For Shopify store owners, the process of account reconciliation can be full of unexpected speed bumps and roadblocks. You’d think it would be simple enough to get your numbers to agree, right? Unfortunately, it’s not always so simple. Just because your trusty computer churns out certain figures automatically doesn’t mean you can take those numbers at face value. So let’s talk about what you need to be looking for, what pitfalls to avoid, and how to reconcile Shopify in Quickbooks.
What You’ll Need to Reconcile Your Shopify Store
To be 100% sure that the money you’re owed matches the money you’ve actually received, you’ll need proper tracking. Tools matter—and just as you wouldn’t try to put out a 4-alarm house fire with a toy water gun, you shouldn’t try to reconcile Shopify with Excel.
This is not a “set it and forget it” situation. First off, there’s a lot of superfluous information in your Shopify records that you won’t be needing. Leave those extra numbers floating around and you’ll risk arriving at the wrong figures, which will confuse you and anyone helping you with your accounting. More on what data not to pull later.
For now, focus on tracking those credit card processing fees and any related credits. Then, triple check to see that your shop’s sales, refunds, and discounts are all playing nice. To get those numbers crunched right, you’ll need the software the experts use, like QuickBooks.
QuickBooks is quite easy to learn once you get the hang of it, and there are plugins for Shopify (like, ahem, ours) that are designed to make the transition easy. When you need to see your Shopify operating margins, you better be looking at reliable information, or you risk the viability of your business. The right tools will get you there.
Two Big Pitfalls to Avoid When Reconciling your Shopify Store
There are plenty of apps in the Shopify App Marketplace that claim to do proper account reconciliation. But as many a disgruntled accountant will tell you, these are a waste of money—and are actually costing their clients big time on their accounting bill.
Look out for apps that leave a carried balance on your Shopify store’s balance sheet. This is a sloppy band-aid for major errors, such as double-counted sales income. These apps are such a hodgepodge that they result in incorrect, unreliable financials. Not good! Want to know how to find out if this is happening to you? Ask your accountant if you have a carried balance, often referred to as a “Shopify holding account.” They’ll be impressed that you know the lingo, and relieved to know that you have access to a better app solution.
Another pitfall to avoid? Scrubbing your deposit details, labeling it as one big “revenue” figure.
Do this and you’ll be kicking yourself later: you needed the details of how refunds and discounts impacted your income for the period. Key business metrics like sales, processing fees, chargebacks, and refunds must all be labeled separately.
How to Reconcile Your Shopify Store the Right Way
Earlier, I explained how the common error of using a “Shopify holding account” can badly derail you. So what’s the alternative? A little something called Settlement Reconciliation (it’s what we do here at Flowify!). It’s a process that ensures that there are no carried balances month to month.
It’s one thing to identify a discrepancy (and then create a holding account that duct tapes your financials together)… But it’s another thing, a much more intelligent thing, to have a tool that is smart enough to identify discrepancy and actually move your funds into the proper place (thereby settling the account). No loose ends, no money with question marks floating over it.
In short, it’s time to switch to settlement reconciliation. And we can help you do that.
With Flowify, Shopify store owners can completely automate their accounting integration with Quickbooks. It couldn’t be easier to track Shopify sales, inventory, refunds, processing fees, bank deposits, and more.
Get started today and see how a support team of accountants and bookkeepers can help you to better manage your Shopify store accounting. Think of us as your QuickBooks-Shopify connection.