How to Integrate Shopify with Xero using A2X for Ecommerce Businesses

Matt Byrne

Matt Byrne

Director

Running a successful eCommerce business means managing not just sales but also finances. As your store grows, manual bookkeeping becomes time-consuming, error-prone, and stressful. Integrating your eCommerce platform with accounting software like Xero can save you time, reduce mistakes, and give you real-time financial insights.

In this guide, we’ll show you how to integrate your eCommerce platform (like Shopify, or Amazon) with accounting software effectively for seamless financial management.

Why Integrate Your Ecommerce Store with Accounting Software?

Manual data entry isn’t just tedious; it’s risky. Here’s why integration matters:

  • Save Time: Automate posting of sales, fees, refunds, and taxes.
  • Improve Accuracy: Eliminate data entry errors.
  • Enhance Cash Flow Visibility: Understand your financial position in real time.
  • Simplify BAS and Tax Reporting: Capture GST correctly and generate reliable reports.
  • Get Audit-Ready: Keep clean, traceable financial records.

Good integration sets a strong foundation for scaling your business sustainably.

Step 1: Choose the Right Accounting Software

If you’re based in Australia, Xero is a leading choice because:

  • It’s cloud-based and integrates with hundreds of apps.
  • It supports Australian GST, BAS lodgement, and payroll.
  • It’s user-friendly and scales with your business.

Other options include QuickBooks Online and MYOB, but for eCommerce, Xero’s app ecosystem (including integrations like A2X) makes it a standout.

Step 2: Choose the Right Integration Tool

Your eCommerce platform usually won’t “talk” directly to Xero without a bridge. That’s where integration tools come in.

Top Integration Tools:

  • A2X: Best for Shopify, Amazon, Etsy, Walmart.
  • Xero’s Shopify App: Direct but limited; better suited to micro-businesses.
  • Zapier: For custom integrations.

A2X is highly recommended because it:

  • Consolidates payouts (e.g., daily, weekly) into easy-to-reconcile journal entries.
  • Separates out sales, shipping income, discounts, merchant fees, GST.
  • Matches Shopify payouts with Xero bank feed entries.

Step 3: Set Up Your Integration Correctly

Getting the setup right from the beginning avoids future headaches.

Key Steps:

  1. Connect Your Ecommerce Store to the Integration App: Authorise access securely.
  2. Connect Your Accounting Software: Link your Xero account.
  3. Map Your Chart of Accounts: Assign Shopify sales to “Sales Revenue,” shipping income to “Shipping Income,” merchant fees to “Merchant Fees,” etc.
  4. Configure Tax Settings: Ensure GST is mapped correctly.
  5. Choose Posting Frequency: Daily or weekly summaries are best.
  6. Test the Integration: Review first few transactions before going live.

Tip: Work with an eCommerce accountant or bookkeeper to review your mapping.

Step 4: Manage Payment Gateways Properly

Payment processors like Shopify Payments, PayPal, Afterpay, and Klarna each have fees and timing differences.

Best Practice:

  • Create a clearing account in Xero for each payment processor.
  • Reconcile the net deposits against the sales and fees.

A2X can automate clearing accounts setup and reconcile payment processors accurately.

Step 5: Track Inventory Correctly

If you sell physical products, inventory management is crucial for accurate COGS (Cost of Goods Sold) reporting.

Options:

  • Basic Tracking: Adjust inventory manually at year-end.
  • Advanced Tracking: Use inventory apps like DEAR Systems, Unleashed, or Cin7 integrated with Xero and Shopify.

Good inventory tracking ensures your gross profit margins are correct and helps with stock forecasting.

Step 6: Automate Your Financial Reporting

With a good integration, you can:

  • Run real-time Profit and Loss Statements.
  • Monitor Cash Flow Reports.
  • Track Sales by Channel (e.g., Shopify vs. Amazon).
  • Prepare GST/BAS reports quickly.

Set up recurring financial reports in Xero to review:

  • Monthly sales performance
  • Profit margins
  • Cash burn rates
  • Outstanding supplier bills

Tip: Reviewing reports monthly ensures you spot issues early.

Step 7: Common Mistakes to Avoid

  • Incorrect Chart of Accounts Mapping: Leads to messy financial reports.
  • Failing to Capture GST Correctly: Causes BAS errors and ATO penalties.
  • Ignoring Payment Gateway Fees: Overstates income.
  • Not Reconciling Regularly: Creates inaccurate financials.
  • Delaying Integration: Leads to large backlogs and data entry errors.

Working with an experienced eCommerce accountant can help you avoid these pitfalls.

Conclusion: Simplify Your Finances and Focus on Growth

Integrating your eCommerce platform with accounting software like Xero is one of the smartest moves you can make for your business. It frees you from manual work, ensures accurate financials, and gives you the data you need to make better decisions.

By choosing the right tools, setting up your integration properly, and maintaining good reconciliation habits, you’ll:

  • Save time
  • Improve accuracy
  • Stay GST-compliant
  • Scale your business with confidence

Need help setting up Shopify, A2X, and Xero for seamless financial management? Reach out to our team today and let’s get your eCommerce finances flowing smoothly!

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