You have taken the plunge and launched your new business. Now it’s time for you to take care of all of your paperwork and receipts. Fortunately, there are a couple of quick pointers and basic tips that will completely transform your accounting efforts and help you build a Shopify store that continues to grow.
Tax Settings
Whenever you launch a new Shopify store, tax rates are automatically set up based on your work address and countries that you ship to. In the short-term, that is fine. However, you need to make sure that the tax rates are up-to-date and relevant as you continue to grow your business. Customers from all over the world can access an online website, so you will need to determine your shipment plans scope and get tax rates set up for each of the countries you will be doing business with. In addition, you will need to assign certain tax rates to all of your services, collections, and products, and also know what the exceptions are for each of them. According to VATGlobal the easiest and quickest method for dealing with tax exemptions like state tax or VAT is to apply a tax override. Get in touch with your local taxing authority to learn how to precisely apply tax rates correctly.
Integration
Shopify comes with an assortment of built-in apps that you can integrate inside of your store to meet your specific accounting needs. The apps help you save time and also make your entire accounting process easier to track and more intuitive. For instance, sales are exported automatically by the QuickBooks Online Integrations and deposits and payouts can be directly recorded into your bank account. That reduces the amount of manual data entry that you have to do, which will save lots of time. The best way for you to stay on top of all of your various accounting activities is to use integration since it brings all of your in-store transactions together into one or two basic hubs. A staff account can even be created for an accountant or bookkeeper so that they will be able to access information and reports.
Reports
It is easy to track cash flow when your Shopify store and accounting software are synced together. That will allow you to generate sales tax reports that show the amount of tax you owe and have collected and provide you with a snapshot of all of your inventory on the inventory valuation report. This report can play a major role in helping you optimize your inventory management, and enable you to answer very important questions regarding the value of your inventory, identify slow-moving products, and get your cash flow streamlined to support your plans for growth. You can generate a cash flow report and compare it with your bank statements to identify any discrepancies and unaccounted for money.
Profit Tracking
Getting a sound accounting infrastructure established for your new Shopify store will be very helpful in running your business. You also need to be aware of how profitable your business is. A profit and loss report will tell you that. It will detail all of your main revenues, margins, and costs to round out your accounting puzzle. Cost of goods sold (COGS) will need to be calculated. This is the expenses that directly come from the services or products that you sell. When calculating COGS, one common mistake is to assume that it is the equivalent of the invoices you have received already throughout the financial year from clients. However, the way you actually calculate the cost of goods sold is adding your open value inventory with purchases and then subtracting your ending inventory value. You can use accounting software to calculate this.
You also need to determine the year’s net profit and gross margin. Gross margin is important since it helps to determine your promotion campaigns and pricing flexibility. It is calculated by subtracting your sales form cost of goods sold. That figure just accounts for your direct product costs. The last thing you will want to calculate is your net profit. That is the figure that is left after you have paid all of your expenses including things like advertising, heating, lighting, and office supplies. You just need to subtract your operating expenses from your gross margin to get your net profit.
Deadline planning
Another thing that you need to know is when your annual tax deadlines are and be prepared for them. For example, there are several different important dates in the UK for corporate and individual tax returns. A company tax return and full statutory annual accounts must be prepared by private limited companies and then they must be filed with HMRC (HM Revenue and Customs) by the deadline, which is about nine months after the ending of the entreprise’s financial year. There are two key dates for individual tax returns for entrepreneurs and self-employed individuals -” the paper return deadline is in October, and the online tax return deadline is in late January.
All of these aspects are part of your accounting success. If you pay close attention to all of the methods that we discussed above, your tax and accounting activities will be transformed and provide you with the financial freedom that you need to grow a successful Shopify store.