Introduction
In order to do Etsy and Shopify bookkeeping, you must keep track of your inventory levels. This can be done by keeping a running tally of what you have in stock, or by using a software program like InventoryLab.
Next, you need to track your sales. For each sale, you’ll need to know the date, the product sold, the quantity sold, and the price. You can use a simple spreadsheet for this, or you can use a more robust software like QuickBooks.
Finally, you need to track your expenses. This includes things like the cost of goods sold, shipping costs, and any other business expenses. Again, you can use a simple spreadsheet or QuickBooks for this.
By tracking your inventory, sales, and expenses, you’ll be able to see how your business is doing and make necessary adjustments. This will help you run your Etsy shop more efficiently and profitably.
What is Bookkeeping
Bookkeeping is the process of tracking all financial transactions for your business. This includes recording, categorizing, and storing financial data. Bookkeeping can help you make informed financial decisions and create reliable financial reports. It is a process of tracking physical books. This helps businesses understand their current financial health and make better business decisions.
The function of bookkeeping is to keep track of and report financial transactions, enabling businesses to better understand their financial situation and make informed decisions about where to allocate resources. Bookkeeping also helps protect companies from fraud and provides a comprehensive view of the company’s overall finances. It is essential for Etsy and Shopify merchants to understand how to do bookkeeping in order to properly manage their business finances.
Bookkeeping offers numerous benefits to Etsy and Shopify businesses, such as helping them to track their finances accurately, address any potential tax issues that may arise, and manage their financial transactions more effectively. With bookkeeping, Etsy and Shopify businesses are able to keep a better eye on their money and make sure everything is accounted for. In addition, it allows them to plan for the future by having detailed records that can be looked back on at any time.
How can bookkeeping help your Etsy and Shopify business?
Bookkeeping is an essential part of any successful Etsy or Shopify business. It helps you identify which expenses are driving your profits and which should be cut down or eliminated altogether. Bookkeeping also helps you address any tax issues that may arise.
Bookkeeping can be easy to set up and manage with the help of the right software. This can help you track your business progress, manage taxes, and improve your business strategies.
It is important for businesses to reconcile their books with taxes in order to maintain accurate records, remain organized, and communicate effectively with clients. Doing so can also help business owners address any potential tax issues that may arise.
Financial statements provide key insights into a business’s performance. By looking at the Profit and Loss, Balance Sheet, and Cash Flow Statement, businesses can get a clear picture of their financial situation on the 14th of every month. This information helps businesses make more informed decisions that can lead to better results in the future.
The three types of financial statements commonly used in bookkeeping include the Profit and Loss, Balance Sheet, and Cash Flow Statement. The Profit and Loss statement reveals how much money the business is making while the Balance Sheet shows what assets and liabilities are owned by the business. The Cash Flow statement tracks cash flows in and out of the business. By using these three financial statements, businesses can track their finances accurately for Etsy or Shopify stores.
It is essential for businesses to review and adjust their bookkeeping policies as needed in order to ensure that their financial data is up-to-date, accurate, and suitable for tax filing purposes. Additionally, having an updated set of policies helps business owners make strategic decisions related to pricing, product sales, and operations. Regularly reviewing the bookkeeping policies ensures that any changes or adjustments can be made quickly in order to best meet the needs of the business.
A2X is an accounting tool designed to help optimize Etsy and Shopify businesses. It provides accurate ecommerce bookkeeping for businesses of all sizes and industries. It offers a range of features tailored to different ecommerce platforms, as well as a free trial period. A2X helps both small and large businesses save time and energy while managing their finances.
Bookkeeping can help to facilitate communication between Etsy and Shopify clients by allowing for basic contact information, like names and addresses, to be stored securely. Furthermore, bookkeeping allows shop owners to keep track of any orders placed through their store on these platforms. By recording important financial and tax information related to those orders, shop owners can make more informed decisions about the future of their business.
What are the best practices to follow for bookkeeping on Etsy and Shopify?
Bookkeeping for Etsy and Shopify businesses can be a bit different from bookkeeping for other types of businesses. There are many programs that can help automate common processes for Etsy sellers, including QuickBooks.
Managing transactions manually can be time-consuming and tedious, so using an automated accounting software application can be helpful. To keep your Etsy business finances in check, follow our tips for setting up your own bookkeeping system.
