Monday Merchant Meetups - Accounting and Bookkeeping

When I started my Shopify journey, I wished there was a regular meetup where no one was trying to sell me a solution. But a place that offered a sounding board for my roadblocks where I could meet people like me who could help. This is why I started Monday Merchant Meetups. Each week like-minded Shopify merchants meet up and help each other out. Usually the discussion is guided by a topic of the week.

This week's topic is focused on Accounting and Bookkeeping and we had Brad from Wise Advice as our special guest. Below are the notes that were taken from the meetup.

Monday Merchant Meetups - Accounting and Bookkeeping.

Date: 24 - 08 - 20

Special Guest: Brad from Wiseadvice.co.nz - Ecommerce Accounting

Merchant Question:

We use Xero for our accounting package with tracked stock. I have read that if we integrate Xero with Shopify that it does not update the quantities in Xero. Is this correct?

Brad Answer:

That is correct. This is why it's a great idea to use an inventory management software to manage inventory count Recommended Inventory management systems:

Dear Inventory, CIN7, Tradegecko, Stocky, Unleashed [Links Below]

Merchant Question:

If we integrate to Shopify from Xero what will our Xero invoice look like and how do we amend our tracked stock? Can we edit the Xero invoice, as I presume this will bring across the line items. This could still save us time on manual invoicing. 

Brad Answer:

If you bring line by line items to Xero using the integration then the tracked stock would change

Merchant Question:

Is there an easy integration of Shopify into Xero for wholesale accounts?

Brad Answer:

You can use reconcile.ly to send a select group of orders to Xero. The way it presents is based on what your invoice template looks like on Xero.

Other Comments:

I use Wholesale Gorilla for wholesale within Shopify at the moment and it’s brilliant. 

Main takeaways from today:

If you are reconciling Shopify to your accounting platform ensure you are reporting Shopify fees separately since it doesn't have GST. Reason is this will clean up your reporting and leave you less exposed if and when you are audited by the IRD.

Consider registering your business for GST even if you are not at the 60k threshold. Reason is that we anticipate you will eventually cross that threshold. All of a sudden you will have to collect 15%. Will you simply put your prices up? Your customers might not appreciate that and your profitability could come into question. Registering for GST will set you up and will teach you how to run a larger business when eventually you grow.

Apps to integrate Shopify to Xero: A2X, Reconcile.ly, Xero Bridge

Inventory in your accounting system at the end of the year is counted as profit so if you are asking where is my money/profit? It's sitting on your shelves. Hence why there are so many end of financial year sales to reduce inventory / profit.

Working capital is important but you can only report on it if you run good accounts. Ensure you are reporting your inventory position at the start and end of each month.

If you are wanting to do easy reporting on more that just accounting then consider trialing aider.ai

Brad or one of his team can help see if all of your Shopify to Xero integrations are working correctly. This is a free service. Brad and his team are ecommerce accountants and have helped me and my merchants tidy up our integrations. support@wiseadvice.co.nz

5 Things to think about and review from Brad:

What is your break even point? Break even analysis
Measure your cash flow. Why is cash flow even more important than profit?
Measure your cost of sales? Blog from Shopify
Rate of Return and Shipping Costs: add the average cost to your retail price to optimise conversions and avoid being surprised by incorrect profit analysis. The plague of ecommerce return rates and how to maintain profitability
Ensure you are spending time generating systems and working on your business plan for scaling and or selling your business. Block out some time to continually work on your systems. Develop an operational business plan operational being the key word! One of the biggest assets you own is your business. Is it sellable? No one became wealthy pulling a wage from owning a business. They became wealthy selling their business.