WooCommerce is considered one of the world’s most customizable ecommerce platforms and is responsible for powering over 30% of all ecommerce websites on the Internet today. To use WooCommerce effectively, it needs to be integrated with bookkeeping software so that it can track figures for accounting purposes.
So what do you need to know about WooCommerce and bookkeeping? This guide will help explain the following concepts:
- The advantages of using WooCommerce for bookkeeping
- The importance of good record keeping for digital businesses
- How WooCommerce can track business records with accounting extensions
- Which accounting extensions best compliment WooCommerce
- How to choose an accounting extension for WooCommerce
- Why Storefront is a good WordPress theme for WooCommerce
- How to use accounting extensions with WooCommerce
- Tips for keeping books for an online business on WooCommerce
WooCommerce is a very effective ecommerce suite and serves many functions for an online entrepreneur, but to be truly comprehensive in function, it needs to have accounting software integrated into it.
Read on to find out more about WooCommerce and how you can add accounting extensions in order to use it for bookkeeping on your digital storefront.
What is WooCommerce?
At its base, WooCommerce is essentially a plug-in for the WordPress website building platform. WooCommerce uses this platform to set up a fully functioning digital storefront that can sell a wide variety of goods and services, such as the following:
- Physical goods (ex. Vintage clothing)
- Digital goods (ex. Musical files)
- Invoices to charge for appointments
- Service charges
WooCommerce has a bunch of advantages as an ecommerce software. Here are some of the benefits of using WooCommerce to establish a digital storefront:
- Free: Both WordPress and WooCommerce are software with basic editions that are free to use, which is a good option for small business owners who are trying to get a business jump-started with very little capital.
- Open source: WooCommerce is an open source plug-in, which means anyone can edit or modify it. Not only does this leave the source code open to customizable at the individual level, this also means that new extensions and related apps come out for WooCommerce all the time, constantly refining the utility of the product.
- Layman friendly: WooCommerce is an intuitive software plug-in that doesn’t require a computer science or web design degree to use. Even business owners with very little accounting or web design experience can use WooCommerce to quickly establish basic business records.
- Endlessly customizable: There are literally tons of extensions available for WooCommerce that are perfect for tweaking your digital storefront until it is exactly how you want it. These extensions offer a variety of auxiliary functions such as accounting or marketing data mining.
- Lots of aesthetic choice: The large amount of themes available to customize WooCommerce means that the choices for customizing the way a digital storefront looks, sounds, and feels when browsing or making a purchase means you can create the online store of your dreams.
Record Keeping in Online Businesses is Important
Record keeping in any small business is vital to stay ahead of taxes and other regulatory issues, but it’s doubly important in online businesses, This is because online businesses more than any other type of business operate in digital transactions, which don’t leave much of a paper trail.
This means that if you don’t keep good records of your accounting (and backups of those records), you could end up in a situation where you don’t have the documentation necessary to perform a business tax return.
Part of the responsibility of starting and maintaining a small online business is keeping detailed, accurate records of both expenses and income so that not only are you prepared come tax season, you can also use that same data to determine other factors about your business,
- Measuring how well the business is performing: If you look at the patterns depicted by your sales records over time, you can start to see whether the business is doing well or is suffering from decline and adjust your business strategies accordingly.
- Measuring profit after expenses and taxes: Measuring how much money you make in your business once the business expenses and tax withdrawals are accounted for is a large part of determining whether or not your digital storefront is currently successful
- Monitor sales trends or conversion rates: Using ecommerce software like WooCommerce to keep books helps you as the business owner to both monitor general sales trends as well as digital marketing factors like click conversion rates.
- Manage invoices: Keeping on top of invoices (both incoming bills from vendors and outgoing invoices requesting payment from customers) is an important part of keeping the books straight from month to month.
While all of these things can be done manually to one degree or another, accounting extensions in WooCommerce help to automate many of these bookkeeping processes, which leaves the business owner more free time to pursue aspects of the business that focus on growth, rather than maintenance.
Between giving a business owner an overhead view of their digital storefront’s performance and also helping the business owner prepare his or her records for tax season, using bookkeeping extensions with WooCommerce is the best way to keep all of your ducks in a row.
