10.8.24 - E-Commerce Fundamentals

Rachel Dauchy joins us to discuss some Niche Nuances with E-Commerce Clients. Rachel and Dan have created an E-Commerce Fundamentals course and this QB Power Hour unpacks the high level topics of this online course.

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QB Power Hour is a free, biweekly webinar series for accountants, ProAdvisors, CPAs, bookkeepers and QuickBooks consultants presented by Michelle Long, CPA and Dan DeLong who are very passionate about the industry, QuickBooks and apps that integrate with QuickBooks.

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Transcript

Dan DeLong: 0:30

Actually it's not Michelle and Dan today, quite a different Segway going into today's QB power hour, but we appreciate you joining us here today, Michelle is still on her trip of a lifetime in Papua New Guinea. So joining us today, we have some extra special guests but today we'll be talking about e commerce fundamentals and I really had to look up how to spell intricacies of going online because that is a tough word to spell off the top of your head. If you're not familiar with the intricacies of spelling.

Matthew Fulton: 1:02

Do you ever spell something so bad that even spellcheck just doesn't understand you?

Dan DeLong: 1:08

All the time.

Matthew Fulton: 1:09

Yeah. Okay. Thank you,

Dan DeLong: 1:12

That's a good, that's a good poll question. of course, everybody knows who Michelle is. She's she's off gallivanting the world doing her semi retirement today. Coho co-hosting today. My name is Dan DeLong, owner of Danwidth and School Bookkeeping. Worked at Intuit today as well. Workshop Wednesdays oddly enough on Wednesdays and we'll pass it over to Matt joining us today for a guest host

Matthew Fulton: 1:43

Hello everybody. Matthew Fulton here with park web business solutions and qb community live the facebook group Actually just want to use my a couple quick seconds here to do a big shout out and to everybody in florida And the east coast that's you know been affected by all these different storms and the upcoming storms so hope everybody's safe and

Dan DeLong: 2:03

Stay dry this this time. And joining us for another time. You've been on the Power Hour before, Rachel, but let's for those that don't know Tell us a little bit about yourself.

Rachel Dauchy: 2:16

Sure. So I, like you said, also, I'm a co host with you with the workshop Wednesday, which I really enjoy. And I am just one of those folks that really enjoy inventory. So I, that's my background before I came into the QuickBooks world. So I really fell into e commerce and retail, and now I'm doing a lot of manufacturing and inventory setup and that kind of thing. So yeah, I do that.

Dan DeLong: 2:42

We appreciate you joining us and we'll actually unpack a little bit about the spider web of industries that you could actually get involved with with just e commerce in general. You can, you actually came from the inventory space professionally before you became a bookkeeper, right?

Rachel Dauchy: 3:02

Yep. So I've always worked in goods based businesses, consumer packaged goods and operations and accounting. And it's not, it's funny, it's not necessarily one type of industry. It's really the way we do it. Manage the inventory, the connectivity, the automation, is really what kind of we're talking about when we're talking about the e commerce specialty. It's not necessarily just, it can be a service business, it could be digital downloads, it could be all kinds of different things that they're selling.

Dan DeLong: 3:34

Yeah, they definitely, there is no one size fits all when it comes to this type of industry. So a little bit about the QB Power Hour every other Tuesday the first QB power hour of the month, which is this one is eligible for TP and credit. Thanks to our friends over at Makers Hub. Ted is lurking in the background, making sure that we fulfill our duties with poll questions and making sure that those certificates get emailed out post the work, the webinars. We appreciate you joining us for that. You can always go to the qbpowerhour. com slash resources. Website for the PDFs of the slides, the recordings, the podcast, and as well as other resources. A little bit of housekeeping, if you have specific questions about topics that we're talking about today, please put them in the Q& A, it makes it a lot easier to follow up and make sure that we're addressing your questions. As I see the webinar chat is scrolling by They tend to get lost there, so it's really hard to manage that sort of thing, but thank you to Matt joining us today, because he will do I see he's typing already in there, so he's helping out with that.

Rachel Dauchy: 4:41

Yeah, thank goodness for Matt. I always say that. Yes.

Dan DeLong: 4:47

And of course, we're we're simulcast or streaming on the Facebook and social media channels. If you are on the Facebook group and want to participate please use that QR code so that we can see who you are when you when you communicate or engage in the conversation. We do have, of course, the KB Power Hour store to check things out. NRCP credit thanks again to Makers Hub for making that available. You get one hour. You do have to participate, meaning that you have to answer the poll questions. And then we have a survey. Post post webinar. Our agenda today is we'll be talking about, and this all came up about a year ago. Rachel and I started a series of a workshop on the workshop Wednesday over at school bookkeeping about the nuances of e commerce. And and we're going to talk about in real high level, just what we talked and unpacked during the, I don't know, what was it, Rachel? Was it it was like a couple. A couple months of workshop that we really dug in there into the conversations. And

Rachel Dauchy: 5:48

we also like to talk about it a lot too. So it's not that it's so complicated. We just love to chat about it.

Dan DeLong: 5:55

It was it was definitely a, an eye opening discussion on both our parts, but we really want to talk about really high level what we discussed there and we've created we've taken and repurposed those those workshops and turned them into an e commerce fundamental course over at School of Bookkeeping as well. Want to review all that things that, a deeper dive that what we're talking about here today. We'll share those links at the end of the webinar, but really we want to talk about, selling online in general shopping cart versus a marketplace, what the, what that is inventory is going to be specific typically it's a specific nuance of this type of industry and that as we're going to unpack is really the, um, when you're talking to a client, where the inventory source of truth is really going to determine a lot of other answer, a lot of other questions that you might have when you're working with them. So typically they don't come to you and say, here's my business. Help me. Or do they? They

Rachel Dauchy: 6:57

do sometimes.

