; as we mentioned earlier, automated tasks are less prone to errors and are generally more accurate.
Accurate and updated data play a crucial role in making business decisions. This way, you are not making rash decisions that are not supported by data. When you use e-accounting, you are already provided with an updated overview of your business's finances, making it a lot easier for you to adjust if needed.
With the rise of e-commerce businesses comes numerous online accounting services. Now that you know how online accounting works and the advantages it can bring to your business, the next thing you should focus on is how to choose the best service that will cater to your needs. With that, here are some key points you should consider.
Before signing with an online small business bookkeeping service, you should first have your monthly revenue data with you. Online accounting services base their pricing on how much your business earns.
For example, a company is considered "small" in the US if its average annual revenue is about $44,000 or around $3,700 monthly. But this can further be extended to the $20,000 per month range, and it will still fall under the small business classification.
It’s reasonable for online accounting services to price services based on your earnings because their workload will depend on your business's revenue. It is expected that the more money your business makes, the more work that needs to be done.
Aside from your monthly revenue, an online accounting service may also charge you depending on the number of accounts and transactions you will let them handle. The package inclusions vary depending on the accounting company, so it's best to clear this up. Some charge per account enrolled in the service, while others offer unlimited transactions, with the pricing depending mostly on your monthly revenue.
If you're a small business, you might think it best to start working with an accounting service that charges per account or transaction. Although this is a good way to start, especially if you have a fairly limited cash flow, it might not be sustainable and scalable.
So even if you are just starting and don't have much cash to work with, you will eventually realize that it is a lot cheaper for you to invest in a service that offers unlimited transactions than to opt for those that charge per transaction.
Online accounting services use software that will make bookkeeping and accounting activities a lot easier to facilitate. There are different accounting software available, and each of them has its set of pros and cons.
Before hiring them, ask what kind of software they use to do your books and financial statements. You can look these up and check on their pros and cons and other features.
Aside from seamless syncing and accurate computations, it would help if you also considered software’s security. Although the accounting service will help you set up the software so it's integrated with your business's systems, the security of your data will depend mostly on the software.
It's understandable not to be too familiar with the various accounting software in the market. Just know that QuickBooks Online with the A2X integration is an excellent choice.
Quickbooks Online is the gold standard for cloud-based accounting of small to large-sized businesses. When you choose to work with an accounting service that uses Quickbooks Online, you can easily track your cash flow anytime and anywhere. In addition, they are one of the most secure accounting software, with your data backed up safely on the cloud.
The integration of A2X, on the other hand, allows you to easily connect your e-commerce platforms such as Shopify and Amazon to Quickbooks. So if you've made a sale on Amazon, you don't have to go to Quickbooks manually to log that sale. Instead, A2X seamlessly syncs that over, making the process more efficient and accurate!
Before choosing an online small business accounting service to work with, see to it that they can help you integrate this software into your system.
Accounting is a complex process, especially if you don't have any background in it. With all these technicalities in software and process flow, it might be too overwhelming for you to learn it all in one go. There is a significant learning curve but this shouldn't be a problem for you since an excellent online business accounting service also comes with exceptional customer service.
It's already a given that there are dozens of accounting services you may choose from. However, not every one of them can guarantee to guide you from onboarding your files up until you receive your financial statements.
Since this is a fairly complicated and crucial process, you must keep in touch with someone from the team. Therefore, when choosing an accounting service to work with, ask if they have experts you can ask questions to if you need to clarify some things. This line of communication between you and their team can help you understand more of how the process works, and how you can further maximize it to your advantage.
The short answer is yes and no. Yes, you'll need to hire an accountant for filing taxes. But working with an online bookkeeping service expedites the process. Most online accounting and bookkeeping services do not file your taxes since you have to work with a CPA firm for these. What these services do, however, is produce the most accurate financial statements with the help of the different accounting software mentioned above.
Unloop is one of these online accounting services that recognizes how hard it is for online sellers to find an accountant within their budget. With that, our services don’t stop after we’ve provided you with your statements; we also partner with CPA firms at a discounted partner rate, so you won't have to worry about finding one.
Accounting is a complicated yet crucial part of any business, may it be an online or physical store. However, online businesses may have difficulty in compiling all of their sales and generating reports, having them analyzed for interpretation, and filed. This is because selling on multiple online channels makes it harder for you to organize your financial data. As an online business owner, you need to recognize this bottleneck and solve it right away.