Overall, accounting extensions in WooCommerce almost act as a personal CPA, except without the hourly rate. By organizing all the raw online data generated by an ecommerce store into easily analyzed categories, WooCommerce makes it easy for business owners to stay on top of their accounting duties.
With stringent record keeping and the right accounting software, small business owners can save themselves the trouble of keeping an accountant on retainer by keeping tax records themselves and reconciling their own bank statements, at least up to the point of actually filing.
WooCommerce Accounting Extensions
On its own, WooCommerce would not be able to act as effective bookkeeping software. This is because while WooCommerce is good for ecommerce, it is not built for advanced accounting or bookkeeping. Luckily, WooCommerce easily integrates with several popular accounting extensions that make more advanced accounting doable.
Similarly to how WooCommerce is a plug-in for WordPress, these extensions act as plug-ins for WooCommerce, allowing laymen with no knowledge of either web design or accounting to seamlessly plug these features into their online stores and gather pertinent business-related data with them.
Here are some WooCommerce accounting extensions that are available and some of their key features:
- QuickBooks: QuickBooks is always a popular choice as an accounting extension because QuickBooks also has full accounting software that can be synced with WooCommerce to make your tax data collection simpler. QuickBooks does involve a monthly fee, but it is massively multifunctional to make up for the expense.
- Zapier: Zapier is basically an adhesive app that sets up work flows between different apps and lets them all work together. Adding Zapier is a good idea if you intend to sync two or more different bookkeeping extensions together, but be sure they’re Zapier compatible before downloading it.
- Paypal: Paypal not only acts as a secure payment gateway for your ecommerce, it also helps you keep a transaction record for tax purposes. Paypal is also a good option for helping to keep personal expense accounts and business expense accounts separate, as well as business and personal checking accounts.
- Cost of Goods: Cost of Goods is an extension within WooCommerce that allows you to assign a Cost of Good field to any product or transaction in your records. Once this data is aggregated, you get precise patterns of profitability and other sales trends as they occur in your digital storefront on a monthly basis.
- Xero: Xero handles a variety of accounting functions, from tracking your digital storefront’s standing inventory to automating invoice creation. Xero also handles data like discounts and shipping fees, which are important ancillary costs to keep track of for both revenue analysis purposes and tax season.
- Sequential Orders Numbers Pro: Sequential Orders Numbers Pro provides the very useful function of putting your order and invoice numbers in a sequence, rather than having them randomized. This makes keeping track of orders much less chaotic and is also easier to track for bookkeeping purposes.
- Freshbooks: Freshbooks is a cloud accounting based invoicing extension in WooCommerce that keeps a database of your customers based on past transactions and can be set up to allow customers to download a .pdf of their invoice at any time.
- Authorize.Net Reporting: For those who use Authorize.Net, this bookkeeping extension simplifies the notoriously tedious reporting process by aggregating it into a daily email form.
- WooCommerce Smart Refunder: Smart Refunder is an extension that helps make it easier for digital business owners to facilitate easier returns. Giving people an easy and hassle-free way to get a refund is an important aspect of maintaining your credibility as a storefront. Smart Refunder makes sure you keep the books straight at the same time.
- Kiwiz: For those digital storefronts who wish to operate within French territory, they will need to use a bookkeeping software such as Kiwiz to encrypt their transaction with anti-fraud blockchain technology in accordance with the VAT Fraud Prevention Law. This is a requirement of the French government in order to combat online fraud.
- Vosfactures: Like Kiwiz, Vosfactures is invoice encryption software that is used to encrypt invoices and secure transactions in accordance with the VAT Prevention Law. Vosfactures allows you to email invoices to customers either manually or automatically and offers the ability to send corrected invoices as well.
- Sales Analysis for WooCommerce: Being able to analyze how your business is performing and react accordingly is one of the most important aspects of establishing a sound and lucrative business strategy. Sales Analysis for WooCommerce helps you figure out who your customer demographic is and what your best products are.
- MYOB Integration: MYOB Integration is a WooCommerce accounting extension that was designed specifically for digital storefronts operating out of Australia and New Zealand.
- Free Agent: Free Agent is a bookkeeping extension that helps keep incoming orders and outgoing invoices perfectly synced so that you don’t get behind on your bank reconciliations from week to week. Timely invoices are an important part of a professional presence and also help to keep your accounting organized.