Matthew Fulton: 6:59

They come to you and say, here's my business, help me. But they don't say, here's all of my business, help me. And oh, by the way, I forgot to mention these two other things I'm going to add on next week when you tell me not to do anything and so forth.

Rachel Dauchy: 7:13

Exactly. It usually comes in the form of a surprise.

Dan DeLong: 7:21

And I'll add PayPal to all my sales channel. And then there's always a sales tax concern when it comes to that. We'll talk about those types of concerns omni channel selling cause typically e commerce or a, a shopping cart as a gateway drug. Hey, they want to they want to sell other places as well. Hey, if I can just do it here, I can do it. I can do it at Walmart or or Amazon or eBay or multiple channels. What's one more, right? It's like when you have a triplet, um, what's one more baby. And then you get a surprise. Yeah. And then shipping and fulfillment will definitely be a concern for e commerce salute e commerce, the e commerce industry. And then we'll unpack some of the tech solutions that, that will help streamline, hopefully these processes, sales connectors, the inventory management system and then QBO desktop synchronization. And then if time permits, we'll have some Q and A. So our first poll question while we're Doing this, let's launch that. It's a two parter, right? One, you need CPE credit for today's webinar, and two, you currently have clients in the e commerce space. So Rachel, what really drove you to this state? What made you get into this type of industry? Why would you do such a thing?

Rachel Dauchy: 8:44

First of all, I was very familiar with inventory and inventory measurement and movements, but I ended up when I first started with QuickBooks online and I've used all other kinds of inventory softwares, my, whole professional career, but I hadn't used QuickBooks online. I had used QuickBooks desktop. And when I first started it, I was so clueless about QuickBooks online that I thought I had to connect everything to automation. I thought that was a requirement. It's just funny how you just assume certain things. I screwed it all up. And so it took me a while to unravel it and figure it all out. So when I did that, I realized, oh, I can really service these e commerce clients. I just taught myself so many different things. And then I realized, oh, this is such a great advantage because even though I wasn't an inventory expert I know much more now, but I thought, wow, I can really use these few things that I know. And. Just pick this niche And then set myself apart from a lot of other people and all you people on the call you might even hear the same thing A lot of bookkeepers and accountants will say I don't touch inventory but if you equip yourself with a few key fundamentals, you can certainly do it and then not, set yourself apart. And now you're in a league of your own, and you don't really have to compete with as many people. So that was really important to me. And that's really how my experience has worked out. So you

Dan DeLong: 10:14

had you had that knowledge, intimate knowledge of inventory management, and then just

Rachel Dauchy: 10:20

Yeah, I did, but I also learned so much more as I went along. Of, okay, it's gotta work like this, I gotta have a COGS entry, okay. Now that I discovered this connector is posting transactions individually, this connector is posting transactions. Batched for the day. How am I going to get my COGS entry? Just figuring out so many different things. How is my COGS reporting going to work in this situation? You just learn so much as you go along, almost inadvertently, that it just works out that way. Yeah, so

Dan DeLong: 10:57

you definitely don't go into this sort of industry expecting to know everything.

Rachel Dauchy: 11:03

No, and you can't because you just don't. A lot of these, what we're going to get into, they, a lot of these tech companies, SaaS, companies that sink into QuickBooks do it differently. That's why they're different companies. They don't all do it exactly the same. And I know Matt and Dan, you guys are so knowledgeable and well connected with so many different companies. And so just the further that you go along is now I have you just learn how everybody does me think it does everything and how these things are connected and how it works. But I will say, I'll just say this because I think we're probably going to get into this. You don't have to be an inventory expert to do this kind of e commerce bookkeeping and accounting. I get very involved in the inventory and help my clients with the movement and housing of their inventory. I personally don't get involved in their shipping and fulfillment. That's something that they have to take care of. I am not involved in that at all. I know other bookkeepers and accountants that do not get involved in where their inventory is housed. And they're just doing the bookkeeping. And they're just, accounting for the cogs and making sure everything is timely. It's really up to you. There's no rules and that's what I've learned along the way is you just find, what you really like and what your inclination is towards this type of thing and you can pick and choose and I now am getting involved in, we'll talk about this a little bit later, but an IMS, which is where you manage this inventory, a cloud based IMS, the way that it used to be done in QuickBooks Desktop, but now we're doing it in a cloud based situation. That's my jam. So I don't, nobody has to do it the way I do it. There's a lot of different ways to get involved in it. Yeah.

Dan DeLong: 12:53

Matthew, what do you, Where's your experience from? Is it more of you found a client that brought all this to your attention or was it more of a specialty for you to

Matthew Fulton: 13:03

found a couple clients over time that kind of brought it to my attention and then always being a button pusher like that likes to try to break things and better understand it. I personally try to stay away from having to track true physical inventory where I can especially within QuickBooks online, because if it's a mess, it's a mess and which there's a question actually from Carolyn, which I'm sure we'll get to that's was asking about having issues trying to upload inventory for weekly batch update of thousands of items in QBO. I know some. Apps that can externally do it, but I'm sure you may know other items that can be done other ways. But prefer to stay away from some quite a bit of the e commerce stuff, but everything's e commerce now.

