You can start your e-commerce business through many different channels, but a popular choice for a quick setup is Shopify. It’s simple to set up and can have your products in front of your customer in a store you can control. Accounting for Shopify can also be just as simple.
If you’re new to e-commerce and Shopify, accountants may seem like an unnecessary expense to you right now. Those first few months can be treacherous, and we understand that you need to see some traction before you are looking for help on growth. So, if you are unsure where to start accounting for Shopify stores, here’s our helpful primer.
What is e-commerce accounting?
E-commerce accounting is the process of managing, tracking, and organising financial transactions and data associated with an e-commerce store. It is a specialised type of business accounting that helps e-commerce store owners with specific needs.
Key tasks in e-commerce accounting include bookkeeping functions such as invoicing, payroll, balance sheets, tax planning and reporting, and payment processing.
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While this might seem straightforward, if you are a small business or sell goods and products across borders you will also need to manage more complex tasks such as multicurrency transactions and international tax obligations.
What do e-commerce business owners need to keep track of?
As an e-commerce business owner, you are required to keep track of your organisation’s transactions, inventory, and financial data. By keeping a close eye on cash flow, balance sheets, margins, and profit and loss statements, you will be in a good position to anticipate growth, profitability and tax compliance.
E-commerce business owners may also need to keep track of shipping and fulfilment costs, website analytics and performance, customer service, and market trends.
Begin accounting on Shopify
Take the stress out of e-commerce accounting with Shopify. If you are just starting to get to grips with the e-commerce platform, here are your next steps:
Choose your System
One of the key fundamental pieces of your e-commerce business setup should have been to choose your accounting software. If you didn’t, you will want to add this to the top of your to-do list. Accounting for Shopify through a spreadsheet or scraps of paper simply won’t be practical for long, and once you breach the VAT threshold it will also be a legal requirement to use an accounting system compatible with Making Tax Digital protocols.
We strongly recommend Xero to all e-commerce entrepreneurs as it is built with e-commerce in mind, customisable through apps and allows easy tracking of multiple e-commerce platforms and multiple currencies, futureproofing your accounting for your growth and success.
Set up Integration
Before you confirm your choice of system, check if it will integrate with Shopify and any other e-commerce platforms you are looking to sell on. Xero covers all such platforms, but if you do opt for an alternative, it is worth spending the time checking that your choice does entirely cover your Shopify accounting needs and future needs to avoid needing to change down the line.
If you discover your current system doesn’t fulfil your needs, our team can convert your existing accounting data to Xero so you can hit the ground running.
Set your system up to automatically pull in all your Shopify data and your future transactions will be fed in without you needing to lift a finger. Depending on the system you use, you may need to set a weekly reminder to file these transactions under the right accounting categories to avoid a mountain of admin time when you hit tax season. Again, Xero will do this automatically.
Retroactive Completion
If you were looking for a Shopify accountant because your books aren’t currently up to date and you have limited time and/or accounting experience, you may need to find an e-commerce accountant. E-commerce has many intricacies that make it a separate discipline from general accounting so look for a specialist to help you get up to date.
We can bring your accounts up to date, set up Xero and show you the best integrations for you to keep on top of your accounting moving forward. Of course, we can also offer advice on how to grow your business and bookkeeping as you need them.
Next Steps
If you are looking for Shopify accountants to help you now and with the future growth of your e-commerce business, our team would love to hear from you. We specialise in all things e-commerce accountancy from the best integrations to automate your accounting to your VAT requirements and we are here to help.
Why choose Unicorn Accounting?
Ensure you keep on top of your finances and tax obligations by outsourcing to an accountant. This means that you don’t need to worry about your end of year accounts, payroll, or bookkeeping requirements.
At Unicorn Accounting we are e-commerce accountants who help make your online business a growing success. We offer e-commerce accounting advice, financial management, bookkeeping, cash flow statement, and tax filing services to support and scale your business.
Our team of accountants and Xero-certified advisors have experience working with both small start-ups and family-run online stores to large-scale, international retail and e-commerce brands.
If you’ve got an online store, we have the best solution for you. Providing you with a financial arm to your business through our sector experience, and skills with innovative technologies.
To see how we can help you maximise the scalability of your e-commerce brand all year round, get in touch with Unicorn Accounting today. Or click here to get a free quote.
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