Automation is all about working smarter.

It allows you to hand the repetitive tasks of your business, that demand accuracy and consistency, to software designed to handle this. As a result, you have more time to up-skill, learn and grow your business.

If you are here, you have probably figured that much out already. Using Xero for Shopify brings you as a seller a host of great benefits and functionality options, so here, we will explore what these are and how to get started.

By the end, you will know not only how to connect Shopify to Xero, but how to get the very best out of your automation software stack and stay ahead of the game.

In this guide, we cover:

• Shopify apps to automate your business
• How to enhance your Xero Shopify integration with A2X
• Step-by-step: how to integrate Shopify with Xero and A2X
• Shopify payment processing and how to automate it
• How to reconcile Shopify payments in Xero
• Syncing your inventory with Shopify and Xero
• Where to find more information about Shopify accounting
• Shopify Xero FAQs

The Best Shopify Accounting Apps

The good news is, if you have signed up to Xero, you are already on track for Shopify accounting success!

On top of great accounting software, you can automate other aspects of your Shopify bookkeeping that will make your life a lot easier. Tax apps are incredibly helpful when it comes to selling across multiple tax jurisdictions (which almost every online seller will). These ensure that you meet your tax obligations as they differ based on location.

And don’t forget A2X, a key piece of your Shopify accounting puzzle, which we explore in more detail in the next section.

Managing the money is just one aspect of selling on Shopify that can be automated. As you grow, you may want to consider more ways to automate in order to give your business resilient foundations to support scaling up.

Other areas you can automate include:

• Printing labels
• Order processing
• Order tracking
• Marketing
• SEO
• Email capture
• Stock counting
• Social proofs

Check out The Best Apps to Fully Automate Your Shopify Store for our favourites under each of the above categories.

With a smart, integrated tech stack, you’ll be able to slot out of the laborious manual tasks of your business and put your ecommerce expertise to better use!

Enhance Your Shopify and Xero Integration with A2X

Your Shopify Xero setup can be taken to the next level with the help of A2X.

“A2X for Shopify is the best thing to come out for ecommerce sellers since A2X for Amazon, really!”

– Patti Scharf, Catching Clouds.

Accounting is complex, no doubt about it. Ecommerce accounting brings with it a host of additional and unique complexities, so any seller with limited or no accounting experience may struggle.

Ecommerce sellers have to keep track of a lot. Cash flow, inventory management, returns and reimbursements, varying platform fees, shipping costs – and that’s before we touch on sales tax which differs for online sellers across and within states, as well as across the globe.

Here’s why, for a Shopify ecommerce seller, investing in A2X is just as important as investing in good accounting software like Xero.

Individual orders vs summarized

Importing individual orders into your Xero account will clog up your accounting system, make reconciling an all-consuming nightmare, and stunt your ability to scale your business.

A2X generates summarized statements that are matched to each Shopify payout summary, ensuring accurate reconciliation every time.

Save time reconciling

A2X can automate the reconciliation process into a few button clicks, turning what took you hours, into a few minutes.

Why waste time and energy on something you don’t have to?

Accurate bookkeeping

This one’s a biggie. Think of A2X as a bridge, providing the way for all your store’s data to file nicely into Xero.

This ensures your business has reliable and accurate financial data, which is essential to scaling your business.

Benefits of accrual accounting

Without A2X, Xero will import fully paid orders instead of importing transactions as they occur.

Accrual accounting gives you a more accurate picture of your cash flow. Many business expenses span multiple months, and accrual accounts take this into account. Investors prefer it, as does the GAAP.

This is information that will help you make informed business decisions, like when to develop a new product, switch suppliers, or double down on marketing spend.

Try it free!

As you can see, having A2X on hand for your ecommerce accounting is pretty much a no-brainer. To see the benefits for yourself, try A2X for Shopify on a free trial here.

