 QuickBooks Online 2023, e-commerce sales data to QuickBooks Online Methods, Part Number 2, Demonstration. Get ready to earn the skills needed to boost your bankbooks on up with QuickBooks Online 2023. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in our QuickBooks Online test company file using the accountant view as opposed to the business view. You can toggle between the two views by going to the cognitive top and switch the view on down below duplicating some tabs to put our reports in like we do every time right click on the tab up top to duplicate it. Once again right click in the duplicated tab to duplicate it back to the tab to the middle opening up the reports on the left. Let's open up the balance sheet report. Yes, the balance sheet tabbing to the right reports on the left this time the profit and loss. We do this every time. So I'm going fairly fast here. We're going to close up the hand boogie and change that range. Let's go from 0 1 0 1 2 5 to 12 3 1 2 5 this time run it and then go on to the tab to the middle. Close up the hand boogie and change that range from 0 1 0 1 2 5 to 12 3 1 2 5 and run that one as well. And then I'm going to go back to the tab to the left now in prior presentations. We've been thinking about an e-commerce type of situation where we are selling inventory but not in an on-ground in-store setting but rather online located on the cloud possibly using applications to help facilitate the sales and do some of the logistics like a Shopify or an Amazon. Now we want to think about how to pull that information into our accounting system to create the major financial statement reports that being the balance sheet and the income statement. We're going to need at least the income statement at the minimum to be able to do our tax obligations at the end of the year. If we are sole proprietor type of business. OK, so let's go back to this tab. Now we're focused on just the sales side of things where we've broken out the concept of this inventory business to the inventory. We'll talk about later and now we're talking about the sales side. But also we have expenses related to the sales side of things. So last time we looked at methods to pull that information into QuickBooks. The easiest method would be just to use bank feeds, although it's not as detailed. And then we can go to the manual entry of reports from a commerce platform also using bank feeds. Bank feeds are always going to be integrated typically. And then we can go to the QuickBooks online commerce connect, which is the new QuickBooks online thing. As of the time of this presentation, still, you know, new item in there. And then we've got the third party apps like an A2X. So let's just go think about how those items might be put together looking at the QuickBooks software here. Now clearly, if you have a third party platform like an e-commerce, you're making sales, you are you are putting the information necessary in order to facilitate the sales and have the inventory you need. You're working on your website and that kind of stuff. You want to pull this information as the sales happen virtually on the website into your financial statements. So the easiest way to do that just on the sales side of things would wait till it hits your bank account. Sale happens Shopify. They take it out on the shopping cart. They make the payment and then it's going to at some point hit your bank account. And we're going to have our bank feeds typically on over here. So if I go into my banking tab, then in the bank feeds, we're going to see it play in possibly to our checking account over here. And we'll ultimately have a deposit that will come into our checking account. And then when we popular and by the way, turning on the bank feeds, we have a whole nother course or section on the bank feeds. But it's fairly simple process to set up your bank feeds and pull in the banking information. The bank feeds, of course, report the increases and decreases to the checking account. That's all the bank knows. The bank knows the date. The bank knows increase decrease to the checking account and the bank knows memo data, which is most likely most detailed when you have electronic transfers. So which is often the case if you have an e-commerce type of business that detail can help you to determine vendors and customers. So if we just wait till something hits our bank and we have the bank feeds on, we can then go into the transaction and record the transaction to sales. And what will that do? It will increase the bank account and it will increase sales. So if I was to do that and go on over to my income statement over here, what would be showing on the income statement would be just the gross sales. We'll go into some more examples of this in the future, but just a summary here. We would just have the gross sales. That gross sales not exactly completely accurate because there will be expenses that were taken out before it hit our bank account. And so that's going to be the big issue with waiting till it hits your bank account. Now, we're not worried about costing it sold. We'll talk about that later because we're breaking, we're severing these two things apart instead of using a perpetual system. We're using a periodic system. We're just focused on the sales side of things. And the other side of course would be in the bank account and the checking account would be correct on that case because that's what actually hits your bank account. Great, but it's too summarized for the income statement because you should have instead of one net number in the gross sales line, we should have basically a higher number here and then expenses related to fees from Shopify and related to charge backs and any other kind of thing that happened down here would be the general item. Now, why is that a problem? One issue is that when you have your taxes, you're going to be issued possibly a 1099 from the payment processor or something, which is going to show you a number that is higher than your sales number. Likely because your sales number is netting out not gross sales, but it's netting out some of the fees. And if you report on your schedule, see a number that's lower in gross sales, then on the 1099 you could get questioned. You're likely to