what to put for payment deposits on quickbooks shopify

hello sarih here from small business,Ericom and in this video we're going to,discuss how to do your Shopify shop,bookkeeping within QuickBooks Online,Shopify is its own special little beast,it's a little tricky because people can,pay in multiple ways on Shopify and that,kind of can make things a bit tricky so,this is my method for recording your,Shopify bookkeeping accurately and,quickly every month in QuickBooks Online,it's not the only way to do it it's just,the way that I do it for my clients each,and every month so let's take a look at,Shopify and we'll go from there,so in Shopify this is kind of like your,main homepage your main dashboard and,there's two sections we're going to be,working with with Shopify the first,section is let's go to the reports,actually so if we come over here to,analytics and then to reports we can,scroll down to the finances section and,look at the finances summary so I won't,change anything here right now actually,maybe I'll do a year to date just so we,can get a look at some different things,here so this financial summary is what I,have found to be the best tool when I do,my Shopify bookkeeping and QuickBooks,Online,because it breaks out the components of,my sales we've got our gross sales,discounts returns shipping income sales,tax collected and then a total so this,is most easily done by month and since,the monthly report is the best thing,that we have in Shopify because after,all we're getting deposits from Shopify,from all these different sources,so it's really hard to do bookkeeping,within QuickBooks Online on a per,deposit basis because we're getting,deposits from so many different sources,so what I have found is easiest as to do,our bookkeeping on a monthly basis,within QuickBooks this method is what I,call a Shopify Bank method and basically,what Shopify Bank will represent in your,QuickBooks account is the amount kind of,available to be deposited from Shopify,because as you know there's a delay,there's a delay in the time between when,you make a sale and when you receive the,money so um this is kind of gonna be our,starting point this particular client to,gets deposits from stripe from Shopify,itself from PayPal that's not normally,she doesn't normally have cash we're,gonna skip that for this month and then,after pay so there's a lot of different,things going on so the first thing we,need to do is get a good beginning,balance within QuickBooks of what we're,calling Shopify bake so like I said,Shopify Bank is gonna represent the,amount available to be deposited,specifically from Shopify because some,of these other ways of getting paid for,example like PayPal you get your,payments a little bit faster so really,Shopify Bank is just gonna represent the,amount from Shopify payments that kind,of lags behind so we're gonna go back to,home and we're gonna go to payouts so we,want we're gonna start as of January 1st,of 2020 so basically what we're looking,for here is we're looking for amounts,that were like sales that were made in,December but didn't get deposited until,January,that that would be our beginning balance,as the beginning of the year so if we,look at this January second deposit from,Shopify it includes a bunch of amounts a,bunch of sales that were actually made,in December so that would be part of our,beginning balance and if we go back of,course it takes me all the way up to the,top okay so we're gonna jot down that,4473 amount okay then we're gonna go to,January third and most of this is also,related to December it's not until,January 1st that it's not so if we take,our growth total here of 141 and,subtract out the 6480 what's left is,also part of our beginning balance so,the beginning balance number I'm getting,is 44 73 plus I'm just gonna do plus 140,180 minus this 64 80 and that gives me a,beginning balance of 122 I know that,sounds tricky,and honestly this is still an,approximation because there's those,other payment methods out there as well,we're gonna go back to QuickBooks and if,you watched the other video I show you,how to set up your custom chart of,accounts really quickly and easily for,all of these Shopify accounts that,you're going to need to do what we're,doing so if you missed that video I'll,post a link in the description head back,there get your chart of accounts all set,up for the Shopify transactions that,we're gonna be recording here and then,come back to this video okay so I this,Shopify bankers will just say Shopify,Bank but I this client has been in,Shopify for a long time so I needed to,do an example here so we're gonna go to,I made the Shopify example Shopify Bank,example and we're gonna go to edit over,here and this is where we're gonna put,not beginning balance so we want to,start tracking for this bank account for,this Shopify Bank which is really like,our Shopify receivable as of the,beginning of this year and our balance,I'm just gonna round to 122 because it's,an approximation okay and then we're,gonna hit save and close okay so you're,gonna do something similar now if you,have just opened your Shopify store when,you begin this whole Shopify accounting,bookkeeping process you don't need to,add a beginning balance your beginning,balance is zero and you