If you’re an online seller, should you track Shopify inventory in QuickBooks Online? The answer is… well… it depends. In this article I’ll share the basics that you need to know when it comes to tracking Shopify inventory in QuickBooks Online.
Click on the link below to watch my video about whether you should track Shopify inventory in QuickBooks Online:
The basics of tracking Shopify inventory in QuickBooks Online
One thing you have to understand is when you track your inventory in Shopify, you’re only tracking inventory quantities not cost. For accounting and tax purposes, you need to track the inventory quantity and cost so you can reflect a dollar amount in QuickBooks.
QuickBooks Online inventory is not really made for e-commerce sellers. It’s for people who sell inventory out of a warehouse and invoice their customers directly. If you need to keep a detailed inventory with costs and different levels of inventory while selling in Shopify, it likely won’t work for you. So, what should you do if you are a Shopify seller using QuickBooks Online? I want to share 2 options with you.
First, take a look at the diagram below, which shows the workflow of tracking Shopify inventory in QuickBooks Online. Then, we will discuss the basics of each option – using a spreadsheet or an inventory app.
Tracking Shopify inventory with a spreadsheet
What is the primary advantage of using this option? Well, a spreadsheet is the least expensive way to track your inventory. In fact, you can download my free inventory tracking spreadsheet HERE. While it is the least expensive way, keep in mind that it does take time to update that spreadsheet. You can check out my video on getting your e-commerce inventory ready for tax time to show you how to fill out the spreadsheet.
Tracking Shopify inventory with an app
While inventory apps aren’t free, they’re the most streamlined way of tracking and managing your inventory. There are several different options including Ecomdash, Zoho Inventory, Cin7, and Skubana. Look at the different options and make sure the features address your inventory management needs.
Track inventory dollar amount in QuickBooks Online using a journal entry
Whether you decide to use a spreadsheet or an app to track Shopify inventory, you will take the total amount of your inventory at the end of the month and update the inventory amount in QuickBooks Online using a journal entry. By doing so, you will bypass having to track individual items, costs, and quantities in QuickBooks Online.
Closing
So, should you track Shopify inventory in QuickBooks Online? Now that I’ve shared my insights, I hope you can better decide which inventory tracking option is right for you. Have questions? I encourage you to join my FaceBook community, 5 Minute Bookkeeping with QuickBooks Online, where you can ask your most pressing questions and interact with other e-commerce sellers, small business owners, and bookkeepers and accounting professionals as well.
If you would like to reach out to me, my firm VM Wasek specializes in e-commerce for Shopify, Amazon, and Walmart sellers. Click on this link to learn more about my services and see if my team is a good fit to help you elevate your e-commerce business and reach your goals.
