Etsy is one of the best digital marketplaces to sell handmade goods and artisan crafts online. This site is home to many home-based sellers and niche markets, making it feel more like a community market. Many sellers on Etsy have already turned their once small operations into their full-time jobs.
The concept of turning your hobbies into something profitable is one that anyone would love to have for their own. However, one key part that new sellers tend to not pay proper attention to is the financial side of their business. A business owner can handle this all on their own but it will come at the cost of valuable time.
That’s why many Etsy Sellers have chosen to make use of Accounting Software to streamline their financial processes. The use of software provides sellers with accurate financial data that they can base their decisions on. They can also be sure that their bookkeeping records are always up to date, making it easier to keep track of their growing number of transactions.
With these benefits in mind, we’ve come up with a few options for Accounting Software that Etsy Sellers are sure to find useful. Whether you are just about to set up your storefront or are already well-established on the site, you’ll be able to make full use of these to improve your businesses’ efficiency.
We’re starting with a free option for businesses that just want to try out the idea first. Wave Accounting is a bookkeeping and accounting solution that’s simple to use and meant for small business operations. Commonly known as an alternative to other accounting software like QuickBooks, this choice tries to cram in as many features as it can within the free package.
Simplicity is the name of the game when it comes to Wave’s roster of features. It offers business owners invoice creation tools, income and expenses tracking, automation options, and even a phone app for use on the go.
Wave makes use of a double-entry bookkeeping system which allows it to generate basic financial reports for you. It also allows you unlimited bank and credit card integrations, making it easier to manage your accounts. Collaborative work is also possible within this software as you can add in as many collaborators and accountants as you want.
In terms of data security, Wave makes use of 256-bit encryption protocols to secure your data from any chance of interception. This type of encryption is great as it offers higher levels of security when compared to 128-bit encryption. All transactions you log onto Wave are automatically backed up into the cloud, reducing the risk of data loss in any circumstance.
However, there are some cons to this software due to its simpler nature. Users of Wave have commented on how linking bank accounts can be cumbersome. Another potential issue is the fact that Wave only offers basic options when it comes to financial reporting. These include a Sales Tax report, Aged Payables and Receivable, a Balance Sheet, and an Income Statement. Although, it should be noted that these can be downloaded as CSV and PDF files which make them easier to customize.
Free 30-Min Strategy Session
By the end of this Strategy Session, you will have a clear understanding of the next steps you can take for your business to take advantage of the tax deductions you are missing out on.
The next option that Etsy Sellers can use for their businesses is QuickBooks, starting with QuickBooks Self-Employed. This one is meant more for freelancers and sole business owners who want a better way of tracking their finances and tax obligations. With a starting rate of $15/month, it allows sellers to categorize their expenses as business or personal with a few clicks or swipes. This goes all the way up to $35/month where users can contact TurboTax CPAs and other support options only available to the highest tier of subscription.
QuickBooks Self-Employed can easily connect to your accounts, whether it be bank accounts or digital payment options. At first setup, you’ll have to configure how transactions will flow throughout the app. This involves manually assigning your income and expenses as either business or personal ones. There is also the option to automate this process, making expense tracking much easier in subsequent uses.
This accounting software has a built-in mileage tracker to help sellers markdown potential tax deductions on business travels. It can also produce several financial reports such as Profit and Loss Statements, Receipts Captured, and Tax Details and Summaries.
However, one drawback to the Self-Employed version of QuickBooks is how it just isn’t meant for larger businesses. Say that you’re planning to go all-in on your Etsy retail store and you’re starting to plan for expansion. You’re likely to outgrow the service as it does not offer much in the way of more robust features.
This is where QuickBooks Online comes in: A more robust accounting software that fits your growing business needs. This version offers more features that offer users scalability and functionality. Their subscription offers start with the Simple Start package, coming in at a monthly rate of $25. This goes all the way up to $100/month with their Advanced package that’s meant for mid-sized businesses.
Compared to the Self-Employed version we discussed earlier, QuickBooks Online provides much deeper insight into how your business is performing. This does come at the cost of it being a bit harder to use for business owners unfamiliar with accounting. The number of users that can be registered to an account depends on the subscription plan, with the Simple Start package only allowing for 1 user and 2 accountants.
The main dashboard of the software gives an excellent overview of your account, displaying various financial information via easily readable graphs. QuickBooks Online can also automatically track and categorize your transactions, also giving you the option to review them later on. Invoices and automatic sales tax tracking are also available for sellers.
The higher-tier subscription packages offer Inventory Management tools that are an immense help. The software will alert you when there’s a low number of stocks, as well as create purchase orders for various vendors. If you’re planning to extend your storefront to other marketplaces, QuickBooks can sync with multiple platforms all across the web. There is also the option of third-party tools and integrations to customize your QuickBooks experience. Some of these tools are paid, while others are made free on the software’s app store.
One negative to making use of QuickBooks Online is the aforementioned learning curve. Those with some basic knowledge of accounting will find it easier, but others may take some time to get used to it. There are various resources and guides that new users can check out, so that helps to ease some of the initial stress of learning a new system.
Another drawback is how expensive their monthly subscription is to some users. Sellers will most likely have to upgrade to the Plus package as the Simple Start package does not offer any inventory management options. This means that your monthly fee will rise to $80/month which might be a bit too steep of a price hike for an Etsy Seller that’s still on the more casual side of business. Luckily, other options give similar features for a lower cost.
A paid alternative to QuickBooks Online that has its own merits, FreshBooks is a great choice for Etsy Sellers as well. This software offers small business owners accounting features and integrations that keep it competitive against other available options. Their pricing plan is slightly cheaper than QuickBooks, with FreshBooks Lite costing around $15/month. Their most expensive option, FreshBooks Premium, is priced at $50/month and has improved features that help to streamline your business operations.
The main dashboard of FreshBooks has been enhanced as of late, giving users a cleaner interface to work with. After some initial setup, you’ll be able to immediately start adding your clients to the software for easier invoice creation. However, you also have the option to completely skip this step and add them later down the road.
Your businesses’ financial health can be easily analyzed through FreshBooks. This software gives Etsy Sellers information on any outstanding invoices, profit and loss statistics, and spending displays. Lately, there have also been new charts added which display your revenue streams and any unbilled time pending. The software easily connects with any financial accounts such as banks, as well as any payment options that your business makes use of.
FreshBooks allows the creation of estimates and proposals, which can be turned into invoices as soon as both parties confirm. It also comes with various invoice templates to help you get started as quickly as possible. Sales Tax is also configurable immediately from the invoice creation screen, as well as Project Management tools and Expense tracking.
Some negatives to using FreshBooks would be the lack of quarterly tax estimates generated. It also offers no accountant access features for users making use of FreshBooks Lite, necessitating an upgrade to the more expensive plans. Lastly, it also has a limit on the number of users and clients that can be registered unless you get the highest-tier subscription plan.