get questioned by the IRS or at least more likely. So you could work around that by saying, look, the 1099 is correct. I'm going to make an adjustment increasing the sales number and then record the difference as fees and other charges, which I assume is the difference, right? So you're making some assumptions to do that, but that would be, you know, a simple, the simple type of method to do. So there's the pros and cons in general with that. We'll go into some more detail in some examples, but then you have the manual entry of reports from the commerce platform. So you could say, all right, I look, I want more detail in my sales line up here than simply waiting till someone, till something hits the bank feeds. So I could then go into my Shopify or my Amazon type of reports and depending on like, this is Shopify, you could have different report settings depending on how much you, you know, your payment plan with them. But if I go into analysis, then I've got my reports here and I've got my, like my sales reports, for example, and you could try to match out your reports if they pay out by day. I just have the week because that just to pick up the sales item they have. And here's the gross sales and then discounts returns, net sales and so on to get to the total sales. If I put this into like a worksheet, it might look, you might see reports, something like this, right? It would give you the grocery sales. We're trying to tie out to the payment periods, whether they pay out daily or if it's like Amazon, they pay out every two days. We'll get into this in more detail later. But the idea being now you've got the gross sale, you've got the discounts and then you've got payment fees and whatnot that we can break out. We'll take a look at this example more in a future presentation. And then I can basically enter a journal entry into the system, which will more properly break out the income to the gross income, which will typically be larger. And then some of the other detail that is involved that was handled on the Shopify or the Amazon side of things. So for example, if you look at an Amazon report, just to see all the information that is located on it, it could, if we break out all the information, this might be the amount that was deposited into the bank account. But they could have all this other stuff. There's a whole lot of other categories that might have happened that you're not getting, you're not picking up that detail in the system. So you may not need all the detail, but it would be more accurate to pick up some of this detail. So you could make a journal entry from the payout statements to put that into the system. And then we can use basically a clearing account so that the amount that actually deposits into the bank account will still match the bank feeds. So that we can still tie out the bank feeds so that our cash will still tie out. So the bottom line would be the same amount hit the checking account under either method. So we still want to be able to use the bank feeds to tie out to our journal entry in essence. But we'll use the financial reports and we'll manually pull them in and enter a journal entry to more properly break out the income and all the other stuff, chargebacks, fees and stuff that happens. So that's another method that we can use now. Note that if I use that method, there's still the issue of the third party payment platforms. Because now I'm saying instead of me using an app to connect to these applications like an Amazon or Shopify, I'm manually doing it. I'm manually going and doing what the app would do in general. I'm pulling that information in and manually doing a journal entry to summarize the data into the QuickBooks system. However, if the app, if I'm using say Shopify and I'm only using Shopify payments, then Shopify will have all the fees and integrated and so on. However, if I'm using another payment platform, in other words, I'm accepting payments from customers in the Shopify pay, which could allow credit cards or whatever. And then I'm also allowing them to pay me with like a PayPal or some other method. Then I have the other third party platforms. And again, a lot of people want to turn those on because you might figure that it's going to help you to facilitate sales. If people like to buy stuff using PayPal because it's easier for them or whatever. So then you've got the PayPal platform that also has some fees, which you might be able to deal with by on the bank side using the PayPal integration, which is kind of like bank feeds, but PayPal has its own little integration thing, which sometimes breaks out the fees. So for example, on the PayPal app, if you log into the PayPal side, which is over here, then like for example, this item right here has the fees kind of broken out over here. So PayPal can break out some of the fees. This gets a little bit messy because now you've got two of these integrations, which are kind of trying to break out the fees. But if we, you know, tie them together properly, hopefully we can account properly for the fees between PayPal and the Shopify store. All right, so that's method number two. And then we've got the next method, which is the QBO commerce connect to the sales channel. So now we're using kind of like an app, but it's integrated within QuickBooks Online. Now this is a fairly new thing for QuickBooks Online, but it's trying to do, to what I see still, still do, but it's trying to do what most people are recommending for the apps for most e-commerce stores, meaning some apps could try to pull in all the transactions and try to run QuickBooks like we did in our demo before in a perpetual inventory system, which could overload the books. So the QuickBooks app is trying to kind of integrate and pull in the information similar to what we would do manually with the journal entry method, but try to do that in an automated type of process. So for that, they've got the commerce down here. And if you hadn't, and here's the overview, if you hadn't turned on commerce yet, this is the sample version. So you go down to commerce and then you've got your seamless seamlessly connected. You can watch their little, little thing here. And this is specifically for eBay, Amazon and Shopify. So obviously this looks