how to reconcile shopify payments in xero

in this tutorial we will demonstrate how,to account for your sales paid through,shopify's many other payment gateways,into xero,we will be focusing on paypal however,you can apply the same guidance for,other gateways,we will demonstrate two different,options both of them use a clearing,account to reconcile the sales,the first option is if you have the,paypal feed activated in xero,this is suited to small to medium-sized,sellers,if you have a large volume of individual,sales that go through paypal,each day you will want to skip ahead to,option two,so let's take a look at a live paypal,feed coming into xero,you can see that each sale comes through,individually,and the fees paypal have charged also,come through per individual sale,we want to send all our sales straight,to a clearing account,we have used,clear out to xero at month end if you,have multiple,different payment gateways going through,your shopify account,we would suggest you create a separate,current asset clearing account,for each gateway,so back to our paypal feed we are going,to set up a rule in xero to send all of,our sales straight to the clearing,account,we do this by clicking on options then,select,create bank rule,we want to change this to contains so,that it picks up all the sales,and removes any personal names,we can set the contact to paypal sales,fill in the description,and as this is going to the clearing,account and not the sales account,we'll apply a no vat rate here,finally we can give the rule a name if,you have any refunds coming in,you can do the exact same thing and send,them to the clearing account,you can also set up a rule in xero for,this too as a spend money rule,now let's look at the fees we need to,send these to an expense account as,shown here,we can set up a rule for these two by,clicking,option create bank rule and follow,through the same steps to send this to,an expense account,so now that we've set our rules in xero,app let's head back to our a2x account,and follow through in example payouts,we will use this one for 39.99,let's click review and see what will be,posted to xero,we can see that the actual value of the,invoice posted will be zero,it's going to post our gross sales to,the sales account,with the correct tax rates on there was,also some shipping income included,so that gross amount will be posted to,the shipping revenue account,with the correct vat rate then we see,the total of these gross sales,is going to be reversed out to the,clearing account,making this a nil value invoice,as with all our invoices sent from a2x,to xero,this will appear in your draft invoices,tab ready for you to approve,once approved it will post those figures,to the relevant accounts,so let's take a look at our clearing,account now,so looking back at our clearing account,we can see that it clears itself out,because we posted gross sales from the,feed here and gross sales from our nil,value invoice here too,we also know that our fees and sales,have been accounted for,so we don't need to do anything else as,it all balances out,when we get a net payment received into,the bank account,it just transfers to the paypal feed and,that's it,job done,for the second method we don't have the,live feed enabled in xero,so first of all we need to find the net,payment we receive from paypal,into our bank account and post this to,the clearing account that we discussed,earlier,now let's take a look at the invoice,again we will use the same example,payout of 39.99,let's click review and see what will be,posted to xero,we can see that the actual value of the,invoice posted will be zero,it's going to post our gross sales to,the sales account,with the correct tax rates on there was,also some shipping income included,so that gross amount will be posted to,the shipping revenue account,with the correct vat rate then we see,the total of these gross sales,is going to be reversed out to the,clearing account,making this a nil value invoice,as with all our invoices sent from a2x,to xero,this will appear in your draft invoices,tab ready for you to approve,once approved it will post those figures,to the relevant accounts,so let's take a look at our clearing,account now,so we can see that our net sales are in,here from the bank payment,and our gross sales are in here from our,a2x invoice,the difference is the amount deducted,from paypal for their fees,so we need to add in a journal entry to,account for these fees,and clear down the clearing account you,may want to do this once a month rather,than per payout,we would also recommend that you check,that this amount does correspond to your,paypal fees,using the reports within paypal and that,it doesn't contain any pending balances,being held back by paypal if you are not,sure how to do this,or where to access the reports please,read through our support,article entitled a2x for shopify and,paypal,reconciling payouts and accounting for,paypal fees monthly,this will guide you through the process,so let's create a journal entry in xero,to account for these fees,go to accounting manual journals,new journal we can enter our description,here,we need to debit our expense account for,paypal fees,and credit the clearing account then,click post,now let's go back to our clearing,account we can see that it's cleared,down to zero,so no further action is needed we've,reconciled this account,this concludes the tutorial on how to,account for sales through shopify's,other payment gateways using a clearing,account,if you have any more questions please,feel free to contact our support team,or browse our support articles

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