how information flows from shopify to xero

hey it's patti scharf CPA and co-founder of catching clouds the leader in,e-commerce accounting and today we're going to talk about Shopify it seems,like every single day I see on some kind of forum or something where somebody is,asking me hey what is the best integration to use with Shopify and Xero,or QuickBooks Online and I always kind of cringe because I want to make sure,that everybody understands what the potential problems are with there,because there are like seven different issues and I never know which one,somebody's gonna have so let's go through this pretty quickly if you log,in as Shopify and you go to the payout screen you'll see this total here and,this total is the amount that actually lands in your bank account this is the,amount that you want to make sure that you got because these are the orders,that were made and this is the amount that landed in your bank people who are,less familiar with accounting they will just see these deposits in their bank,account and just go sales sale sale sale sale sales done and that's actually not,right as you can see it's broken out between your the gross sales and their,refunds in there there are adjustments for the refunds there are fees,associated with this and all of that needs to be recorded separately in your,accounting so that it makes sense so then people are like okay then I'll just,record these boom boom boom boom boom it's also not quite that easy because if,you look at any one of these payout dates so let's say April 10th you will,look and see that there are like a gazillion orders in here and some of,them were made yesterday and some are on Sunday and some were on Saturday and you,really need to record those in the right period and the the gross charges that,they have here there might be shipping income that you want to keep track of,that's in addition to the cost of the product or something like that so you,you really want to break these out into more detail okay,but I don't care how much you love accounting nobody wants to go in and,record these one-by-one I mean that is just too much brain damage for anybody's,let's say you're really simple you're just starting out you have maybe one,sale a day or a few sales a week it's really easy to stay on top of you would,just go into your payout screen you you click on your specific order and in your,quickbooks online file or your Xero file you can setup let's say for quickbooks,online you would set up a recurring sales receipt that has the basic,information that you typically are selling and then you just have to update,the amounts and the date you have the the payee go to Shopify and you're done,boom in Xero you would set up a repeating invoice same thing have your,customer be Shopify and just record the details of your sale the way you want it,done if you want to keep track of your inventory in there great if you don't,don't it does it it doesn't really matter but let's say you are now up to,ten transactions a day and it's kind of starting to take some time and it's,annoying you and and you want to automate it some way I think this is,where most of the questions come from how do i automate it and I would say at,10 orders a day or less okay you could probably use the Shopify integration if,you go to the App Store you'll see something for Xero you'll also see one,for into a QuickBooks Online and you'll notice that when you go through the,reviews you get lots of ones twos ones 5/5 like they either love it or hate it,and this is for both both systems the reason is it really depends on the,complexity of the store whether it's going to work for you well or not if you,have a lot of payment processors so if you're using stripe and Shopify payments,and PayPal the integration is only going to reconcile Shopify payments the others,it'll record the orders but then you still have to reconcile the other stuff,by hand you have to record the other fees by hand,and people who don't understand that get this kind of jumbled mess and they don't,know how to reconcile it and don't know what to do with it accountants might be,able to handle that more easily than say just somebody who's never touched,accounting before but that's something to be aware of,the other problem is if you're selling more than a thousand orders a day zero,in particular will not pull in more than a thousand orders a day and even if,QuickBooks Online does which I'm not convinced that it does it will start,overloading the system because neither systems were built to be a database like,that they weren't built to hold that much data all that information already,lives in Shopify you don't need it in your accounting system also so you,should really just be recording everything as a summary amount of,information the other problem is if you're selling like 3,000 SKUs a stock,keeping unit so the different types of products you're selling if you're,selling like a gazillion different different types of product then it's,going to overwhelm QuickBooks Online it's gonna overwhelm 0 so what do you do,the short answer is that you should really be recording everything as,summary information we have yet to find a tool that really handles this well,except for in unique circumstances but we have a method that we've created that,works pretty well if you want to get more information about that you can look,down below in our links we've included a link to our accounting for Shopify,course it's about four and a half hours long and covers the cost of goods sold,in addition to post how to post income from your Shopify store so I hope you,like this video if you did please hit the like button share it with your,friends comment and subscribe if you haven't already and we'll catch you next,time,you

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