Step by Step: Shopify Xero Connection

We’ve covered off the benefits of a Shopify integration with Xero and A2X, so now let’s move on to the best way to integrate Shopify and Xero.

Prefer videos? Check out this one below. Or keep scrolling for steps with screenshots.

To connect A2X, Shopify and Xero:

1. Sign up for your free trial of A2X for Shopify here.
2. Log in with Google, Intuit or via your Xero account.

3. You’ll be prompted to fill in your personal details and then you’ll be ready to go!

The next step is to connect A2X to your Shopify store.

4. In your A2X account click the green ‘Connect with Shopify’ button.

5. Add your Shopify name when prompted and click ‘Connect’.

6. You’ll be redirected to your Shopify store and asked to log in and grant A2X permission to connect.

7. Once permission is granted, you’ll be redirected back to A2X and your first payouts will begin to import – it usually takes 10-20 minutes to populate your account.

For larger Shopify stores, the whole process can take several hours to complete. This is what you will begin to see populating:

Now you need to connect A2X to Xero.

8. This part is easy – when you sign up with A2X, you’ll be given an option to connect to your accounting software. Click ‘Connect to Xero’. You’ll need your Xero login credentials handy.

9. Follow the instructions on-screen to complete the connection, and when done, you’ll be redirected back to A2X.
10. If you go to the ‘Connections’ section of your A2X dashboard, you’ll be able to see whether the connection has been successful.

Lastly, you need to set up your accounts.

You can set up the account and tax mapping to your accounting software so imports will arrive already coded and ready to reconcile – saving you a lot of time.

The Accounts and Taxes feature allows you to map your Shopify payout transactions to your accounting system. It does this by accessing your Chart of Accounts or by creating accounts specific to Shopify transactions directly from A2X in your accounting system.

• You can set the accounts that the typical Shopify transactions will be coded to in the ‘Accounts and Taxes’ tab on your A2X dashboard.
• To choose your Chart of Accounts, access your accounts in Xero by clicking the ‘x’ next to each account in A2X, and selecting from the drop-down menu.
• Click the ‘Save Mapping’ button at the bottom of the page, so your account mapping will now apply to your payouts consistently.

Note: If you create new accounts in your accounting software after connecting A2X, you will need to refresh your Cache in ‘Settings and Connections’.

For more help and instructions on this step, check out our tutorial here.

Shopify Payment Processing Automation

Payments on Shopify used to be a pain point for sellers. You needed a third-party solution which was often pricey and complicated, plus Shopify added their own fees on top.

Their solution to this problem? Shopify Payments. Or Shop Pay, as it has been recently re-named.

Partnering with Stripe, Shopify has cut out the middleman to give its users a better experience. You can still choose other payment providers, but this option helps you keep everything in one place: your Shopify dashboard.

In your dashboard you can track your transactions in real-time, no longer needing to login elsewhere to view these. This level of ease and transparency is a pro for sellers that they may not have experienced in the past with third-party processors.

The benefit of using Shopify Payments with your Xero Shopify integration? Simplicity.

The least number of apps you can have in your stack with maximum impact gets you the greatest level of efficiency. Save your additional app spots for ones that will add real value to your business.

Pro tip: payment processors can be time consuming and costly, so don’t let your customers dictate which one/s you use. Do the research and make the best decision for you and your business.

For more details about Shopify Payments, check out our blog Why You Should be Using Shopify Payments.

How to Reconcile Shopify Payments in Xero

First up, in order to reconcile your Shopify Xero accounts, make sure you have completed all the setup steps listed above. Without having your taxes mapped correctly (including any freight additions), for example, you’re going to run into issues down the line.