1. Set up accounts and track sales
Sales on Etsy and Shopify can be tracked in a number of ways, but the best practice is to set up separate accounts for each platform. This will help you keep track of your sales and expenses more easily, and will also make it easier to file your taxes.
To set up an account, you’ll need to create a new “income” account in your bookkeeping software. Then, you’ll need to create a new “expense” account for each platform. For example, you might have an Etsy Expense account and a Shopify Expense account.
Once you have your accounts set up, you can start tracking your sales and expenses. To do this, you’ll need to create a new transaction for each sale or expense. Be sure to include the date, the amount, and a description of what the transaction is for.
If you’re using accounting software, you can usually link your Etsy and Shopify accounts to your bookkeeping software. This will allow you to automatically import your sales and expenses into your bookkeeping software.
2. Download all financial data
To download all of your Etsy and Shopify financial data, follow these best practices:
1. First, create a dedicated folder on your computer for saving all of your online store’s financial data. This will help you keep everything organized and in one place.
2. Next, log into your Etsy and Shopify accounts and navigate to the “Your Shop” page. From here, click on the “Sales” tab and then select “Download Data”.
3. Etsy and Shopify will both generate a CSV file of your sales data. Save these files in the dedicated folder you created in step one.
4. Finally, open up your CSV files in a spreadsheet program like Microsoft Excel or Google Sheets. From here, you can begin organizing your data and tracking your finances.
3. Organize records and store data
It is important to organize records and store data when bookkeeping for Etsy and Shopify in order to ensure accuracy in record keeping.
Keeping backup copies of records is essential, as it provides a safeguard against data loss due to mistakes or technical issues.
Using a software program or Excel spreadsheet will help streamline the bookkeeping process and make it easier to maintain accurate records.
4. Naming the transactions
When bookkeeping for an online store, it is important to name transactions in order to keep accurate records of income and expenses. Naming transactions properly makes it easier to track finances and determine where money has come from or gone.
By categorizing different types of sales, it becomes easier to distinguish between them when reviewing the accounts. Furthermore, fees associated with transfers should also be noted separately from sales transactions in order to track income more accurately. Not naming transactions correctly can lead to inaccurate records which could have a negative impact on the business’s finances.
5. Combining each Excel spreadsheet
When bookkeeping for Etsy and Shopify, it is important to combine Excel spreadsheets in order to effectively manage one’s finances. To do this, the data from each spreadsheet should be copied into a new workbook.
After organizing the spreadsheets, a Pivot Table should be created by selecting the “category” and “amount” in the data table. Additionally, one should specify whether or not to include transfers and personal expenses in the Pivot Table.
Finally, licenses and permits may need to be obtained depending on one’s location as well as an understanding of local sales tax laws. Taking courses covering these topics is highly recommended for those wanting more detailed information on how best to combine their Excel spreadsheets when bookkeeping for Etsy and Shopify.
What tools can you use to do your bookkeeping for Etsy and Shopify?
1. A2X for Etsy
A2X is a new file format that offers greater compatibility with mobile devices and other platforms, specifically for those using Etsy.
It provides tools to help sellers take control of their bookkeeping and accounting needs, by making it easier to transfer data between different platforms. A2X also offers free trials for their services, allowing users to try out the software before committing fully.
2. Xero
Xero is a popular accounting software choice for small businesses, especially those operating online shops on platforms like Etsy and Shopify.
It offers affordable plans for businesses of all sizes that can be scaled up as business growth requires. Xero offers easy-to-use features and integrates seamlessly with other platforms, earning high marks from Capterra reviewers. Its wide range of options makes it ideal for finding the best fit for any business’s bookkeeping needs.
3. Intuit QuickBooks Online
Intuit QuickBooks Online is a good tool for bookkeeping for Etsy and Shopify because it offers apps specifically designed for these e-commerce sites, making it easier to accurately keep track of sales and expenses.
Additionally, the user interface is easy to use, making it ideal for self-employed businesses that are selling many products online. The features specific to Etsy and Shopify also make Intuit QuickBooks Online an ideal choice for bookkeeping on these platforms.