Dan DeLong: 13:48

Yeah, about four years ago Pretty much everybody needed to at least have that e commerce discussion. Even people that met in person needed to have some way to sell something online that didn't require people to be in person. No, we had we've, we've talked a lot about this. Type of topic in prior to be power hour. So I wanted to make sure that I really had the availability to review those. We did have Veronica Wasik on several years ago. And she is one of those people that Rachel was mentioning that. Doesn't get involved

Rachel Dauchy: 14:26

with, that,

Dan DeLong: 14:27

That's her turn, her engagement is I'll live in the QuickBooks and I'll get you set up, so that it comes into QuickBooks in the way that I wanted to, you do everything else, and then they'll help it helps her corral the cat, heard the cats a little better when you have that, Framing in an expectation setting. So she has a great great workshop or QB power hour there. We did have William English on to talk about his specialty of retail when he was out in the on the other side of the the Intuit badge. Now he's a QB assisted team lead. Funny how things work full circle. We did have WebDuality on to talk about their solution. And then I had a couple of Amazon sellers that I was working with do a panel discussion of what it's like to work with that, that drunk uncle of selling, selling selling on Amazon. So you can always check those check those out there. They hold no punches of their feeling towards towards Amazon. Oh, we don't want to start them. Welcome everybody to another Oh!

Rachel Dauchy: 15:33

Oh boy, okay, see i'm not the only one dan.

Matthew Fulton: 15:37

Oh, wait Actually michelle told us we're allowed to blame everything on her when she's not around remember. That's right. I forgot about that

Dan DeLong: 15:43

So if you're considering specializing in e commerce if we haven't scared you enough these are the things that you're Potentially find yourself specializing in the inventory management selling online Consulting and these are things that you can Go down that rabbit hole and and maybe find yourself a home in like Rachel is finding inventory management and those types of things to be really where she, he finds her passion regarding and all of these other things. Maybe she's working with another. Partner, you know that can handle those things. So it comes in as a a team, you don't have to wear all the hats here

Rachel Dauchy: 16:23

Yeah, there is that situation going on for sure.

Matthew Fulton: 16:26

Is this considered niching the niche or niching the niche?

Dan DeLong: 16:30

Depends on what whether you're north of the canadian border or not, I think that's where the The pronunciation we'll have to ask sean at katana tomorrow when we have him on the workshop What he says But then there's eat online selling consultant, right? Like you could be specializing in setting up Shopify, from start to finish marketplace consulting. All right. And, do you really want to deal with Amazon? You can get into those types of services, the retail aspect of e commerce, right? Do they have a brick and mortar store in addition to selling on then of course, that leads up to the point of sale system. What are they using to track those those sales? And then of course, The 64, 000 question of how that data gets into QuickBooks. And then of course

Rachel Dauchy: 17:18

Yeah, or do, can I even manage inventory in QuickBooks with this situation? Somebody that was, we were just, the chat maybe was saying something about the thousands of SKUs. I would never do that in QuickBooks online, even if I was only managing one channel. So that should I do it here or should I not do it here? There is so much potential for advisory. This is my advisory. I do this all day, every day.

Dan DeLong: 17:47

Yeah. And then those retail channels, they're going to have specialized service offerings that they might need, right? Like the customer rewards, right? Those types of things that they could potentially be needing. All of those things could be. Be part of your technological advisory services, if that's what you want to specialize in, and then sales tax is going to be a huge concern for somebody selling online, especially if they don't realize that they've crossed the economic nexus in a certain state those things are going to necessarily be, uh, that, that kind of someone looking out for them, I think is, that's probably the best place.

Matthew Fulton: 18:29

So this is one of the areas, yeah. That I'm really interested to learn a little bit more about today as well. And when I think of e commerce and a lot of people I'm helping. Even just having communities and online and selling subscriptions of that nature It's e commerce because as you're going to talk about payment gateways versus sales channels And you're when you reach nexus in these different places so i'm excited to hear a little bit more about some of that stuff as we're all building out these new communities for each other

Dan DeLong: 19:00

Yeah, and then, of course, shipping and fulfillment. So all of these could be, you could be a generalist in just this area, just one of these areas or a, I'm sorry, generalist in all of these areas or a specialist in just one of these areas. Lots of areas of places to, to focus on. Lots of rabbit holes to find yourself jumping down in this particular area, right? Let's first talk, talk about where you sell things, right? Selling online you're gonna have some options and and Rachel, we had unpacked this whole idea of a marketplace versus an online shopping cart.

Rachel Dauchy: 19:37

This is something we address heavily in the course in School of Bookkeeping.

Dan DeLong: 19:43

Yeah. So talk a little bit about what a marketplace is versus versus an online shopping cart, because simple thing is, Hey, I want to sell stuff online, but the question is where and how, and the. Depending on where you do those things will determine a lot of other workflows, right?