great if you're new and you're trying to set up your Shopify or Amazon or eBay thing, and you're like, all right, QuickBooks has it all in house and it's great, but it's still quite new. And again, you might think that if you just flick that thing on, then it's going to track your inventory within QuickBooks online and do the whole full service process on a perpetual inventory system as you might expect like on an on-ground kind of store, but it doesn't. And it's kind of, well, they might add that features in the future, but I think most people would recommend not to do that because as we've talked about multiple times in the past, it could muddy up a lot of data that you're duplicating. It could pull in a bunch of transaction and weigh down your QuickBooks system over time and tracking inventory would still require you to enter the products into the system in the sale so it can tie out the products and a lot of people are not as sophisticated in adding the products and what not and seeing exactly what the transactions are doing. So most of the time people recommend to do something similar to what we talked about with the manual method, which is for QuickBooks to kind of pull in the data and then kind of record a journal entry, but now it's doing that basically in an automated way. So basically now I've got this e-commerce like this first page right here. The overview is actually pulling in data directly from the store. So it's pulling in the information here on like the financial information and it's giving you kind of something similar to this financial information. But this stuff as of now isn't actually being pulled into your finances, making the financial statements balance sheet and income statement, which is of course our main goal of what we want to do here. This is pulling in kind of the information summary data. So and then this tab here and we'll talk more about this later, but this tab here is going to show you the orders again. However, these are giving you the individual orders, but it's not actually recording a sales receipt for each of these individual orders in QuickBooks, but rather just trying to say, hey, look, this is what actually happened in summary data. It's not being input into QuickBooks to make the financial statements, but it helps you to see it all in one place, even though it's not part of your financial statements, right? And then you've got the payouts and this is the payout that actually happened. Notice I'm down here in the commerce area and if I look at the detail here, I can see the detail and this is going to take me up to my transactions tab. So now I'm in the banking section and now I'm in the application. So now this application looks similar kind of like to the bank feed type of thing, but notice it's summarizing all of the transactions in a summary field and putting it here. So it's not pulling in the data transaction by transaction. It's not doing a perpetual inventory type of system. It's lumping the stuff together and put it in here in a lump sum in a similar fashion as we might do if we were trying to do it on a manual method. So we'll get into that in more detail in future presentations, but obviously if we actually add the transaction here, then we should be able to connect it to the bank feed as well when it actually hits the bank. Again, we have that same kind of issue with the PayPal intermediary problem because this integration is generally connecting directly to the app. In this case, like a Shopify, the PayPal intermediary is going to have its own kind of fees and stuff that we would have to deal with, which adds a little bit of complication. We'll get into the logistics of how to do this in a future presentation because it takes like clearing accounts and stuff, but that's that method. And then lastly, we have the method of connecting to a third-party app like an A2X and use the bank feeds. Now A2X is a common example of an app that does a similar thing that what we're seeing with the integration here that QuickBooks is trying to do. A2X, however, has been doing this for some time. So a lot of people are comfortable with what the format that A2X is doing. So obviously you'd have to pay for A2X and so it's a third-party app. But you want to be careful with the third-party integrations because, again, other third-party integrations may attempt to pull in every transaction so that it'll be reported as a sales receipt and track the inventory on a perpetual inventory system. And again, a lot of people recommend not to do that because of the reasons we've talked about before. Some applications, third-party apps try to summarize the data in a similar fashion as we thought about manually and as we thought about with the QuickBooks app. And A2X generally has that option and that's usually what a lot of people kind of recommend so that it'll do a similar process, summarizing the data and then pulling it in to QuickBooks in a summarized fashion. Now, because A2X might be a little bit more complicated because it's third-party but it also might give you some more options and, again, it's been kind of tested for a much longer timeframe as of now as QuickBooks Online. Obviously, QuickBooks Online, the integration in here, although less tested at this point in time, you would think going forward, it might overtake the other one, right? So it's kind of hard to decide between those two. But also, you think QuickBooks Online is trying to pick the simplest middle ground. So I would think going forward, QuickBooks Online might not give you quite as many options to completely customize to your personal needs, but they're probably going to, at least for now, it looks like go towards the most common, simplest kind of integration, which is what most people generally want oftentimes and that kind of makes sense because, obviously, once you add a bunch of options, that's going to give you a lot more complications. Some of the third-party softwares then are likely to give you more of those options if you want more customizations that might be outside of what a commerce thing would do. Okay, so that's the general overview. We'll do some examples of some data input and the logistics of how some of these different methods will work in future presentations.