can just forget,this but if you're trying to get your,bookkeeping under control,midway through the like you've already,had your Shopify shop opened then you do,need to start with a good beginning,balance for whatever date you're picking,up with your bookkeeping here in,QuickBooks okay now I am actually I,don't want this to mess up the,bookkeeping here so I'm actually going,to well I'll come back and do that get,rid of that account later because I,don't need it,let's move on so there's another kind of,introductory step we need to do and that,involves going to sales and products and,services so most of the time if you have,a Shopify shop you're getting some,deposits from Shopify through PayPal and,we need to make sure that those PayPal,deposits go to the right place,now here's the tricky part and by the,way I should mention have mentioned this,earlier in the video I'm not using any,sort of an app or any sort of a link,between Shopify in QuickBooks I have,found that that just makes things,Messier and harder to understand in my,opinion so this whole method that I'm,recommending is without any apps or,integrations at all okay so with PayPal,another important thing here if,you are using PayPal for more than one,type of deposit or receipt it's going to,make things much trickier for you so for,example if you are using PayPal for,Shopify and you are using PayPal to,invoice people separately your Shopify,bookkeeping is going to be tons harder,because you're gonna have to sort,through what PayPal transactions are,Shopify and what PayPal transactions are,I don't know wholesale or retail or,whatever,I've strongly recommend that if you're,using PayPal only one type of income,comes in through your PayPal account so,if it's Shopify fine find a different,way to do payments for wholesale or,something like that,also the more types of payments you have,available in Shopify the harder your,bookkeeping is going to be that's a fine,choice I mean people like options for,how to pay and maybe that is the best,business decision but the more options,you have the harder it's going to be on,the bookkeeping side so this particular,person they only get PayPal deposits,from their Shopify sales that makes it a,lot easier because what we need to do is,these kind of products and services are,already going to come in if you've got,PayPal linked and we want to make sure,that our PayPal sales are going to the,right place so we want to come in here,and do edit and the account we want it,to go to is actually Shopify Bank you,want all of your PayPal sales to go to,Shopify Bank and I'll explain this a,little bit in more detail later so if,that is not correct change that so if I,actually wanted it to be Shopify Bank,example I would actually also check this,also update it in history,Oracle as well that way I can make sure,that everything is going to the correct,spot save and close and then do the same,for everything else all of these,products and services for PayPal let's,go to banking now and we'll take a look,Shopify is not easy and I'm going to do,my best in this video to explain what,I'm doing but honestly it's tricky,it's definitely tricky so if you're not,very familiar with bookkeeping you may,struggle with with Shopify bookkeeping,doing it on your own but I'll do my very,best here ok so we're in our bank,account the banking tab with QuickBooks,and like I mentioned we're what the,method we're using is called Shopify,bake and I'll tell you how this all,works together later but you'll see here,we've got deposit after pay deposits,Shopify deposits these are all related,to our Shopify store and all of our,deposits we are going to categorize this,is set up as a rule in this one just,Shopify Bank we're gonna go ahead and,click Add Shopify deposits are gonna go,to Shopify Bank this is all in the,received column continuing on Shopify,deposits go to Shopify Bank Shopify,deposits go to Shopify bank and on and,on and on down the line after pay,Shopify bank if you have stripe through,Shopify and once again if you're using,after pay or you're using stripe I,highly recommend you only do it on one,platform if you have a I don't know a,website of your like your have a shop,through some sort of app on your own,website,I wouldn't use stripe on both Shopify,and your website because then you're,gonna have to short so,through all these deposits to figure out,what they relate to same with after pay,if you're using after pay on Shopify I,won it then if you have what's it called,WooCommerce on your website,I wouldn't then use after pay on your,website too you can it's just gonna make,things a lot harder so all of these,Shopify deposits Shopify Bank and on and,on it goes down here we have our Shopify,fees so the Shopify fees can be like,your monthly fee and then sometimes like,the shipping expense if you're shipping,printing labels and so in the chart of,accounts video we already created,accounts for Shopify monthly fees and,Shopify shipping expense so just,categorize these Shopify expenses to,whichever category that applies to so,we're gonna go ahead and click Add on,the Shopify fees okay so so far I mean,this part is easy if if you're not,confusing things with the to many,payment methods in too many places now,let's go ahead and take a look at