Getting accurate data about your business's finances is one way for you to make sound decisions. This way, you can base any decisions you make now and in the future on actual data derived from your business. Never second guess your decisions when you work with a reputable online business accounting service like Unloop.
Unloop offers unlimited transactions and access to Quickbooks Online and A2X. Get all of these and more when you sign on with us! Focus more on your business, and let us handle your books. Schedule a call with us today!
Whenever you are out in the market searching for the best product, you must undergo a couple of steps to ensure that you’re making the right purchase. First thing, find out what people are saying about the product—look at the customer reviews on the product page, and expand your research even further by googling its pros and cons, watching how-to videos, and even following the brand on different social media platforms.
If you’re doing the same thing to search for the best accounting tool for your business, you are on the right page—a Xero VS Quickbooks Online article. We hope that after reading this, you can weigh the different advantages and disadvantages and decide, once and for all, which software is best for your business.
Let’s begin checking the main services you will get when you sign up for Quickbooks accounting software.
First among the services you will enjoy with Quickbooks is bookkeeping. When you sign up, you will be partnered with an expert bookkeeper who will help you backtrack all your income and expenses for the year. You just need to provide the right documents, and your business finances will be updated and ready for tax season.
Through these bookkeeping services, you can also ensure that all the transactions and the money coming in and out of your business are all tracked and categorized accordingly. Receipts and invoices will be kept in one place, and you'll have data readily available for reporting and data analysis.
Next is an accounting service, where you make sense of all the data you collected, put them into graphs, and prepare them for reporting. With Quickbooks, you can customize and get the following reports and more:
Because you have all the data stored in one software, you can run these reports instantly and as often as possible. As a result, you can make decisions and adjust game plans right away and based on data.
You can integrate to Quickbooks the time tracking software you are using so that you can easily generate your employees’ payroll. The highlight for the payroll services is that it also includes tax and sales tax calculation, filing, and payment by Quickbooks. Computation accuracy is assured, and Quickbooks even vows to pay $25,000 if there are any mistakes in tax computation. These steps are all possible because of software automation.
By the end of every cutoff, your company accountant would need to check the details. You just need to click the approve button for the payment to be sent to your employees.
The advantage of bank account connection is the convenience of tracking the money coming in and out of your account. The software will also automatically categorize these transactions. You can easily raise a red flag for unaccounted transactions.
Payments are made easier as the invoice you send to your customers already has “Pay Now” buttons, which makes the payment process convenient, cashless, and digital. You can also create and schedule recurring invoices, send them to your clients, and receive payments automatically.
Quickbooks is designed for freelancers and small businesses, but it adjusts as you grow your business. If you’re in the planning stages of building a business in the eCommerce world, you can integrate your inventory to Quickbooks from different platforms:
You can utilize multiple tools for your eCommerce business, but it would help if you integrate all these into a single software. In addition, doing so will organize your data and money and ensure convenience.
Moving on, let’s talk about the services being offered by Xero, the equally recognized software for accounting.
You can rely on Xero accounting to generate reports based on all the data you’ve stored in the system. The reports are all customizable, from the dragging and dropping of columns, formula creation to determining which area of your business you want to keep track of.
Whether you have weekly, monthly, quarterly, or yearly reviews, you can generate reports instantly with up-to-date information. All these reports are stored in the system as historical data, which you will find useful for case studies for your present decision-making. In addition, you can import and convert reports to PDF or spreadsheets documents.
Some bills and expenses are generated consistently, while some are paid only a few times or one time only. No matter what type of transactions you have, Xero has solutions for you.
All the money going out of your account will be tracked by the system and tagged as expenses.
Utilize the bank connections capability of Xero to receive and give out payments easily. You can also integrate the following payment methods:
The invoice you send will have a “Pay now” button, so your clients can send payment instantly. If you have regular customers, you can also schedule acquisition of payments via bank-to-bank transactions or direct debits to ensure all fees will not pass due dates. The charges you get will be tracked and categorized as income, while the payments you make will fall under expenses. Reporting will be made easier with data tracked right away.
Whether you have a business with in-house employees or remote workers, the project and time tracking features of Xero can be extremely helpful. You’ll see project progress and the work rendered by your employees. When payroll generation comes, it will be easy to create invoices and compute salaries based on the time rendered. You can also check the cost for each project and use all the data collected to foresee future spendings with the same project.
