Hi, I'm wondering how the majority of people record their income and expenses for their shopify store. I am just doing it on an excel doc at the moment and struggling with how to record some things. Firstly regarding paypal and shopify fees, do you record this as an expense or do you minus these out of all your orders individually as part of your income? Is there a quick way to add up all your total fees for the year on shopify or using an app?
Also I am trying to work out my total sales minus refunds and partial refunds. Is there a way to do that? I am currently on the basic plan and don't really want to upgrade right now. I know there's apps like Deepmine which I have been using but I find it doesn't work for partial refunds. It just counts the whole order as a refund even though only one item out of three (third of the order total) may have been refunded.
Many thanks in advance,
Great question! Handling refunds and fees is a common challenge among Shopify users. Can't wait to hear the community talk on how they are solving this. Here are my learning of best practices:
1. Handling payment fees: It needs to be recorded as an expense and linked to the respective invoice. If you minus the fees, your reconciliation will be a nightmare. Since shopify/paypal payouts come to your bank periodically (after deducting the fees) and your orders come realtime (without deducting the fees), both numbers wont match and it will lead to double counting and innacurate profit/loss reports.
Have you thought about using an accounting app like QuickBooks Online or Xero? They let you link a 'credit memo' or 'credit note' with each invoice you create - these can be associated with your expense account in the application. Once you get the shopify payouts minus the fees, you can accurately generate a profit loss report which reflects the true number. Here's a step-step guide on How to Reconcile Your Shopify Sales with Bank Deposits
In short, with your orders increasing month on month, Excel sheet will be a laborious and redundant way to manage accounting. you think the same?
2. Handling refunds: Hope you dont mind me being a promonent of software again to make life easy for you :)
Partial refunds are super hard to track/update in excel sheets (if you are doing so) and it is hard to manage it in shopify alone. Shopify is primarily ecommerce app and has limited features to help you in proper accounting. In an app like quickbooks/xero or such, you can link refunds to specfific customer and orders/invoices. Also, if you integrate the two (connect and sync data between Shopify and the accounting software), the integration application will create or update full or partial refunds on the fly. Handling refunds is done best in an automated manner.
Am looking forward to hear your feedback. Got any specific questions? You can write to me at tejaswi at pipemonk dot com and i will do everything in my power to help you
Thanks for your response. Re payment fees, even when using quickbooks or xero are you saying you still have to maually enter the shopify fees for each transaction one by one? As each order is a different amount the fees will be different for every amount so I'm confused how this could be automated.
Thanks for the info re refunds. I'm just a bit concerned that Quickbooks and Xero have so many features and so is a bit overwhelming to get my head around.
you got to the right question! very well put :)
When you use a software like QuickBooks Online or Xero, Shopify app store provides you apps which integrate your store with the accounting software (case in point Pipemonk - the integration app with most reviews and rating in the app store). When you use an integration solution, it will automatically transfer the payment fees associated to each and every individual order in your store and link it to individual invoices that iws created in the accounting app.
So as an example, when you get order #1001 with payment fees $2.5, Pipemonk will create a credit note and link it to the invoice number 1001. Also, the payment fees is synced to the appropriate 'Expense account' in the accounting software - hence the total is factoring in the fees. You are no longer doing this tedious activity of manual data entry and you let the app save you upwards of 100+ hours a month. All you need to do is set it up once and focus on selling, marketing, customer support and the things you love!
Here's a dedicated post for the exact question: Do you consider Payment Transaction Fee (Credit Card Fee / Merchant Fee) when syncing data from Shop...
I know this is quite an old question but I wanted to let you know that I recently published an app called Better Reports that can show you your total sales and it processes partial refunds correctly.
I hope this helps.