Rachel Dauchy: 20:03

Yeah, so one thing that we talked about before is asking questions of a new potential client or even somebody that you already have as a client and maybe they're looking to get into this. Or maybe you have them as a client and it's, Surprise! I do this too! And that happens as well. There's always some core questions you always want to ask. And if they're selling stuff, where are they selling that stuff? Or where do they want to sell that stuff? Some people sell that stuff in one retail store, where I'm just taking on like a pack and ship store. And I'd consider that e commerce, because they're selling a whole bunch of stuff in their store, and we're collecting those Those that revenue through a POS system. So anyway, that and that we can talk about a more later, but basically it's where am I selling this stuff? If I'm selling it online or in a store, am I selling it on a marketplace and a by marketplace? I mean something like Amazon and dad had a really good analogy to this before. It's basically like a swap meet. It's not your swap meet. It's a place that you go to and there's a whole bunch of other vendors. So you're one of many, right? So you're going to a place where you know there's going to be a lot of buyers. That's a marketplace. So Amazon's a marketplace. Etsy's a marketplace. Walmart has a marketplace. Walmart retail is not a marketplace. But Walmart marketplaces. And then there's a whole bunch of other e com marketplaces out there. And the main commonality that they all have is that they're what is called a marketplace facilitator. Meaning, they collect the sales tax from your buyer, they then remit that sales tax to the state, and they also file the return. That is an advantage of going with somebody like Amazon or eBay or another kind of marketplace. You still have to record the sales tax coming in the sales tax going out, but you are not accruing a sales tax liability. That is the most important thing. That's enticing to people because they don't want to deal with sales tax. And I get it. Sales tax sucks. So they'll often be willing to pay the high fees of something like a marketplace. The other option would be a, what'd you call it? Like your own, whatever. Yard

Dan DeLong: 22:46

sale. Yeah,

Rachel Dauchy: 22:49

so your own website would be something like Shopify or WooCommerce or something like that where it's your own business like joeshardwarestore. com. It's your own domain and you are responsible for the traffic of getting people to your website. You also have to collect the sales tax and then you have to remit the sales tax. And because it's online, if you're in an online store, people could be buying from anywhere. And so that collects what we call economic nexus. That's all I'm going to say about that. We have a course on that in the workshop, but in school bookkeeping. But the other piece of that would be if you have your own retail store, your own salon or your own, whatever. where you're collecting your own payments and then you're obligated to pay your own sales tax. I lump that under e commerce because I'm usually taking some kind of electronic POS payouts. And so again, and Matt, you probably know all about this. This is something that is also needs to be synced to QuickBooks Online. To post the revenue, because I'll ask you guys one question. We talk about this all the time in this course. Do we post payouts to revenue? No, never ever. So in quick, now here's the beauty with QuickBooks online. This is all sinking into QuickBooks online. You bookkeepers out there. What posts revenue? A sales receipt, an invoice, or a journal entry. So that's how the revenue comes in. The payouts can sometimes come in two days, three days, two weeks later. It really depends. So that all these are things to know about but the main question is find out from your potential client or your client where they are selling and again you can be a expert get some information on the fees involved in either and position yourself to be an expert and hey you might want to consider something like amazon yeah the fees are high but look at the the advertising potential you can get from that. Or don't do that. Maybe go the Shopify route. Maybe you're a Google SEO specialist and you have some insight into that and can help your client, navigate that world. And I don't know anything about that. So that's where I would reach out to somebody like Matt, who's an SEO expert.

Matthew Fulton: 25:34

Probably Dan It's better. But can I try to summarize to make sure I heard?

Rachel Dauchy: 25:39

Yeah

Matthew Fulton: 25:39

a big difference between it being it's like a marketplace What you're telling us is it's important for us to talk to the client to number one understand where they are selling everything and then to You also need to know how you get paid for everything you sold.

Rachel Dauchy: 25:56

Yes,

Matthew Fulton: 25:57

because depending on how you get paid if it's going through a sales channel where you're selecting it through Authorized. net or any of these other different ones that are paypal which Dan and I were joking paypal is the only six letter four letter word out there. Yeah

Rachel Dauchy: 26:15

There's a million and one different ways to collect that money You

Matthew Fulton: 26:20

Yep. And so when you have that control, that's talking about the shopping cart. And then the shopping cart has to have a really good understanding of sales tax, pinpoint rooftop type stuff that to save your rear down the future.

Rachel Dauchy: 26:33

Yeah. And then there's also, and I, maybe we'll get into this a little bit later, but there's all kinds of automated sales tax apps. That I'm looking a lot into numeral right now that will track that nexus. And so it'll determine, that's a whole separate webinar that we could do about what achieves nexus. But there's a lot of resources online about that. That's something that's really important to know. But it, software can do it for you.

Dan DeLong: 27:01

And the big thing is there's pros and cons to either, either route, right? So you're in, in, in what you had mentioned about the marketplace is you're going to have sales tax calculated by them. They're going to be handling the customer service and of most of these sale and then on the. Individual online shopping cart, Shopify being, an example of one, all of the end to end, you're going to own that, right? So another analogy I would say is if you're a farmer, you can set up a farm, stand on the side of the road and you have control of everything. From customers coming in, how those things are fulfilled and everything. Or you take all your goods over to a farmer's market.

Rachel Dauchy: 27:43

Yeah. And

Dan DeLong: 27:44

that will have, foot traffic already built in because people know that there's a farmer's market Yeah. And such a dick larger

Rachel Dauchy: 27:50

audience. Yeah. And by the way, Shopify, and I'm a Shopify partner. Shopify by far in my opinion, is the best they actually have. I don't know most of the market share, not most, a significant number, I used to know it off the top of my head, of all online sales. And I think last year they were responsible for 65 billion worth of online sales. They're by the way, Shopify payments is a payment method powered by Stripe. It has the most powerful shopping cart. Most integrated, most integrate ability. Is that a word? Yeah. Integratable of all the people in the QuickBooks ecosphere that are building apps to get data into QuickBooks. Shopify is by far the best.