Since Xero allows integrations, you can use Trello project management software for projects and collaborations and integrate it with Xero.
Xero offers two data analytics versions Xero Analytics and Xero Analytics Plus. This accounting feature allows you to track your cash flow and check the financial status of your business because the data tracked are given sense through reports. If you upgrade to Analytics Plus, your decision-making will be made easier with AI simulations for specific financial decisions. Run your plans A-Z in the Xero Analytics plus first to see whether your venture will be profitable and to check what adjustments you need to make to work on your plans' weak spots proactively.
After seeing the two accounting software services, it’s now time to know when it is best to use Xero accounting software vs. Quickbooks and vice versa.
As of 2019, Quickbooks announced that they already have 4.5 million customers. Meanwhile, Xero only had 1.82 million subscribers in 2019, according to their website. These numbers show that Quickbooks is the more widely used and trusted accounting app.
Quickbooks is designed for freelancers and small businesses, but its reporting and data tracking capabilities adjust as your business grows. If you look into the four plans offered by Quickbooks, you will see the increase of data being tracked—enough to cover the increased needs of your bigger business.
You don't need to worry about tracking the miles you take for business-related trips, as the Quickbooks mileage app will do it for you. The best thing is that you can enjoy this service even with the software’s basic plan. Doing so will give you peace of mind when tax season and IRS audit comes.
Although both software has customer service available, Quickbooks has it better because of phone and online support availability. If you want 24/7 customer service, the Quickbooks Advanced Plan also offers this. Whereas Xero provides 24/7 online support, but none for mobile.
Proportionate to the growth of your business is the increase in the number of invoices you need to create. You can count on Quickbooks' unlimited invoice creation for this in any plan type you sign up for. It is unlike Xero’s limited invoice offers of 20 invoices for its Early Plan.
Claim expenses begin the moment you start your business, so you need to track them as soon as possible. It's a great thing Quickbooks offers claim expenses from the basic plan to the more advanced offers. Xero also provides claim expenses, but only under its Established plan.
As your business continues to grow, so should your Quickbooks plan. There are four plans you can choose from, and as the plan advances, so do its reporting and data tracking capabilities. For Xero, only a few services are added as the plan progresses.
In accounting, it is important to categorize all the data in the software, and with Quickbooks, you can create up to 40 categories. Your assets, liabilities, and equity can be broken down further into more classes to help you generate the reports you need.
The advantage of using cloud accounting software like Xero and Quickbooks is the ability to control who can access business financial data. If you need software that does not limit the number of users, Xero is the one for you with its Established plan allowing unlimited users for the software.
In the same way, Xero also allows more accounts than Quickbooks. If you manage many businesses, you can track all the accounts with a single software. You can make up to 699 accounts using Xero. In comparison, Quickbooks can only create up to 250 accounts.
Xero has more than 1,000 applications you can integrate into its system to keep all your financial data in one software. This is higher compared to Quickbooks, with only 650 integrations. Some of the applications you can integrate with Xero are Trello, Gusto Payroll, and other payment software.
Do you own properties or assets like land, buildings, factories, furniture, or equipment? Quickbooks or Xero can account for even these details in your business. However, Xero makes it more accessible to users under all accounting plans.
After giving you the details of what Xero and Quickbooks software offer and what features the two software are better at doing than the other, which one do you think suits your business best?
The answer depends on your current business needs and how you foresee your business growing.
Business needs: Consider the size of your business. Are you a freelancer, a startup, or a small business? Xero is software intended for bigger firms. As you can see, the software allows an unlimited number of users and creates more accounts. However, if you are a freelancer or a small business, Quickbooks offers much more efficient data tracking and reporting.
Growth of your business: Quickbooks' reporting and tracking capability are better when it comes to assisting a growing business. It offers even more features as you scale your plan from Simple Start to Advanced. Xero, too, makes its features accessible gradually from Early to Established plans, but the differences are not that much as compared to the increased services by Quickbooks.
Knowing which one is better depends on you and your business goals.
Here at Unloop, we particularly use Quickbooks because it is the most widely used software by accountants. It perfectly caters to our clients, who are mostly freelancers and are still starting with their business.