- Quaderno: Quarderno is an extension that helps automate both tax calculations and automated billing. This helps business owners both generate tax reports and also generate receipts for customers.
- Akaunting: Akaunting is a free accounting software app that syncs to WooCommerce and exports data from WooCommerce into Akaunting for bookkeeping purposes.
These are just a few of the many different accounting extensions that are available as extensions for WooCommerce. And this doesn’t even take into account the different accounting themes that are available for WordPress.
Since WordPress and WooCommerce are integrated platforms, this means that business owners who use them can take advantage of bookkeeping extensions and themes in both platforms. That means they don’t only have access to the many WooCommerce accounting extensions available, they have access to WordPress accounting plug-ins too.
WooCommerce as a WordPress Plug-in
Integrating your bookkeeping practices into WooCommerce and WordPress is easy as a result of the design of the software. Both are designed to be customized with a dazzling array of apps, plug-ins, and extensions, allowing each individual business owner to customize their landing pages exactly how they want in order to create the best digital storefront experience.
While WooCommerce is probably the most expansive digital storefront plug-in on WordPress because of all the extensions it can support, it isn’t the only WordPress plug-in that you can use with your digital setup. Along with WooCommerce, there are plug-ins that can address many issues in online business, such as the following:
- Marketing trends
- Customer data collection
- Customer relationship management (CRM)
- Automated email lists
- Dynamic content generation
- Mailing lists
There are many different aspects involved to running a digital storefront or online business, and it helps to have software that automates many parts of this process in order to streamline overall business operation. WordPress and WooCommerce are perfectly designed to allow for that.
How to Choose an Accounting Extension for WooCommerce
Which accounting extensions you use alongside WooCommerce and WordPress are going to depend on a lot of different variables. What is a vital website accessory plug-in for one type of business would be practically useless for another business.
To figure out which accounting extensions to use with WooCommerce and WordPress, you should ask yourself the following about your online store:
- What accounting software am I planning on exporting my WooCommerce sales data to? Some popular forms of accounting software, such as QuickBooks, have WooCommerce extensions that can allow you to sync your WooCommerce data directly with your QuickBooks account to simplify bookkeeping practices.
- How much of my online storefront do I want to be automated? Some WooCommerce and WordPress extensions and plug-ins place an emphasis on automation, while others put more focus on customizing manual control over the online store’s daily operations.
- How much online marketing am I going to have the time and energy to perform in-house? While most business owners would prefer to do their own marketing to both save money and preserve brand integrity, social media marketing platforms that involve a lot of hands-on babysitting may not be a good option for many business owners, while other WooCommerce extensions serve to streamline many duties involved with this.
- What shipping and freight needs do my products require (if any)? Keeping track of shipping will be an important aspect of any digital storefront which needs to ship physical product to client locations in a timely fashion.
- What is my social media marketing campaign, and how do I plan to implement it within my digital storefront? Knowing what social media accounts you intend to integrate with your main storefront and how they all interact with each other will inform what extensions you want for your website.
One of the biggest mistakes that business owners (and people in general, really) tend to make in day to day life is trying to hold several pieces of information in their memory simultaneously at once. Not only does this rarely work out for the person trying to remember everything, it adds a lot of unnecessary stress that isn’t necessary.
Instead, using apps and extensions to take care of a business owner’s auxiliary duties leaves them more free to figure out ways to improve their business and attract more custom, rather than constantly attending to busywork or trying to manually analyze sales data to get an overhead view on how the store is performing.
Storefront – A Bookkeeping WordPress Theme
Storefront is the official WordPress theme of WooCommerce, and it is designed for a deeper level of integration with the digital storefront software than most other WordPress themes.
One of the major benefits of using Storefront as your WordPress theme alongside WooCommerce is that the people who developed WooCommerce are also the people who developed Storefront, which means that there are absolutely no compatibility issues between the two pieces of software. They were literally made for each other.
Storefront is optimized for both desktop and mobile viewing, which means that business owners who use it won’t have to suffer through poor mobile formatting that results from using some online platforms.
Since a large part of any industry’s customer base has now taken to performing consumer research on their smartphones, making sure that a website can be easily read from a mobile device is crucial to maintaining that demographic.
