How to Sync Shopify to Your Accounting System

How to Sync Shopify to Your Accounting System

Why it’s important and the benefits of integration

An important part of setting up your Shopify store is connecting your Shopify account with your chosen accounting system. The best accounting software and tools for your Shopify business are ones that can be easily integrated with Shopify to allow the seamless flow of your financial data.

This guide will explain how you can integrate Shopify with your accounting system, why it’s important – and what the benefits are of having the two connected.

Choosing the best accounting system

Particularly as an e-commerce merchant, one of the first systems you should invest in when opening a new Shopify store is one to help you manage your finances.

While you might not hire an accountant in the early stages of your e-commerce store’s journey, when you do decide to work with one, you’ll need to have robust accounting software.

An accounting system effectively takes away the manual labour involved in certain accounting processes, making room for you to scale your business with stability. While most businesspeople invest in accounting software to make life easier and speed up processes, the real value is in how it can simplify your finances.

When deciding which accounting software is right for your business, consider the following:

  • Ease of use
  • Customisable dashboards – so you can tailor the system to meet your needs
  • Detailed reporting capabilities and automated bank reconciliation
  • Additional features like invoicing, payroll, tracking inventory and contact management
  • Balance sheet and PNL functionality
  • Accessibility – cloud-based
  • Any user limitations – including accountant access
  • Pricing
  • Other customer reviews and feedback

The benefits of connecting your accounting system

As individual products, accounting software and Shopify make it easier to manage your accounts and run an online store, respectively.

If you were to keep the two separated, they would still do the job they were each developed for, and you would be required to manually enter your sales data from Shopify into your accounting system. Depending on how you choose to manage your accounts, this option might suit you fine, but it can get tricky as your overall number of transactions increases – and your business grows.

Integrating Shopify with your accounting system helps to resolve a lot of issues associated with manual data entry. As bookskeep CEO Cyndi Thomason explains in her 10 fundamentals of e-commerce business accounting, you run the risk of human error when you rely on memory and manual processes. To make good business decisions, you need accurate, real-time financial information – and that comes from integrating your accounting software with your Shopify store.

With integration, you’re giving your accounting software permission to automatically import and sync your Shopify transactions. This includes sales, fees and adjustments, giving you a real-time view of your accounts so that you can keep track of how your Shopify business is performing.

What you need for integration

As an e-commerce seller working from an online platform, you’ll need a cloud-based accounting system . To integrate cloud-based software with Shopify, you’ll need to check there is a compatible software app available to download.

Xero and Shopify

To integrate Shopify with Xero, you’ll need the Xero Integration app. Install it through the Shopify App Store and connect your Xero account.

QuickBooks and Shopify

To integrate Shopify with QuickBooks, you’ll need the Sync with Shopify app. Install it through the Shopify App Store and connect your QuickBooks account.

On their own, Xero and QuickBooks are great cloud-based accounting software options for Shopify store owners (you can read why here), and although they integrate with Shopify well enough, there are a few drawbacks.

Xero will only import one invoice for each fully paid order. Refunds are imported as credit notes and payment is recorded alongside the credit note – not the order. QuickBooks will automatically sync all your Shopify orders and refund data as sales receipts including items, taxes and shipping fees. Essentially, they’re both importing too much data – something which can quickly overwhelm you and your accounting system.

Here is where you’ll find good e-commerce accountants talking about what’s called an accounting connector app like A2X for Shopify.

A2X for Shopify will automatically post a summary of all your Shopify transactions – sales, fees, refunds, other adjustments – into Xero or QuickBooks. It then reconciles those transactions against the Shopify payments in your bank account, so that you know everything has been accounted for accurately.

Here’s why, for a Shopify e-commerce seller, investing in an accounting connector is just as important as investing in good accounting software.

Individual orders vs summarised

Importing individual orders into your Xero account will clog up your accounting system, make reconciling an all-consuming nightmare, and stunt your ability to scale your business. A2X generates summarised statements that are matched to each Shopify Pay-outs summary, ensuring accurate reconciliation each month.

Save time reconciling

A2X can automate the reconciliation process into a few button clicks – turning what took you hours into a few seconds. Why waste time and energy on something you don’t have to do?

Accurate bookkeeping

This one’s a biggie. Think of A2X as a bridge, providing the way for all your store’s data to file nicely into Xero. This ensures your business has reliable and accurate financial data, which is essential to scaling your business.

Benefits of accrual accounting

Without A2X, Xero will import fully-paid orders instead of importing transactions as they occur. Accrual accounting reflects that income and expenses generated in one month can carry over into the next month or even longer – a much more accurate picture of overall cash flow. This is information that will help you make informed business decisions, like when to develop a new product, switch suppliers, or double down on marketing spend.

It’s super easy to integrate all three systems – Shopify, A2X and your chosen accounting software. Use these step-by-step instructions to integrate Shopify and A2X with Xero, or for QuickBooks integration, you’ll need to follow these steps.

Finding a good accounting partner

Working with an e-commerce specialist accountant isn’t just about finding someone who can help you manage your finances – although that is certainly within their job description. There are other useful benefits as well:

  • Specialist accountants have experience in handling the complexities of e-commerce accounting and selling through a platform like Shopify.
  • They’re confident and knowledgeable using cloud-based accounting systems, as well as accounting connector apps, and can help you decide on which system is best for your business.
  • They’ll be up to date with sales tax legislation and know what’s involved with filing your sales tax returns. If they don’t have the experience, they’ll probably partner with someone who does.
  • Accountants often have access to special discounts for accounting systems like Xero and QuickBooks that they’re able to pass on to their clients. Some also offer accounting packages which include an accounting system and A2X subscription.

A2X Partners are expert accounting firms, highly experienced with A2X and the accounting intricacies involved in selling on Shopify. Our partners are based all around the world: North America, Canada, United Kingdom, Australia, Hong Kong and New Zealand. If you’re looking for an expert accounting firm to work with, find one on the A2X Directory.

Get integrated, reap the benefits

Integrating Shopify with your accounting system, using A2X, will bring together everything you need to see the performance of your business – in one single view. Take advantage of the convenience, and benefit from the satisfaction of knowing you have accurate, real-time financial reporting at your fingertips, to make good, financially sound business decisions.

Still searching for the right accounting system? Get sorted with The Best Accounting Software and Tools for Shopify.

Looking for more in-depth information on setting up shop the right way? You’ll need the Definitive Guide to Shopify Accounting.

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