Dan DeLong: 28:40

But you can certainly find yourself into those rabbit holes of what apps and add ons

Rachel Dauchy: 28:45

in

Dan DeLong: 28:46

the Shopify space. But the next biggest thing, and this is probably the biggest key factor to determine when you're taking on an e commerce client, is inventory management.

Rachel Dauchy: 28:58

Yeah,

Dan DeLong: 28:58

determining where that source of truth is it going to be in the online sales channel? Is it going to be in QuickBooks or is there something that's necessary in between the online sales channel and QuickBooks to manage that inventory? Because that's going to really dictate the workflow, the purchasing, receiving sales tax And your sales tax I'm sorry, your technology solutions Rachel, what are you what are your thoughts about that?

Rachel Dauchy: 29:22

Yeah. So as, so the first important question, like I said, was determining where are they selling? The next important thing to determine is. Where is my inventory going to live? But before you ask that question, you have to know, and this is where a lot of people are very confused and clients are very confused. And it's this, are they drop shipping or are they carrying an inventory? Meaning are they buying goods that they're either storing in their garage, in a warehouse, In a fleet of warehouses and are they shipping out their own stuff? That is extremely important because a lot of people come to me as dropshippers, they don't understand that they're even dropshipping. And what that means is, they're not holding an inventory, they are Facilitating, they're getting the inventory that's over here with some other provider and they're making the sale and that provider is shipping it. So they're not actually buying the inventory, recording the sale and putting it to inventory and then recording a cost of goods sold entry at the point of sale. That's not happening. So if they're drop shipping, they're not holding any kind of inventory and it's actually quite simple. And we talk about that in the school of bookkeeping. If they are buying goods for either resale or. Sorry, if they're buying goods for resale, then they're holding an inventory. Then it shoots off into, am I holding the inventory on the balance sheet? Or am I actually just hitting cost of goods sold right away with this inventory? That hitting the cost of goods sold right away with the inventory, isn't my preferred way to do it. It's the easy way, and it's not, it could cause them to be upside down on their P& L. We'll talk about that another time, but that is the most important question to know. Aside from, am I dropshipping? Am I not dropshipping? That requires some really listening to them to understand. But if they are fulfilling their own stuff, then we have to determine, Can I manage that in QuickBooks? The most important thing out of this whole other question besides what are they selling? And this is crucial. If they are buying raw materials, assembling those raw materials into a finished good, and selling it, automatically no QuickBooks Online. They cannot do it. Now, if they're buying stuff, putting it in their garage, warehouse, or any other fulfillment house, and it's just reselling it, they can do it in QuickBooks Online. And let's say, for example, and I'm going to keep it really simple. Let's say, They're a wholesaler and they're, so no sales tax. So they're buying goods, let's say from China, finished goods. They're putting it in a warehouse and then they are selling to a wholesaler, sending them an invoice. Let's say not even doing an, any kind of e commerce thing. They're just wholesaling. They can then manage those items in QuickBooks online. 100 percent I would even say if they've got thousands of SKUs, they can do it in QuickBooks online. Because they're setting that inventory up to when the purchasing is made goes into inventory and then when they sell it with an invoice, it decreases the inventory and hits cost of goods sold. So that's an example of can I do it in QuickBooks or can I not do it in QuickBooks? So Dan, you have a whole bunch of other of why can't I do it in QuickBooks. So why don't you give an example of that?

Dan DeLong: 33:26

Yeah. So we so yeah, so we've we've unpacked this and this is one of those rabbit holes that we ended up going down in managing the inventory. So we've created a separate course for managing inventory. Can you do it in QuickBooks online? I I wrote a blog on the firm of the future of what you can do, but really those three things what you mentioned there is if they're reselling, I buy stuff and I sell that same stuff. I've got maybe some periodic inventory that I want to keep track of but I don't do anything fancy, right? So I don't. I don't need to track like I have a a client who's a distributor of alcohol and the tax even Napa Valley, so it's wine and tequila. I don't know why they go from one end of the spectrum to the other, but Carol, California, he buys in a, Base unit of measure of a bottle, but he's got to tell the state how many gallons he has at a certain, at the end of the year, because the fact man wants to know how many gallons that is. So we have to convert that to to a volume discount, so to speak to do that, and that's not something you're going to get out of QuickBooks online. You're going to need some kind of third party application in order to get those same reports.