PayPal,PayPal is not too bad either if you're,only using PayPal from one source which,in this case is Shopify and because we,have already set up the product and,service over here in the sales section,product and service we set all of our,PayPal stuff to go to Shopify Bank we,already did that then QuickBooks is,remembering that and they're suggesting,the Shopify Bank category for all of,these deposits which is exactly what we,want and you'll notice too that PayPal,is already and let me scroll a little so,you can see Shopify or PayPal I'm sorry,is already breaking out the paypal fee,so we don't have to worry about that,part of things too which is nice so all,of this,is good to go on the PayPal side because,we took the time to do the products and,services over here one thing let's,pretend that this was not Dropbox let's,pretend that this is actually like,somebody's name if this is somebody's,name and it's in the spent column,there's a good chance that that is a,refund a Shopify refund to somebody who,paid with PayPal and you can check that,in the financial summary clicking on the,refunds I'll show you that when we get,there and if that's the case then you,want to categorize this to your shopify,refunds account you've already created,that account if you did the other video,and set up your Shopify chart of,accounts so that's the only refund,you're gonna see on the QuickBooks side,is if there is a PayPal refund related,to Shopify somebody who paid with PayPal,initially in Shopify and then the refund,gets issued from PayPal too and that is,going to be categorized to Shopify,refunds but double check it on the,Shopify side and I'll show you that in a,minute like I said so all of this is,also gonna be easy we're just gonna add,add and add ok that's all going to,Shopify bake alright let's go back to,Shopify and we're gonna go back to,analytics reports we're gonna go down to,finances to the finance summary and the,month we're gonna do is January 2020 so,we're gonna click here and we're gonna,set our dates so we have a monthly,report for January of 2020 let me go,over their refunds real quick so if you,click on returns here you can see then,the deposits or the the returns that,make up that amount,if the return see how this is like,larger than the 20 that showed these are,often like shipping refunds and that,gets deducted out of shipping but you,can see from here then is the is what I,saw in PayPal a refund from Shopify yes,or no you can come here and determine,that okay let's go back so on this,screen we're gonna write down our,monthly numbers because this is the best,report we have in Shopify that,summarizes all of our activity from all,the different methods that were making,payments so honestly to paper right down,growth sales les discounts less returns,net sales shipping sales tax and total,you're gonna write that all down and,those are the numbers that we're going,to use in our monthly journal entry you,don't need to write down any of this in,the in this month these two numbers,agree sometimes they don't don't freak,out about that it's just a timing,difference we are gonna need some,information if we got after pay fees for,the month or stripe for the month and,this case stripe was just an old refund,so she didn't make any stripe sales that,month,okay so we're driving all of this down,we're not worrying about this there is,let's see I'm trying to decide what,order to go in okay so let's do our,collecting of information let's do all,of our collecting of information and,then I'll show you how it all works,together so from here we're collecting,all of this information that you write,down then we need one more piece of,information from Shopify we need two,Shopify transaction fees so we go to,home we go to payouts we go to,January and we write down we add up all,of these fees for January so these are,all the transaction fees from Shopify so,like this is the gross deposit less the,fees this is your net deposit so we're,gonna write down or add up all of these,fees and these total twenty nine dollars,and four cents and you write this down,all of for the month you're doing total,up the fees and write that down I ignore,this column these adjustment columns,because it seems like these adjustments,are picked up in other parts of that,report of the financial summary report,so I ignore any amounts in these two,columns and I just focus on this column,okay the other thing we need is we need,if there was a stripe fee stripe,processing fee and after pay fee so,you'll need to go into your after pay,account in this case and you need to add,up your fees so we add up 392 plus 242,that equals 635 and no it doesn't it,doesn't equal 635 but that's what I,wrote down a line now why because if we,move this out,no no we go like this there we go,there's more digits behind it that's why,it's 6:35 even though it ended in twos,so right down here after pay fee for the,month of January okay then if you have,stripe go to stripe now she didn't have,any February stripe sales,I'm sorry January this is the February,report so we're not gonna actually use,this number in our entry but I wanted to,show you what it'll look like,so stripe will have these reports to the,sales and then less the fee and you want,to add up all the stripe fees,so