4. CraftyBase
CraftyBase is a comprehensive inventory and bookkeeping system for managing handmade businesses. It offers features such as linking products together by SKUs, generating reports to list lot batches, tracking stock at multiple consignment shops, and integrating with Etsy, Shopify, and WooCommerce. With CraftyBase’s monthly fee starting at $9 per month, it provides an easy way for crafters to keep track of their materials in addition to completed inventory items. This helps them stay compliant with GMP and CPSC traceability standards while efficiently managing their handmade business.
- This inventory and bookkeeping software can help you keep track of your materials in addition to completed inventory items, which can be an important step in keeping track of your entire business.
- CraftyBase charges a monthly fee starting at $9 a month, but it goes up from there based on the different features you are getting.
- You can easily link products together by SKUs, making it easy to keep track of how much stock you have of each product and how it is being used.
- You can also generate reports to list lot batches to quickly take care of material defects and product recalls, as well as stay in compliance with GMP and CPSC traceability standards.
- Sell at consignment shops? Easily enter each shop in Craftybase so you can keep track of how much stock you have at each location, transfer stock, and assign sales to the correct consignment shop.
- CraftyBase is actually both an inventory and bookkeeping system that integrates with Etsy, Shopify, and WooCommerce- meaning it has everything you need to manage your handmade business efficiently!
5. SellBrite
SellBrite is a software platform that helps Shopify and Etsy store owners with bookkeeping, inventory management, shipping, sales tax calculation, and more. It offers a free plan for those handling up to 30 orders per month, with fees increasing up to $19 depending on the number of orders.
SellBrite also provides automation options for bookkeeping and shipping at an upfront cost which can save money in the long run. Its features such as invoicing, order tracking, and inventory management help store owners manage their businesses better.
How often should you reconcile accounts when doing your Etsy or Shopify bookkeeping?
It is important to reconcile accounts monthly when doing bookkeeping for Etsy or Shopify in order to ensure accuracy and consistency. Wave accounting services provide detailed Profit and Loss, Balance Sheets, and Cash Flow statements by the 14th of every month that can be used to help with this process.
When reconciling accounts for Etsy or Shopify bookkeeping, it is important to set up a system and follow the advice in the reference. This includes understanding gross revenue and expenses, tracking inventory levels, listing items for sale, and calculating taxes and fees.
Additionally, one can use Excel spreadsheets to copy data into a single file that can then be used to create a pivot table. This will allow one to easily select the data they want to view in the pivot table as well as exclude any personal expenses or transfers from being included in it. Finally, taking courses that teach how to automate bookkeeping processes helps make it more stress-free when doing your own accounting tasks such as filing taxes.
It is recommended to reconcile your accounts on a monthly basis when doing bookkeeping for Etsy or Shopify. This will help ensure accuracy and allow you to have an accurate picture of the financial status of your business. Reconciling your accounts regularly can help catch errors, spot unusual transactions, and ensure that money is being handled correctly.
It is recommended to reconcile your accounts on a regular basis in order to have an accurate and up-to-date view of your financials. Doing so regularly will help you spot any discrepancies or issues quickly, allowing you to address them before they become bigger problems. Additionally, reconciling on a regular basis helps ensure that all transactions are recorded correctly and can help protect against fraudulent activity.
When reconciling accounts, it is important to take into consideration the following: ensuring that all financial information and tax data are accurately recorded; reviewing policies on a regular basis to ensure the business is performing as expected; changing how products are sold, altering product pricing strategies, or modifying business operations; and taking note of any discrepancies in accounts. Doing so will help ensure that a business’s bookkeeping practices remain accurate and up-to-date.
What records should you keep when performing your Etsy or Shopify bookkeeping activities?
1. Gather financial data
In order to complete bookkeeping activities for Etsy or Shopify, individuals must gather their financial data from a variety of payment platforms. These include PayPal, Etsy, Venmo, Cash App, Stripe, and Square.
All of these should be treated like bank accounts in order to keep track of all transactions. Additionally, when selling products on Etsy, the money that is received goes into the individual’s Etsy account first before transferring to their bank account. Gaining an understanding of how money is transferred from sales on these platforms is essential for accurate bookkeeping practices.
2. Track sales and expenses
When performing bookkeeping activities for an Etsy or Shopify business, it is important to track sales and expenses in order to get an accurate picture of performance.