Rachel Dauchy: 34:43

Yeah, so and then so let me just give like a really quick little example because somebody just asked inventory can be tracked in QuickBooks Enterprise. It's not really an issue of can I track it or can I not track it? It's a matter of the complexity that can be involved. So so again, like this poll question that Dan's asking, do you recommend tracking inventory in QuickBooks? Yes. Certain situations, yes, and I'll give you a perfect example of a client of mine that we do track it with a periodic inventory, okay? This is a retail store. They sell very expensive musical instruments and a very low volume of it, okay? This is a very ideal situation for a periodic inventory. In the store, they collect their payments through Stripe, right? The invoices come in, but with those invoices, we don't have a COGS entry. All it's doing is just collecting revenue, right? Revenue payment. That's it. At six month mark, we count the inventory, and at that point, decrease inventory, increase COGS. That's it, end of story. But we can track the ins and outs with of the sales with QuickBooks Online, which is really nice, but that inventory just stays put, right? So now a perpetual inventory, the same thing, let's just say like I have the other client with that we're going to onboard with the, box store, right? The where they're selling, I don't know, tape and boxes and staplers and mailers and stuff. Those can all go into QuickBooks Online as inventory items, if you're using Plus or Advanced. And we can, when we make those purchases, increase the value or increase the quantities of those, use that reporting in QuickBooks Online. It's only one channel. It's just one store. And then they're, they're invoicing from QuickBooks Online, the inventory goes down, hits cost of goods sold right away. The reason that we would need an external hub for inventory is because we would need a complexity of something like we do in QuickBooks Enterprise, where we're multi channel or, all kinds of different complexity. And now the advantage of that versus doing it in QuickBooks Enterprise, it's cloud based, and I can sink in all kinds of other stuff, and I can use reporting tools, and my client can be cloud based, and I can be cloud based, and that's where somebody like Matt can jump on this because he's an expert on all this cloud software and you don't have to remote into your client's desktop enterprise computer, which is not for me. That slows down my business. I can't really scale like if I'm using one provider like sin seven, like I can scale a lot better because I have everybody Feeding the data into qbo and i'm using something like since 7 where everybody goes on it. I use katana, too But for me as a firm owner, I don't have to spend all this time going into somebody's desktop computer So just wanted to address that really quick.

Matthew Fulton: 38:05

Are you familiar with fishbowl?

Rachel Dauchy: 38:07

Yeah, I do but fishbowl is also a desktop software that you would have to remote into They do have a cloud based solution right now, but it can't really do much, and it also can't be multi channel. The last time I talked to them, They told me that, but that might have changed by now. I can't be on a cloud based IMS that can only manage one channel. Something like SYN7 to me is perfect. You can dropship. You can also do holding an inventory. Something like Katana, you cannot drop ship. So it's a total workaround. There's just different advantages to other, to, to different cloud based

Matthew Fulton: 38:44

IMSs. Part of the reason I was asking just real quick was Kate had asked in the questions about specific about Fishbowl and fulfillment. Can COGS all be managed in Fishbowl? Yes, it can. Yeah. And so

Rachel Dauchy: 38:57

The advantage of using an IMS. Is that the invoicing can go, is going from that platform and it just syncs all to QBO. And hey, guess what? If you don't want it to sync that way, you can bypass it with a connector like Cinder or Bookkeep or PayTracker or whatever. And then you can pull your COGS monthly from the IMS, post them to QuickBooks. And actually I'm training a client to do that later today. I'm working in Katana with them. And we actually bypass we post the revenue with Cinder. But because we don't want to be beholden to updating the cogs in Shopify all the time, we want them from the IMS. We're going to pull them from that and post them manually to QuickBooks Online. There's all kinds of different ways you can be creative and do it. And it really is based on their needs.

Dan DeLong: 39:51

Absolutely. So yeah, we can definitely probably spend the entire work power hour talking about your favorite topic. Yeah, for sure. And like

Rachel Dauchy: 40:01

somebody is saying, yes, you can do it in QuickBooks Enterprise, but I jumped onto QBO five years ago from, complex situations like SAP. I like the cloud Setup and so for me, all I do is get notifications all day long about how quick enterprise is No, no longer supported or I don't know what, but or maybe it's the pro and premier that are no longer being sold. And I don't know how long enterprise is going to be supported. If they're going to be doing updates, I don't know. And my business, I'm building it to, to scale and also to be a longterm business. I don't want to. I don't want to get myself involved in something that may be going away.

Dan DeLong: 40:47

Yeah, you just end up finding yourself a new solution in, or having this conversation, a little bit down the road.

Rachel Dauchy: 40:54

Yeah.

Dan DeLong: 40:54

I'm reminded of several political policies that do the same thing, where they just, oh, we'll just, Increase the debt ceiling.

Rachel Dauchy: 41:01

Yeah.

Dan DeLong: 41:02

Speaking of government policies, we've got sales tax considerations, which we had a really nice series with Avalara. They are probably the gold standard of of sales tax collecting remittance services. There are others that are out there but we're really unpack more things, that really involve. With sales tax, what do I sell? What kind of products do I actually sell? Is it services? Is it hard goods? Where do I sell it? Which un unlocks this. Specific topic of nexus and is really concerning or a concern for a for an e commerce seller selling across the lines of whether it's a physical nexus or an economic nexus who do I sell it to, right? Maybe they're wholesalers and they have a resell sales tax. Um, or a reseller certificate. That's the word I was looking for where they don't get charged sales tax. And then there's this other option of when do I sell it? Maybe it's during a sales tax holiday or something like that. So all of those things fall into this. Then diagram of, is it collecting sales tax? And then it's the amount of what do I have to collect? Is it a luxury item or food and beverage? The category of the item, all those go into that. In the essence of time, there's links there for the, for those workshops. You can get free access to these workshops and all the other workshops that we do at School of Bookkeeping. Those links are there in the slides. Shipping and fulfillment is another Workflow concern do they do that themselves or we talk about this idea of a 3PL with Unpack that for us Rachel.

Rachel Dauchy: 42:41

That means a third party logistics. So that's basically is somebody else housing and fulfilling their inventory for them and Oftentimes they'll arrange their shipping for them as well. And

Dan DeLong: 42:55

You mentioned dropshipping before.

