Which accounting program to use for a Shopify store?
This is one of the most common questions we come across when we get a client whose business is starting to grow. If you have an e-commerce website with Shopify, you need to have some solid accounting every step of the way. Shopify has the ability to integrate the most popular accounting software for your website, and it will help you monitor everything going on with your store. But which accounting program is best for an online store? I felt obliged to share my knowledge and personal opinions on this.
QuickBooks Online (QBO)
QuickBooks Online is a popular cloud accounting and bookkeeping software that is a top choice for many small and medium-sized online businesses. You can definitely use QBO to do billing, invoicing, and payroll. The reporting in QuickBooks Online allows you to easily generate Profit and Loss statements, Balance Sheet, Trial Balance, and many other reports.
It is fairly easy to connect Shopify with QuickBooks Online and start using it the same day.
Xero is another popular accounting software that is used worldwide by small and medium-sized online businesses. Xero is relatively new to the market, compared to Intuit products (QBO), yet, very powerful. Most people say that the best thing about Xero is that it is very intuitive. Even if you don’t have accounting training, it is easy to understand the program, record your expenses, create invoices, and so on.
My personal opinion about Xero’s advantages is its reporting. In addition to standard accounting reports (Profit and Loss, Balance Sheet, and so on), Xero allows you to modify and create completely custom reports that would benefit the business, its management, and external stakeholders. Possibilities here are endless and even those who are not computer-savvy or don’t know much about financial reporting could easily get what they need when they need it to analyze their current business’ situation.
Once you connect Shopify with Xero, it can do your billing, invoicing, payroll and others. Its online accounting feature can also let you see your cashflow in real time. Xero also utilizes double-entry accounting tools that “beautifully” compete with other online accounting services.
Similar to QBO, Xero is also easy to integrate and use.
What About Costs?
Cost is an important consideration when deciding which accounting program to use for a Shopify store. However, it’s not advisable for you to choose solely based on it. There are free apps to connect your e-commerce website with Shopify, but there are also paid ones. If you have a significant number of sales daily, I’d definitely recommend paying for the connection app. Both QBO and Xero cost about the same.
I personally recommend paying for the app because the free ones do not make your bookkeeping much easier. If you know bookkeeping/accounting, you could work around this even if you don’t connect Shopify with Xero or Quickbooks Online. However, if you are new or not in the bookkeeping business, getting the right connection app will be the key to your process improvement.
So What Would It Be? Which accounting program for a Shopify store is better – QuickBooks Online or Xero?
There are pros and cons as to which one to use, whether you connect Shopify with QuickBooks Online or Xero. Some even depend on the geographic location or country where you are doing your books. Also, if you have employees, QBO might be better if you are in Canada or the US. Otherwise, it doesn’t really matter which program you use.
A major piece of advice: don’t use desktop software! The integration of online programs with Shopify, Magento or Woocommerce speeds up your operations more than ten times. In fact, if you are considering hiring a bookkeeper, you may instead learn how to use QBO or Xero and do it yourself in no time.
There are plenty of factors in considering which accounting program to use for a Shopify store. Its features, costs, ease of use, advantages, and disadvantages are a few things to think about. If you are new to bookkeeping, I’d suggest that you seek a professional to help you get a leg up on your cloud accounting needs.
If you need help with setting up the books, software integration, or want to discuss which program would work best for you and your business, please, comment below or contact us for more information.