Business owners should keep records of products sold, cost of products sold, gross profit (before taxes), and net profit (after taxes) in order to more accurately assess their financial standing. Doing this will give a better understanding of how much money the business is making and how it is doing overall.
3. Download all of your financial data
It is important to download all of your financial data when performing bookkeeping activities on Etsy or Shopify in order to maintain accuracy and completeness.
By downloading the financial data, discrepancies and irregularities can be identified and changes can be tracked over time. Furthermore, exporting the data will make organizing it easier as it will all be in one place.
4. Review and adjust policies as needed
It is important to review and adjust one’s bookkeeping policies as needed in order to ensure their business remains up-to-date and successful.
Businesses should prioritize the recording of information that is necessary for tax and bookkeeping purposes but can opt to streamline processes that are not critical for those things if they feel like they are getting the financial information they need in order to make strategic decisions.
Need Bookkeeping Assistance?
At FreeCashFlow.io, we take care of all of your bookkeeping requirements for your online business. In addition to cash reconciliations, vendor setup, chart of accounts, monitoring inventory value, and depreciation reports, we also provide clean books that satisfy you.
FAQs
What is the difference between Etsy and Shopify?
- Etsy and Shopify are two different types of online marketplaces that allow sellers to sell handmade items such as clothes, food, or crafts.
- Etsy is more specialized in digital art whereas Shopify offers a wider variety of products.
- Etsy sellers usually have a product that they specialize in which makes it easier for buyers to find what they’re looking for.
- Etsy is a great option for selling handmade items and digital downloads, while Shopify is more suited for business ventures involving manufacturing.
- There is no cost to open up a shop on Etsy, while you may need to pay fees depending on which country you reside in with Shopify.
- Etsy allows for online store management, payment processing, shipping, and feedback scaling your business; all things that Shopify does as well, but with less complications.
What are the bookkeeping requirements for Etsy and Shopify businesses?
Businesses selling on Etsy and Shopify need to set up a bookkeeping system in order to keep track of their sales, expenses, and other financial information. There are applications available that can automate many of the tasks associated with bookkeeping for these platforms. It is essential for businesses to have a reliable system in place in order to ensure accurate records and accurate financial statements. Additionally, Etsy sellers may have more transactions than other businesses, so it is important that they have a bookkeeping system that can handle all their transactions efficiently. By following best practices regarding bookkeeping, sellers on Etsy and Shopify will be able to better manage their finances and stay organized.
What accounting software is compatible with Etsy and Shopify?
Accounting software that is compatible with Etsy and Shopify includes QuickBooks, Xero, Sage, and a variety of digital bookkeeping apps. These solutions are secure, efficient, automatic, and scalable.
How do I track inventory for my Etsy or Shopify business?
Businesses that sell products online need to track their inventory in order to ensure they have enough stock available for customers. Etsy and Shopify stores can manage inventory using Shop Management, Excel spreadsheets, or third-party software such as RunInventory. Tracking inventory with these methods will help business owners monitor sales history, optimize profits and keep resellers informed about product availability.
How do I calculate sales tax for my Etsy or Shopify business?
It is important for Etsy and Shopify businesses to calculate and collect sales tax accurately. To do this, they should use apps that can help them automate their obligations. Depending on the business’ income, product, and sales platform, they may be expected to pay sales tax monthly or quarterly. For sellers using Etsy, the platform now collects sales tax based on buyers’ location without sellers needing to do anything. If additional channels are used such as Amazon, eBay or Shopify, businesses should research how each platform manages sales tax and comply with applicable regulations. Most Etsy businesses only need to pay taxes in their state of residence; however, a Remote Seller Nexus Chart should be consulted for other states where a business may have an obligation to collect and pay taxes. If so is required by a certain state’s taxing authority then contact needs to be made with them as well.
What are some common bookkeeping mistakes made by Etsy and Shopify businesses?
Etsy and Shopify businesses often make bookkeeping mistakes, including failing to properly track sales tax, inventory management, tax deductions, and compliance. Additionally, payments and fees may be recorded inaccurately due to the complexity of Shopify’s platform. It is essential that businesses understand the best practices for accounting and bookkeeping in their business type when using Etsy or Shopify. To reduce errors and optimize efficiency in bookkeeping tasks, businesses can utilize automated applications such as Bench.