if we go back to if we go back here,to Shopify we have taken care of all the,different types of fees now we've taken,care of the after pay fee the stripe fee,if there is one and the Shopify fee and,the paypal fee is automatically being,taken care of for us with each deposit,so now we're gonna go back to QuickBooks,all right I'm sure you're very confused,and hopefully this will all start to,make sense in the end before we get,started with our monthly journal entry,we're doing one monthly journal entry,we're gonna actually run the report,we're gonna run a profit and loss we're,gonna run a profit and loss report for,the month that we're doing so this is,profit and loss for January of 2020 and,what we're looking for here is if we,already have any amounts recorded for,Shopify sales already or refunds most of,the time it'll be refunds so we don't,want to double count things if they're,already recorded so in this case we just,need to jot down the 593 refund amount,that we don't want to double count that,was a PayPal refund amount that we have,already recorded sometimes PayPal will,be glitchy and it could record some,PayPal sales here and this will alert us,to that as well okay so let's now do our,journal entry and then we'll see how,this all works together so monthly,journal entry we're gonna go to new and,journal entry and the date we're going,to do is as of the end of the month so,this is January 2020 so our journal,entry this can be January 31st,20 we're gonna just keep going down the,line and this was actually I had to,delete it this is actually number four,okay so let's start typing we're gonna,start typing our Shopify income we want,to get that so Shopify product sales,sub-account of Shopify income that's,gonna go first,and remember if you don't have these,accounts already here you need to go,back to my chart of accounts video so,remember we wrote down growths gross,sales of two thousand six one 337 now we,want our discounts Shopify discounts,discounts are gonna go in the debit,column your sales are gonna go in the,credit column so just follow exactly,what I'm doing for your numbers so,Shopify refunds we had written down 20,but then when we ran our profit and loss,we saw five dollars and ninety three,cents there so reading it we need to,just get that up to 20 so we take twenty,minus five ninety three and that equals,1407 that's our refund amount refunds go,in the debit column now we need our,shipping income Shopify shipping and,let's see Shopify shipping income,shipping income is going to be a credit,now we need our sales tax okay so those,are the basic numbers that we pulled,from the Shopify report our sales,discounts refunds shipping income sales,tax payable now we need to add the fees,we're gonna do our Shopify transaction,fee of 2904 and that's what we added up,from the payout page we also have after,pay fees,of 6:35 if we had stripe we would add,the stripe fees and that amount will go,here okay so now in accounting your,debits and your credits at the end of,every transaction every journal entry in,accounting debits and credits have to,agree so the difference between our,debits and credits is something that,QuickBooks is going to calculate for us,you may have noticed while I was doing,it it would fill in random numbers as I,was going along and I just ignored them,that's because QuickBooks is trying to,balance my journal entry for me and at,the end of the journal entry that's nice,Shopify Bank is what I want I'm just,gonna kind of tab over and QuickBooks,filled in that number for me which is,what I want so the difference between,but let's see what's happening here we,have our cash in item so our cash in,include our sales our shipping income,and our sales tax that was money yet and,then we have our debits over here which,is our money out our discounts our,refunds and our fees and what's left,Shopify Bank represents the amount of,money available to be deposited for the,month okay let me say that one more time,Shopify Bank in this journal entry,represents the amount of money available,to be deposited for this month so that's,the number we want we're gonna hit save,and close okay so now we're back to our,January 2020 profit and loss statement,now that we have posted our monthly,entry and if you'll look all of our,wonderful numbers agree to our the,amounts that we pulled from the Shopify,report here's our gross sales amount,here's our discounts refunds agrees,shipping income agrees,so you can tie out what you've posted,your journal entry to Shopify and make,sure it agrees so we know that in total,like we've got the right numbers those,monthly numbers were pulled directly,from Shopify now what we need to look at,is that Shopify bank account and I'll,explain a bit more when we look at it,what it means and what it represents so,if we go to banking and then we go to,register up here I know it's above your,screen but I'm clicking on the gray,arrow drop-down box and I'm gonna go to,Shopify bank and let's go to January,lots of Shopify transactions I might,need to go to over let's go to page five,nope pigs seven page nine okay we're,almost there next page okay so as of,trying to find the journal entry I,thought it would be at the very end and,it looks like it's gonna be at the very,beginning of