Rachel Dauchy: 42:57

Yeah. Would

Dan DeLong: 42:57

a 3PL be considered a dropshipper if they are doing the selling?

Rachel Dauchy: 43:02

That's a really good question. I don't know if that's technically considered dropshipping because I think That is still, if it lives in the 3PL, it's still technically your inventory. No, I would say no. If it's on somebody else's balance sheet, that's technically dropshipping. I'm just grabbing that sale and then I'm accounting for the cost of goods sold at that time. That's usually how dropshippers do it. It's not any kind of periodic or perpetual inventory. But yeah, so a 3PL is basically when you get large enough, you want to house and ship your inventory. I used to work for a bottling facility and we used to have 3PLs in California, Texas and New York because obviously that cuts down on the shipping across the country. And so the order, depending on the ship address gets routed to whatever 3PL and then it ships from there. Now there's all kinds of integrated software that you, cloud based software that you can use for that like ShipStation. And that can be integrated into your IMS. So it knows where, when exactly it shipped. So that is actually accounting for the sale date. And so there's no confusion about that. So it's um, I'm really a big fan of, like I said before, cloud based everything, everything's set up on automation. So that way it's running in real time, very smoothly. And yeah, it takes a bit of time to really understand all these different moving pieces, but the accounting behind it is not that difficult. And if you really, just understand this basic okay, I'm buying goods and I'm putting them into inventory and I'm really only going to account for the cost. When the item is sold, then your sale posting is also going to have a COGS entry. And by the way, if you're tracking inventory in QuickBooks Online, that QuickBooks invoice also has a COGS entry when you have inventory turned on. If you are managing inventory in QuickBooks and anybody on this call, you're And you are doing it and it's working great and they have a simple enough situation. Look at one of those invoices, look at the transaction journal and you'll see that COGS entry that's posting along with it. It's really cool to understand the movements that are happening and you're recognizing that cost of goods sold on a true accrual basis, which is going to give you that P and L on an accrual basis, but you really need to track your cogs in the period that the item was sold. Because if you're buying all your inventory up front. In the beginning of one year, and then let's say you're slow all year, and then you sell everything the following year you want to make sure that you're recognizing the cost of goods sold in the time that it's sold, and that's really important for business intelligence. If you're just, hitting cogs right away with all your purchases. It's the quick and dirty easy way to do it, but I know people that have done it that way. Again, it just really depends on what they're selling and maybe is the stuff low cost and they just expense it right away and it's not really that big of a deal. It really just, like Dan and I always say, it just really depends. It just, Take a look at what they're selling, look it up online, do some research, look at, there's all kinds of inventory accounting resources out there. What you know I was just trying to think of that one like accounting Whatever 101 thing to look up and look like what does cogs mean? Just all these different things and you can get some information on that

Dan DeLong: 47:03

And just to touch loop back to shipping there is an option in quickbooks to be able to print your own shipping labels in inside of quickbooks online, but If you're not managing the sale in quickbooks online You're not going to be able to do that. So that's again, talking about the The priority of where is your inventory going to be living? And that's where you're going to be doing all of the other workflows. That's

Rachel Dauchy: 47:30

yeah and that's really important to know because I and i've talked to a lot of different providers about this And when my situation I use quickbooks to collect the data not necessarily do the stuff. I do the stuff You outside of QuickBooks, I then bring the data into QuickBooks. So I have a consolidated financial statement, right? So for people that are used to doing all the stuff in QuickBooks online, it might feel a little weird, that's what I'm saying is you can bring that sale into QuickBooks, have your sale, and then create a shipping label. It's really At this point, I pick and choose what do I want to do in QBO and or do I want to do anything in QBO? Do I just want to leave it as a bucket and just dump all the data in it? It's just, there's a lot of flexibility now of how do I want to do this? And it's really cool because you're not just, you don't have to do it a certain way, which is the way I thought when I first came into it, I thought I had to do it this way. The cloud gods were up there saying, you have to do it this way. Otherwise you're going to be penalized. And as long as you're following, the What, accounting rules, whatever, there's all kinds of different solutions that you can stumble onto and perfect. It's really neat.

Dan DeLong: 48:58

So we want to make sure that we cover, at least gloss over the rest of the topics here. So multi channel filling, this is like an omni channel where you're selling online a multiple outlet, where you've got this hybrid of selling in Shopify and Amazon, it's exponentially more complex as the image here here's the father, the expectant's father, he was expecting one baby, oh, now there's three at at the same time various payment methods across all of those sales channels, multi currency if they're selling in internationally, and then there's that four letter word of, PayPal. And then all of that boils down to how do I get my sales data into QuickBooks? We have these a variety of sales connectors that we call them or bridges. We're not quite sure exactly what the terminology of it all is. But we had we integrate on, we talk about. Comparison of Webgility versus Vendor and then there's Bookkeep and A2X that do summarize transactions. All of those things are unpacked in, in that as well. And then, Oh, there's this other thing. QuickBooks has its own connection. What about that, right? There's one thing that, you seamlessly connect your sales channels, there's there's a few yeah, buts. You can't use inventory when you're using these sales channel connectors in the commerce section of QuickBooks online. You've got a limited. Amount of sales channels to choose from and those sales post on payout. So if you,

Rachel Dauchy: 50:36

I think they created that just so they can say that they have it. I don't use those. Natia, have

