How to set up Shopify Payments and Link To Your Accounting
May 5, 2020

How to set up Shopify Payments and Link To Your Accounting

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Get all your accounting systems working together

Entrepreneurs love Shopify – it’s the full package. One platform has all the e-commerce and point-of-sale features you need to build, grow and run your business, including its very own payment gateway – Shopify Payments.

Shopify Payments was formed in 2013 through a partnership between Shopify and payment provider Stripe. If it’s the right fit for your business, you can start accepting credit card payments quickly and easily, and it means you don’t need to pay for and integrate a third-party option.

This guide will show you how to set up Shopify Payments, and then connect with the rest of your accounting tools and systems to create what we like to call the full accounting loop. Connecting all of them ensures a seamless flow of accurate and reliable financial data – essential for making smart business decisions.

Set up Shopify Payments

The payment gateway is super-easy to activate from the Payment providers page in your Shopify account settings. Here’s what you’ll need to get set up:

  • Your employer identification number (EIN)
  • Your banking information
  • The average price of your orders
  • The average shipping time of your orders

You also need to complete set-up within 21 days of your first sale, or all payments will be automatically refunded.

Step 1:From your Shopify admin, go to Settings > Payment providers.

Step 2: Activate Shopify Payments:

  • If Shopify Payments is your only credit card payment provider, then click Complete account setup in the Shopify Payments section.
  • If you’re using multiple credit card payment providers, then click Activate Shopify Payments in the Shopify Payments box, and then Activate Shopify Payments in the dialog box.

This will remove any other credit card payment providers from your account.

Step 3: Enter your store details and banking information. Click Save.

Now that you’ve set up Shopify Payments you can configure other settings, like setting up Shopify pay-out notifications or editing customers’ billing statements. You can also run a test transaction by enabling test more and using test credit cards to simulate payment.

Choosing accounting software for your business

When you set up your Shopify store, one of your first tasks for getting your accounting sorted is to find cloud-based accounting software. This will automate certain processes, and make it easier for you and your accountant to see what’s happening in your business.

Xero and QuickBooks Online are well-known in the e-commerce world – and by other e-commerce sellers – as arguably some of the best accounting apps for Shopify businesses.

You’ll also find it difficult to scale your business without good accounting software because it’s fundamental to expense and revenue management – including cash-flow tracking.

Both Xero and QuickBooks Online are easy to integrate with your Shopify account – or even better, you should use A2X for Shopify.

Smoothing out the wrinkles with a connector app

Xero and QuickBooks Online can both be synced to Shopify. This ensures you have visibility of the financial data stored in your Shopify account – including Shopify Payments transactions.

That integration removes the need for the manual transfer of Shopify transactions into your accounting software – a painstakingly arduous task that costs time and money. However, if you connect your accounting system directly to Shopify, don’t be surprised if you find the connection somewhat clunky – and here’s why.

Each transaction in Shopify is made up of several different components – shipping, fees, sales tax – and this is what your accounting system will automatically import. It’s exactly what you want from your accounting system, yes, but as your store grows and your sales increase, this amount of individual transaction data will quickly overwhelm your system – and cause it to slow down.

The other issue will come when you attempt bank reconciliation – it’s where you’ll really notice some of the differences in e-commerce accounting . Pay-outs from Shopify Payments are made in batches, which makes reconciling the individual transactions with your bank account a nightmare. Not to scare you, but depending on your transaction numbers, bank reconciliation could take you hours.

That’s why Shopify sellers around the world have turned to A2X for Shopify, because it eliminates those pain points.

A2X explained

A2X for Shopify’s unique advantage is, it offers settlement accounting. The software works by automatically importing your Shopify Payments pay-outs – fees, refunds and adjustments included – and generates a summary. It then posts those summaries to Xero or QuickBooks Online.

Then, when Shopify pay-outs arrive in your bank account, you can easily reconcile them with your A2X for Shopify statements. Through this process, it’s just as easy to manage 2000 transactions per day as it is for two.

Connecting it all together

Now that we’ve gone through each app and system, how – and why – do you connect them all?

The how is simple – A2X connects them all. When your customers purchase an item from your store using Shopify Payments, A2X imports summaries of your sales into your accounting system and reconciles them with the pay-outs you receive from Shopify.

More important iswhyclosing the accounting loop like this will be of invaluable benefit to your business. The answer to this question is pretty simple too.

a) It automates a manual process that takes up a lot of time and leaves room for human error (which can be costly).

b) It’s quick and painless to set up – and makes your accountant’s life much easier.

c) Accurate and reliable financial data is the key to unlocking your store’s full potential. There is no way to create and successfully scale a business without good, reliable numbers – and that’s exactly what this accounting loop of systems and apps provides.

Seamless flow of accurate accounting data

How does the old saying go? “Many hands make light work.” Well, in this case, many apps can make light work!

If nothing else, we hope you walk away with a better understanding of how all these apps and systems – Shopify Payments, Xero or QuickBooks Online, and A2X for Shopify – work better when used together. And why worry about your accounting if you don’t need to? Close the loop, then sit back and relax as you watch your accounting data flow seamlessly and accurately from start to finish. Trust us – your accountant will thank you too!

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