Fifteen common QuickBooks mistakes made by new Shopify store owners
Managing the finances of a Shopify store can be challenging for new owners, especially when using accounting software like QuickBooks. While QuickBooks is a powerful tool, improper use can lead to costly errors. Below are the top 15 mistakes that new Shopify store owners commonly make when integrating and using QuickBooks, along with strategies to avoid them.
1. Failing to Properly Integrate QuickBooks with Shopify
Many store owners neglect to set up the integration correctly, leading to inaccurate data syncing. To avoid this, ensure that your Shopify store connects seamlessly with QuickBooks via an approved integration app.
2. Ignoring Payment Processor Fees
Shopify store owners often forget to account for fees from payment processors like Shopify Payments or PayPal. This oversight can result in discrepancies between income recorded in QuickBooks and actual bank deposits.
3. Overlooking Sales Tax Compliance
Sales tax laws vary by state and country. New Shopify owners sometimes fail to track and remit the correct amounts, leading to potential legal and financial consequences. Use QuickBooks to automate sales tax tracking.
4. Recording Transactions Manually
Manually entering transactions is not only time-consuming but also prone to human error. Automate this process using integration tools to save time and ensure accuracy.
5. Failing to Reconcile Accounts Regularly
New store owners often skip regular reconciliations, resulting in mismatched records. Make it a habit to reconcile your QuickBooks accounts with your bank statements monthly.
6. Improper Categorization of Expenses
Misclassifying expenses can distort financial reports and tax filings. Create a clear chart of accounts in QuickBooks and consistently categorize expenses correctly.
7. Overlooking Inventory Tracking
Shopify store owners sometimes neglect to integrate inventory tracking between Shopify and QuickBooks, leading to discrepancies in stock levels and cost of goods sold (COGS).
8. Neglecting to Separate Business and Personal Finances
Combining personal and business transactions creates confusion and complicates bookkeeping. Open a dedicated business bank account and ensure only business transactions are recorded in QuickBooks.
9. Not Utilizing Classes or Tags for Tracking
QuickBooks offers tools like classes and tags to help store owners track income and expenses by product line, location, or campaign. Neglecting these features can lead to missed insights.
10. Failing to Account for Refunds and Chargebacks
Refunds and chargebacks are common in e-commerce but can lead to reconciliation issues if not recorded properly in QuickBooks. Ensure they are tracked accurately.
11. Ignoring the Importance of Accurate Cost of Goods Sold (COGS)
Miscalculating or ignoring COGS can skew profitability metrics. Update COGS regularly to reflect true inventory costs.
12. Not Reviewing Financial Reports Regularly
QuickBooks provides detailed financial reports, but many new owners fail to review them consistently. Regularly analyzing reports like profit and loss statements can uncover key insights and areas for improvement.
13. Overlooking Multi-Currency Transactions
For Shopify stores with international sales, failing to set up multi-currency options in QuickBooks can result in inaccurate financial data. Enable multi-currency support and stay updated on exchange rates.
14. Relying Solely on Default Settings
QuickBooks defaults may not align with your business needs. Customize settings such as invoice templates, tax rates, and chart of accounts to fit your Shopify store.
15. Delaying Professional Help
Finally, many store owners wait too long to consult a QuickBooks expert. Seeking guidance early can save time, reduce stress, and prevent costly errors.
Conclusion
By avoiding these common QuickBooks mistakes, new Shopify store owners can streamline their accounting processes, maintain accurate financial records, and focus on growing their business. QuickBooks is a robust tool, but its effectiveness depends on proper setup and usage. Invest time in learning its features or consider hiring a professional to ensure your e-commerce accounting is on point.
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This article has been created with the help of artificial intelligence platforms ChatGPT and Bard. If there are inaccuracies or there are opportunities for improvement, please let me know.
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