It may seem odd to think of the world as a small place. However, it is amazing how connected we are despite being separated by oceans and continents.
Technology today has opened up a whole new world for business owners and entrepreneurs. This is especially true when you consider the rise of technology, such as smartphones, apps, and internet-based services, which have changed the way we shop and buy products.
For those who are using Shopify to sell their products and services, bookkeeping is an important element of the process. It can be difficult to keep track of your sales, expenses, and profits in a way that makes sense. In this article, we will look at some basic tips for Shopify sellers when it comes to bookkeeping.
Keeping a record of your expenses and earnings is important if you plan on making money from your Shopify business. As a part of the process, you will need to keep both business and personal records so that you can take advantage of the tax benefits from your business.
If you are starting out your Shopify business, it is important to realize that there are different rules for each type of income. The rule for sole proprietorships and (most) partnerships is simple – any profit will be taxed at whatever rate applies to your individual income.
One of the first things you should do as a Shopify seller is get an idea of your costs. This includes the cost to purchase stock and merchandise, shipping and handling fees, business license fees, and other related expenses.
You can estimate these costs by looking at past experiences in your personal or previous business ventures or using software such as QuickBooks Online to help compute your estimates.
While it may be tempting to skip this step, doing so will only result in more bookkeeping later on since you will have no way of knowing if your income matches up with your books. Later on, this will only result in confusion when trying to figure out what is missing from where and why you are getting different results than expected when it comes time for taxes and audits.
To begin with, inventory management is meant to support your record-keeping efforts in the long term by making sure that any new items entering into storage will not overlap with old items that are coming out.
At its core, inventory management helps avoid mismatches between what is stored and what is being sold, which can cause problems down the line if left unchecked over time. One of the main purposes of inventory management is to reduce errors, which can be easily done by simply taking the time to count and check your book.
In addition to counting your items, inventory management also includes keeping track of expiration dates and rotation. Proper inventory management is essential for any business because it helps you to avoid overstocking or understocking items that might not sell or need to be restocked, which can cause havoc on your margins and in the long term.
When it comes down to it, you will find that knowing how to do basic bookkeeping and accounting is an important part of operating a business.
This is especially true when using Shopify and other online platforms such as Amazon, eBay, Etsy, and many others that are used by millions of entrepreneurs who need to keep track of their sales, expenses, and profits on a regular basis.
While there are no hard-and-fast rules when it comes to bookkeeping for your Shopify business, following the tips discussed above can help ensure that your records are as accurate as possible while also saving you time spent trying to figure out where things went wrong in the end.