Reconciling your Shopify Payments payouts in Xero is straightforward with A2X:

1. This is how your payouts look in A2X:

2. The highlighted payout above looks like this in Xero:

3. Within this payout are multiple line items which A2X has captured for you and categorized according to the mappings you chose at setup:

4. When you send this to Xero, it will appear as a Draft Invoice:

5. You will need to approve this invoice so that its status changes from Draft Invoice to Awaiting Payment.
6. Once you have approved the invoice, you will be able to reconcile it easily in Xero’s bank feed:

7. After this step, your invoice will be marked as Paid.

For help reconciling PayPal payouts from Shopify in Xero and A2X, check out our tutorial here.

Pro tip: to keep your accounting and reconciliation processes as streamlined as possible, stick to the process. Don’t let customers alter their orders via email without going through the proper steps in your Shopify store. If you can keep strict about the processes you have set up, you can be sure nothing is missed.

Shopify Inventory Sync with Xero

A2X has a Cost of Goods Sold (COGS) feature built in, so when you integrate A2X, you’ll also benefit from this inventory tracking system.

COGS will calculate the total cost of your products sold via Shopify as payouts come in, so that you can accurately track your stock levels and the costs associated with your sales. This will help you figure out your gross profitability and margins directly in your financial reports.

Keeping track both of your inventory levels and of which products make you most money is key to growing your Shopify business. A2X helps you stay on top of both.

For more information on the COGS feature and how to set it up, see our tutorial here.

Shopify Accounting Guides

For more in-depth information specific to Shopify sellers, see our guides below:

Apps, Automation & Accounting

• Shopify Accounting for Dummies
• Best Apps to Automate Your Shopify Store
• The 11 Best Shopify Apps for Dropshipping Stores
• How to Get Reconciled Shopify POS Accounting
• Why You Should Be Using Shopify Payments
• UK Ecommerce Accounting Software for Amazon FBA and Shopify

Increasing Traffic & Sales

• Best Shopify Apps to Increase Sales
• How to Drive Traffic to Your Shopify Store
• How to Offer Free Shipping on Shopify to Boost Sales
• How to Add Google Analytics to Shopify
• Shopify SEO Tips

Shopify Tax

• How to Collect Shopify Sales Tax
• An In-Depth Tax Series for Amazon & Shopify

Shopify Fulfilment

• Guide to Shopify Fulfilment Network
• How to Fulfil Orders on Shopify

Shopify Xero FAQs

Does Xero integrate with Shopify?

Yes. Xero integrates with Shopify seamlessly to give you automated accounting. Don’t forget to add A2X into the mix for the next layer of detail that you as an ecommerce seller need to succeed.

How do I reconcile my Shopify payouts?

A2X intercepts your Shopify payouts so that you can capture all the data you need to know in order to reconcile them accurately in Xero. This process makes the reconciliation process incredibly straightforward.

• See our tutorial here for the step-by-step process.*

What accounting software works with Shopify?

Xero and Quickbooks are excellent accounting software options for Shopify. It also supports FreshBooks, Wave, ZipBooks, Holded, Sage 50cloud, Kashoo, OneUp and more.

What does Xero integrate with?

Xero’s App Marketplace offers a range of add-ons and integrations available to users. These include accountant tools, ecommerce, debtor tracking, inventory, payroll, HR, reporting, time tracking and other categories.

Is Xero better than Quickbooks?

This all depends on your needs, but both Xero and Quickbooks are some of the best rated accounting software options out there.

Xero could be considered a good option if you are a smaller start-up, based outside the US and/or prefer minimalist UX. Quickbooks might be considered better if you are in the US, looking for maximum value for money and/or want advanced reporting features.

When choosing which to use, think about your top priorities as a business owner and weigh up how each of these options could solve your biggest problems. These are not the only two options you have as a seller.

See this guide for more.

When three become one

At the end of the day, one of the most important things to most ecommerce store owners is to work smarter and more efficiently, so they can focus on what’s important in their business. 

Shopify, Xero and A2X each play an important part in one seamless automation.

You’ll not only save time (and any number-induced headaches), but you’ll also be setting yourself up for success with financial data you can rely on.

Happy syncing!