Accounting is a crucial part of the business that you can’t avoid. You need to keep tabs on your expenses, profits, and liabilities as well. The good news is that with Shopify, you can carry out the exercise with sheer simplicity. Here are ten Shopify accounting tips that you need to know.
Use Accounting Software
Gone are the days when people used a calculator or Excel to do accounting. You can use arrays of apps on Shopify to simplify the activity. The software that you choose will depend on your business needs and preference.
Consider Your Inventory
Inventory is applicable if you deal with products or goods in your ecommerce venture. Thus, you should outline the amount of money you spent on purchases. It will help you calculate profits when prices increase.
Monitor Cash Flows
Cash flows refer to the money coming in and going out of your company. The process assists you in knowing the amount of cash that the business is making. You can use a spreadsheet on Shopify to lay out the figures.
Determine the Cost of Goods Sold
The cost of goods sold entails packaging, labor, and material expenses. It can also include shipping costs that you used to ferry the products to customers. You can add other ecommerce fees to get the total cost.
Calculate Other Expenses
Shopify accounting involves calculating all expenses in your business. They can be salaries, rent, utilities, property tax, insurance, and interest on the debt.
Ascertain what you need to break even
You need to know how many items you should sell to break even. The best approach is to charge more for shipping or find cheap materials and labor.
Know your Sales and Profits
You can track your sales by reviewing the products that you need to sell to break even. The next step is to market your goods to achieve your goal. Deduct the expenses from sales to get profits.
Create Tax Rates for Customers
Using the software, you can set tax rates for all your customers. The app will calculate the tax payable to your clients.
Pay Taxes
Once you collect taxes, you need to pay them as per the law. On your tax settings, you should indicate that the amount is included in your prices. You will get a detailed tax report thanks to the app.
Determine your Balance Sheet
Finally, you need to understand your balance sheet in detail. It contains your liabilities, assets, and equities. Assets are cash in the bank, while liabilities are debts. You get equity by subtracting liabilities from assets.