Dan DeLong: 50:41

you have you gone down this rabbit hole inside of QuickBooks Online? No,

Matthew Fulton: 50:46

my I would not, no, it's not worth doing that. It's getting on into a dark tunnel with the sound of a train coming and the train doesn't have a light on because you already know that you're going to get hit by something. Pay at the thing I want to add on is paypal. There should be no commingling of paypal ever if you're going to use paypal like

Rachel Dauchy: 51:05

Such a good point,

Matthew Fulton: 51:05

right? if you really have to do it set up different paypal accounts for other personal stuff, but

Dan DeLong: 51:14

So we we talk about the there's one size fits all Doesn't fit all like for all of your sales connector needs, right? Maybe you have a client who's only in Shopify and they want that detail inside of QuickBooks reintegrate is actually a really good solution for them. Their price point is significantly less than something like a Cinder or WebGility if they're only using Shopify if you're not needing the sales detail, Bookkeep is a fantastic place to Sales connector to bring in those and split the sale versus the payout and reconcile those two So we talk about the pros and cons of each one

Matthew Fulton: 51:51

one thing i'm

Dan DeLong: 51:51

working

Matthew Fulton: 51:52

Go ahead one thing on this real quickly when you're able to use a software that's going to do either sales receiver or an invoice You can actually take advantage of bundles and you can bundle things in and get more metrics from reporting as a sneaky way. And you can't do that when journal entries are being used. Just food for thought.

Rachel Dauchy: 52:13

Yeah. And just to also say, Cinder does either journal entries or sales transactions. And with the sales transactions, you can do either sales receipt or invoice.

Dan DeLong: 52:27

We'll launch the last poll question as we're talking through the last last thing here. Obviously, this is just touching on the surface of some of these topics and it, and they do get into the weeds really quickly as we've as we've been able to unpack just in, in this hour. So we've unpacked those, expanded them, made them easier to consume. We tried to take each topic. And turn it into at most five minutes, a five minute discussion. You can go into these courses and these lessons, ask questions in the comments. We'll answer them. There is a community in, in there outside of the social media spectrum where you can ask more specific questions as well. And then there's options of mentorship. Hey I want to. Go right in, I've got this client and I need to, I need some help sorting through some of these things. We've got that there as well. And you'll also have access to that managing inventory course as well. We have a 30 day free trial needs a promo code, a work, you'd be power, our users, all that great stuff there. Yeah. And I'm a member of that

Rachel Dauchy: 53:34

school of bookkeeping community too. And I've gotten more involved in the community and answering questions and stuff. So it's really cool.

Dan DeLong: 53:42

All right, so we did launch the poll question there and it looks like a lot of people got some good information here. I did want to answer one question live and I flagged it. Where did it go? The question was

Matthew Fulton: 53:54

by Wayne, who said, My client primarily sells via website, but he has added marketplaces like Amazon. Shopify has a process to manage the marketplace within Shopify. So is it good to let Shopify manage this, or is there an app that should be in the middle instead?

Dan DeLong: 54:09

Yeah. That's that's a it's depends answer, right? Because bringing that into into shop in those Amazon sales into Shopify. The question is what's going to happen with the payout regarding his Amazon sales? Because as we. As you understand with Amazon, the payout is significantly delayed when it comes to that, that particular marketplace. And of course they throw out all the fees. The storage fees, the I looked at this transaction fee. I I made this be so complicated. You don't argue when you contact Amazon seller central. All of those fees are thrown in there and those come two weeks later. And Oh, and then you also have refunds and returns and all of those things. That is probably not going to be as detail oriented by bringing that sale into Shopify. And then trying to reconcile that sale to the payout is going to be significantly harder by just bringing the sale into the Shopify Ecosystem and then bringing that into into QuickBooks. That's going to be a complicated answer. You probably want to keep those things separate and keep those things and clearing with a separate clearing account. I

Rachel Dauchy: 55:27

know Amazon has the ability to do that now, bring it into Shopify. So then you can manage your inventory within Shopify using something like Stocky. I would use an IMS over that.

Dan DeLong: 55:38

Especially when you have that additional complication of multiple sales channels. Keeping those separate and maybe in something else. And other people were using, Fishbowl as a route to do that. Keeping those outside of that. So we appreciate you all joining us here today. We did talk a lot about some of the specific nuances of E commerce Rachel, appreciate you joining us today. You're a wealth of knowledge in this area and Matthew I appreciate you and your insights as well. Any closing thoughts Matthew on what we talked about today?

Matthew Fulton: 56:12

No, I have, it's fun being up here and still actually being in listening and learning mode. It's why I still attend these myself all the time. There's so much that I can learn. And I learned about Dan's uncle.

Dan DeLong: 56:24

Yeah, that's the uncle that always shows up at the holiday dinner. You're not quite sure what's going to happen with Amazon, it's probably, you're not probably going to like it. All right. So we will see you all next time on the QB power hour. And if you're so inclined to join us tomorrow on the workshop Wednesday, we'll talk more with Rachel. Then with, we're actually comparing QuickBooks enterprise, the desktop enterprise to a cloud based solution of Katana. So join us tomorrow.

Rachel Dauchy: 56:52

So much more things now that they used to have.

Matthew Fulton: 56:56

And

Dan DeLong: 56:57

thank you to

Matthew Fulton: 56:57

Makers Hub also, right?

Dan DeLong: 56:59

Yes, absolutely. And we'll see you next time on the QB Power. Everybody have a great day.