January 31st okay that,confused me for a second,okay so she had a lot of transactions on,January 31st which makes this a little,bit confusing and hard to see but,basically you'll recognize this is the,amount that we recorded in our journal,entry to Shopify Bank okay so that's and,everything all of the other transactions,throughout the month you'll remember all,of the paypal deposits that were from,Shopify we recorded to Shopify Bank all,of the deposits in our checking account,we deposit it we categorized as Shopify,bank and Shopify Bank has nothing to do,with the fact that even though it's,coming in through your bank account or,through PayPal we're still categorizing,it to Shopify bank because Shopify Bank,in this case represents the amount,available to be deposited still left at,Shopify so don't let the bank,terminology confuse you we could call it,Shopify holding that's what some people,call it a holding account Shopify,receivable that works just as well so,don't let the terminology confuse you,but these are all of the deposits that,we made from our banking tab to Shopify,Bank throughout the month and a lot of,these are from PayPal that's why they've,got this you know this thing going over,here okay,so then after we take into account I,wish this would be at the very end of,131,okay so this is saying then as of 131 if,we pulled up our balance sheet it would,show as of 131 in Shopify bank 487 77 so,is that somewhat reasonable okay let's,come take a look so if we go back to,Shopify and we're on the payouts you'll,see that on February 4th she had a big,payout if we click on it you'll see that,most of this February payout of 494 was,from January just a few transactions,were from February so back to QuickBooks,is this somewhat reasonable the thing,with Shopify which is different from,Etsy if you do this method for Etsy in,Etsy there is a clear number that we can,make sure we tie to at the end of the,month to know that our entry was good,and everything is as it should be in,Shopify there's no specific number,because this in Shopify just represents,Shopify sales that are left to be paid,out over here in QuickBooks were taking,into account,Shopify deposits paypal deposits after,pay deposit stripe deposits so I suppose,we could go to a lot more effort digging,into each deposit from each source,I just everything is a timing difference,so I feel like if I could just make sure,this is somewhat reasonable it's gonna,fluctuate up and down but the stripe,deposits you know if it didn't get,deposited this month it's gonna get,deposited next month this is really just,a reasonableness estimate I wish there,was an easy number to tie out to in,Shopify that would make,thing so much nicer but the problem with,Shopify is it's so many different,sources that are depositing so the fewer,sources you have the easier and more,accurate you can be the more sources of,payments you have the more the trickier,it is and the harder it is to judge,whether we're right at the end of the,month but remember when we looked at our,profit and loss our numbers and our,profit and loss for the month exactly,tied to Shopify and we're running our,difference through Shopify bank because,Shopify Bank like I said these are all,of the deposits that we received PayPal,after pay Shopify stripe for the month,that all is going into this Shopify bank,account but then we record our monthly,journal entry which represents all the,amounts available to be deposited and,then it's like we're taking out what was,available with each of these,transactions that we categorized in the,bank feet I know this is not easy to,understand if this doesn't sink in with,you maybe there's a method out there,that will but this is the easiest,fastest way that I have found to do,Shopify month after month from my,clients um you'll notice that that's why,it's negative here it's because we're,you know depositing things throughout,the month to Shopify Bank,we're not depositing categorizing to,Shopify Bank and then this like fills up,our bucket this represents filling up,our bucket that was available to be,deposited for the month and then this,was what was like lowering our bucket,each month um if you have questions I'm,sure you will leave them in the comments,I will do my best to answer them but,Shopify there are so many different,scenarios that can be happy,and if you've tried to use an app in the,past to link Shopify to QuickBooks it,could be really doing some interesting,stuff that can be difficult to untangle,so I'll do my best to answer your,questions in the comments I'm on YouTube,leave them there for sure but just know,that Shopify is tricky it's trickier,than Etsy it just is so I don't want to,be a debbie downer but but Shopify,bookkeeping can be tricky for sure I,hope this really helps I hope you can,wrap your head around why I do the,Shopify Bank method so so that we can,tie to those monthly reports in Shopify,if this video is helpful I would,appreciate your life in your subscribe,it really means a lot to me you can find,other information about small business,bookkeeping especially for online,business owners like Etsy sellers,Shopify Amazon and bloggers on my,website small business Sarah comm okay,thank you

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