If you need assistance on your business accounting and are looking into using Quickbooks, we’d be glad to help. Skip the hassle of learning the ropes on your own with our team of financial experts. If you’d like to learn more about our accounting services, please feel free to call us at 877-421-7270. We’d be most happy to assist you.
Whenever you are out in the market searching for the best product, you must undergo a couple of steps to ensure that you’re making the right purchase. First thing, find out what people are saying about the product—look at the customer reviews on the product page, and expand your research even further by googling its pros and cons, watching how-to videos, and even following the brand on different social media platforms.
If you’re doing the same thing to search for the best accounting tool for your business, you are on the right page—a Xero VS Quickbooks Online article. We hope that after reading this, you can weigh the different advantages and disadvantages and decide, once and for all, which software is best for your business.
Let’s begin checking the main services you will get when you sign up for Quickbooks accounting software.
First among the services you will enjoy with Quickbooks is bookkeeping. When you sign up, you will be partnered with an expert bookkeeper who will help you backtrack all your income and expenses for the year. You just need to provide the right documents, and your business finances will be updated and ready for tax season.
Through these bookkeeping services, you can also ensure that all the transactions and the money coming in and out of your business are all tracked and categorized accordingly. Receipts and invoices will be kept in one place, and you'll have data readily available for reporting and data analysis.
Next is an accounting service, where you make sense of all the data you collected, put them into graphs, and prepare them for reporting. With Quickbooks, you can customize and get the following reports and more:
Because you have all the data stored in one software, you can run these reports instantly and as often as possible. As a result, you can make decisions and adjust game plans right away and based on data.
You can integrate to Quickbooks the time tracking software you are using so that you can easily generate your employees’ payroll. The highlight for the payroll services is that it also includes tax and sales tax calculation, filing, and payment by Quickbooks. Computation accuracy is assured, and Quickbooks even vows to pay $25,000 if there are any mistakes in tax computation. These steps are all possible because of software automation.
By the end of every cutoff, your company accountant would need to check the details. You just need to click the approve button for the payment to be sent to your employees.
The advantage of bank account connection is the convenience of tracking the money coming in and out of your account. The software will also automatically categorize these transactions. You can easily raise a red flag for unaccounted transactions.
Payments are made easier as the invoice you send to your customers already has “Pay Now” buttons, which makes the payment process convenient, cashless, and digital. You can also create and schedule recurring invoices, send them to your clients, and receive payments automatically.
Quickbooks is designed for freelancers and small businesses, but it adjusts as you grow your business. If you’re in the planning stages of building a business in the eCommerce world, you can integrate your inventory to Quickbooks from different platforms:
You can utilize multiple tools for your eCommerce business, but it would help if you integrate all these into a single software. In addition, doing so will organize your data and money and ensure convenience.
Moving on, let’s talk about the services being offered by Xero, the equally recognized software for accounting.
You can rely on Xero accounting to generate reports based on all the data you’ve stored in the system. The reports are all customizable, from the dragging and dropping of columns, formula creation to determining which area of your business you want to keep track of.
Whether you have weekly, monthly, quarterly, or yearly reviews, you can generate reports instantly with up-to-date information. All these reports are stored in the system as historical data, which you will find useful for case studies for your present decision-making. In addition, you can import and convert reports to PDF or spreadsheets documents.
Some bills and expenses are generated consistently, while some are paid only a few times or one time only. No matter what type of transactions you have, Xero has solutions for you.
All the money going out of your account will be tracked by the system and tagged as expenses.
Utilize the bank connections capability of Xero to receive and give out payments easily. You can also integrate the following payment methods:
The invoice you send will have a “Pay now” button, so your clients can send payment instantly. If you have regular customers, you can also schedule acquisition of payments via bank-to-bank transactions or direct debits to ensure all fees will not pass due dates. The charges you get will be tracked and categorized as income, while the payments you make will fall under expenses. Reporting will be made easier with data tracked right away.
Whether you have a business with in-house employees or remote workers, the project and time tracking features of Xero can be extremely helpful. You’ll see project progress and the work rendered by your employees. When payroll generation comes, it will be easy to create invoices and compute salaries based on the time rendered. You can also check the cost for each project and use all the data collected to foresee future spendings with the same project.
Since Xero allows integrations, you can use Trello project management software for projects and collaborations and integrate it with Xero.
