Beginner’s Guide to WooCommerce Accounting for Your Store in 2022

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Trying to set up a functional WooCommerce accounting system for your store?

Accounting doesn’t have to be a struggle for online store owners. It all sounds tedious and somewhat boring, but your accounting structure enables you to stay on top of how much you’re actually making as a business.

In addition, a quality bookkeeping system prevents any legal trouble down the road. Luckily, smooth WooCommerce accounting is possible with just a few steps.

📚 Table of contents:

How to configure a fluid accounting system in WooCommerce

From finding the perfect accounting platform to configuring tax rates in WooCommerce, most accounting can be done in the background of your online store’s operation – as long as you set everything up in advance.

Here are some tips to set up your system…

Accounting platforms pack extensive feature lists into their systems, ensuring that every transaction sent through your online store is both logged and ready for reports into the future.

Finding an accounting platform you enjoy and trust is the first step in configuring an accounting workflow for WooCommerce. You can find a few plugins for handling taxes and streamlining your accounting, but you can’t replace a full-fledged bookkeeping software with a simple plugin.

However, those accounting suites usually have a complimentary WordPress plugin to sync your numbers, from profits to expenses in WooCommerce, with the software of your choice.

Therefore, the goal is to not only locate a reputable accounting platform, but also one with a viable WooCommerce integration plugin and syncing process.

Our favorite accounting platforms include the following:

WooCommerce Sync for QuickBooks Online

The WooCommerce Sync Quickbooks plugin brings WooCommerce together with one of the most popular accounting tools for small and large businesses alike. The plugin offers a real-time syncing feature for products and inventory and sales numbers. Link your bank account to track expenses and utilize the global QuickBooks tax and currency support for logging all taxes and transactions from around the world.

Xero WooCommerce Sync

Xero

Xero is yet another reputable software for accounting. It’s also one of the primary accounting tools with a WooCommerce syncing extension. The Xero extension does everything from reconciling your bank account transactions to checking in on inventory and payroll tracking. What’s great is that all tax and product and shipping data is constantly being sent to Xero, straight from WooCommerce.

WooCommerce Zapier

Zapier for WooCommerce accounting

The WooCommerce Zapier plugin is an alternative for those who potentially already use an accounting platform besides Xero or QuickBooks. Zapier serves as a universal integrator to link your WooCommerce infrastructure with any bookkeeping software that doesn’t have an official WooCommerce extension.

You can also use Zapier to help your WooCommerce store in other ways, so this is a useful tool to have.

Set up tracking and reporting for everything from expenses to profits

Ideally, an accounting platform would begin syncing sales data with the click of a button and placing it directly into the right tracking columns and reports.

Overall, tools like QuickBooks and Xero automate the vast majority of tax and accounting tasks for you. However, you also have the option to track crucial figures so as to monitor the progression of your store over time and make report-building easier in the future.

Some figures to consider tracking in Xero, QuickBooks, or your favorite accounting platforms include:

  • Revenue
  • Expenses
  • Profits
  • Cost of goods sold
  • Cashflow
  • A full balance sheet

That’s only a shortlist of the primary metrics to keep an eye on. Feel free to choose other key figures you want to track. QuickBooks and Xero make it simple to view and analyze your business’ successes and losses at a quick glance. With the WooCommerce sync, you can easily launch tracking for more detailed reports.

cost of goods report

These reports are not only useful for maintaining control of your finances, but they’re essential for sending to stakeholders who also need to check on the financial stability of your business. In addition, you may have to dig back into these reports come tax time.

Configure WooCommerce tax rules and rates

Even though accounting software handles the heavy lifting for syncing your sales revenues and expenses, you’ll still be responsible for another key area – taxes.

Taxes aren’t the most glamorous area of eCommerce, but they’re essential for abiding by the law and ensuring you’re not required to pay fines when tax season rolls around.

In short, if you don’t configure automated taxes in WooCommerce, your company won’t last long because the bills stack up fast.

Furthermore, having accurate tax calculations in WooCommerce makes for better reporting in your accounting software. Those payments are categorized as taxes and can be set aside for you to pay to the government when the time comes.

We highly recommend meeting with an accountant to figure out tax obligations based on your business’ geographical location and the types of products you’re selling. Who knows? Maybe you don’t have to collect as many taxes as once expected. Or maybe there’s no need to collect sales tax at all.

Once you’ve conferred with an accountant, go to the WordPress dashboard to get started setting up your tax rules.

By default, the Tax tab doesn’t appear on WooCommerce until you indicate that you’d like to enable tax rates and calculations. So, you must activate the functionality first.

Turning on tax rates and calculations

In WordPress, go to WooCommerce > Settings.

Under the General Options, scroll to the Enable Taxes area. Mark the checkbox that reads Enable tax rates and calculations.

enable tax rates for WooCommerce accounting

The change doesn’t take effect until you save the settings. So, scroll to the bottom and click on Save Changes.

save changes

Now, you should see a new Tax tab in the WooCommerce settings. Click on that.

WooCommerce accounting tax tab

As mentioned, you need to know your store’s specific tax obligations in order to fill in your tax options and rates. We can’t tell you any exact rates since all locations are different. It’s also better to speak with a professional accountant to make sure you understand everything.

The tax options

However, you can go through some of the Tax Options based on your own company preferences.

Decide whether you’d like to include tax in listed prices or not. This isn’t common on eCommerce sites. It’s more common to show the tax rates in the shopping cart or checkout module.

tax class for WooCommerce accounting

You should also choose how to calculate the tax rate, how to display the prices, and if you want to offer additional tax classes.

Again, consult an accountant if you have any questions about these settings.

save changes

The remaining settings tab include Standard rates, Reduced rate rates, and Zero rate rates.

You have the option to manually fill in tax rates, but the prudent choice is to speak with an accountant and either develop or ask for a tax rate CSV to upload to your online store. This expedites the process and minimizes any user error on your part.

import csv

Think about a WooCommerce tax plugin instead of the default tax rules

It’s not a requirement to use WooCommerce’s tax rate features. In fact, many tax plugins exist, ranging from simple small business tax calculators to more complex eCommerce tax organizers.

An example is TaxJar. It’s a free plugin that integrates seamlessly with WooCommerce and pulls real-time tax rates from different locations. This eliminates the need to find a spreadsheet of a country’s tax rates by region. Beyond that, TaxJar offers automated filing, advanced reporting, and real-time tax calculations that tell you when tax thresholds have been met in each region.

TaxJar WooCommerce accounting

Understand the deadlines to pay your taxes

Tax deadlines vary depending on your company’s location. Regardless, these deadlines are important to remember if you plan on avoiding fees and potential audits.

We’ll use the United States as an example.

Tax Day in the US is traditionally April 15.

Every year has its own extended tax deadline, which you can find online if there’s any reason you need to pay late.

In addition, you may have to pay estimated taxes as a business owner. Although this isn’t always required, most sole proprietors, partners, S-corps, and corporations have estimated payment requirements. Speak to your accountant to clarify the rules for your business.

Final thoughts on WooCommerce accounting

The world of taxes and accounting isn’t always an exciting one, but your best bet is to configure a WooCommerce accounting workflow from the very start. That way, you’ll never have to worry about scary surprises.

Hire an accountant, sync your sales with reputable accounting software, and be sure to run reports on a regular basis.

Finally, for even more ways to improve your WooCommerce store and its workflows, check out our full collection of the best WooCommerce plugins.

Still have any questions about WooCommerce accounting? Ask us in the comments below!

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