How to Use Accounting Extensions with WooCommerce
The process for using most accounting extensions with WooCommerce and WordPress is quite simple. The way these platforms are designed is a “plug and play” system that allows you to use API keys to seamlessly integrate compatible extensions and plug-ins into your main website, with no web design experience required.
Depending on which extensions you decide to go with, you can find individual download and integration instructions for each one. Often the installation of an extension into WooCommerce and WordPress can be accomplished in a matter of minutes.
Some of the accounting and bookkeeping extensions available for WooCommerce and WordPress are free, while others require a one-time fee or a monthly subscription, depending on whether they are integrated with a secondary accounting software like QuickBooks or not.
By figuring out what capabilities you need in a digital storefront, you can collect a group of bookkeeping extensions for your website that can keep track of every piece of data coming in and out of your business.
Tips for Bookkeeping with WooCommerce
WooCommerce can be a useful piece of software as a platform for bookkeeping extensions to help you run your online business, but there are several tips that can help you get a better start when using these applications.
Here are some ways you can improve your experience bookkeeping using WooCommerce:
- Keep personal and business banking separate. Mixing your personal and business banking accounts can make your bank statements a nightmare to reconcile and sift through each month. Keep your personal checking account separate from your business account, so you have a true idea of real business costs and income.
- Set aside money for taxes. It seems self-evident, but this isn’t a step you want to leave until right before tax season, or you’re going to be under significant financial (and probably mental) strain from doing so. Instead, set aside money from each transaction or each month in order to cover your quarterly business taxes and sales taxes.
- Make sure to keep a record of business expenses. For small business owners, claiming business expenses can be a good way to help you get back some of the money you’ve invested in trying to grow and maintain your small business. Getting back the best tax return possible leaves you extra money you can use for further investments.
- Choose a catch-all accounting software. You don’t want to have to manage too many piecemeal extensions or pieces of software, so try to choose a software that can cover many different accounting operations: cashbook, ledger, foreign currency transactions, inventory management, bank reconciliation, the works.
- Stay organized and keep digital backups. Keeping all your business files organized can help a long way towards keeping your sanity during tax season as a small business owner with an online storefront. Be sure to keep all of your data backed up to multiple places in case of hardware failure and do reconciliations often.
- Learn how to read monthly reports. There is no point in having performance analysis software for your business and its income streams if you don’t know how to analyze it properly. Make an effort to deep dive into learning how your business technology and accounting software actually works in order to make the best of it.
- Keep invoices updated. Falling behind on billing and invoicing can quickly snowball into bookkeeping chaos if it isn’t addressed quickly. Automating the invoicing process via accounting extensions can help make sure that invoices are sent out and filed promptly. This not only keeps the business current, it also gives a professional impression.
- Make physical copies of digital data. While it is convenient to have digital copies of all of your office paperwork, it is important to still keep physical copies of important accounting paperwork such as monthly bank reconciliations and invoices. This can be helpful during tax season if you have issues with your online data.
- Know when to call for backup. Keeping track of sales tax and other accounting records for a small business is hard work, so it’s important to know when you need to throw in the towel and call in a tax professional. It’s better to admit defeat early and avoid a costly tax mistake than be prideful and end up having to pay for it later on.
Many of the duties involved with bookkeeping in an online business aren’t necessarily difficult tasks, but for them to effectively paint a picture of how an online business is performing, they must be performed both consistently and meticulously, with great attention to detail.
Getting the most out of these extensions involves learning about them and figuring out how to use them effectively. Otherwise, you’re only going to get a broad strokes idea of how your business is doing, rather than the in-depth look that WooCommerce is truly capable of.
WooCommerce is Perfect for Sales Tax Reporting and Sales Analysis
One of the best things about having a digital storefront is that web design plug-ins like WooCommerce have made it easier than ever for a person running a business who is a web design layman to set up a functional storefront where they can both collect and analyze sales data alongside making actual sales.
Not only do the accounting extensions compatible with WooCommerce make it a perfect hub for collecting tax reports based on transactional sales data, but there are also bookkeeping extensions that allow for so much more functionality–a business owner operating online can effectively become their own storefront, advertising agency, and tax accountant in one!