Xero offers two data analytics versions Xero Analytics and Xero Analytics Plus. This accounting feature allows you to track your cash flow and check the financial status of your business because the data tracked are given sense through reports. If you upgrade to Analytics Plus, your decision-making will be made easier with AI simulations for specific financial decisions. Run your plans A-Z in the Xero Analytics plus first to see whether your venture will be profitable and to check what adjustments you need to make to work on your plans' weak spots proactively.
After seeing the two accounting software services, it’s now time to know when it is best to use Xero accounting software vs. Quickbooks and vice versa.
As of 2019, Quickbooks announced that they already have 4.5 million customers. Meanwhile, Xero only had 1.82 million subscribers in 2019, according to their website. These numbers show that Quickbooks is the more widely used and trusted accounting app.
Quickbooks is designed for freelancers and small businesses, but its reporting and data tracking capabilities adjust as your business grows. If you look into the four plans offered by Quickbooks, you will see the increase of data being tracked—enough to cover the increased needs of your bigger business.
You don't need to worry about tracking the miles you take for business-related trips, as the Quickbooks mileage app will do it for you. The best thing is that you can enjoy this service even with the software’s basic plan. Doing so will give you peace of mind when tax season and IRS audit comes.
Although both software has customer service available, Quickbooks has it better because of phone and online support availability. If you want 24/7 customer service, the Quickbooks Advanced Plan also offers this. Whereas Xero provides 24/7 online support, but none for mobile.
Proportionate to the growth of your business is the increase in the number of invoices you need to create. You can count on Quickbooks' unlimited invoice creation for this in any plan type you sign up for. It is unlike Xero’s limited invoice offers of 20 invoices for its Early Plan.
Claim expenses begin the moment you start your business, so you need to track them as soon as possible. It's a great thing Quickbooks offers claim expenses from the basic plan to the more advanced offers. Xero also provides claim expenses, but only under its Established plan.
As your business continues to grow, so should your Quickbooks plan. There are four plans you can choose from, and as the plan advances, so do its reporting and data tracking capabilities. For Xero, only a few services are added as the plan progresses.
In accounting, it is important to categorize all the data in the software, and with Quickbooks, you can create up to 40 categories. Your assets, liabilities, and equity can be broken down further into more classes to help you generate the reports you need.
The advantage of using cloud accounting software like Xero and Quickbooks is the ability to control who can access business financial data. If you need software that does not limit the number of users, Xero is the one for you with its Established plan allowing unlimited users for the software.
In the same way, Xero also allows more accounts than Quickbooks. If you manage many businesses, you can track all the accounts with a single software. You can make up to 699 accounts using Xero. In comparison, Quickbooks can only create up to 250 accounts.
Xero has more than 1,000 applications you can integrate into its system to keep all your financial data in one software. This is higher compared to Quickbooks, with only 650 integrations. Some of the applications you can integrate with Xero are Trello, Gusto Payroll, and other payment software.
Do you own properties or assets like land, buildings, factories, furniture, or equipment? Quickbooks or Xero can account for even these details in your business. However, Xero makes it more accessible to users under all accounting plans.
After giving you the details of what Xero and Quickbooks software offer and what features the two software are better at doing than the other, which one do you think suits your business best?
The answer depends on your current business needs and how you foresee your business growing.
Business needs: Consider the size of your business. Are you a freelancer, a startup, or a small business? Xero is software intended for bigger firms. As you can see, the software allows an unlimited number of users and creates more accounts. However, if you are a freelancer or a small business, Quickbooks offers much more efficient data tracking and reporting.
Growth of your business: Quickbooks' reporting and tracking capability are better when it comes to assisting a growing business. It offers even more features as you scale your plan from Simple Start to Advanced. Xero, too, makes its features accessible gradually from Early to Established plans, but the differences are not that much as compared to the increased services by Quickbooks.
Knowing which one is better depends on you and your business goals.
Here at Unloop, we particularly use Quickbooks because it is the most widely used software by accountants. It perfectly caters to our clients, who are mostly freelancers and are still starting with their business.
If you need assistance on your business accounting and are looking into using Quickbooks, we’d be glad to help. Skip the hassle of learning the ropes on your own with our team of financial experts. If you’d like to learn more about our accounting services, please feel free to call us at 877-421-7270. We’d be most happy to assist you.
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.
