Net sales include your gross sales revenue, shipping income, discounts & promotions, and refunds & returns for each of your various income sources and sales channels. Here is a quick overview on how we track your sales:

Integrated ecommerce sales channels

Finaloop integrates directly with many sales apps and payment processors like Shopify, Amazon, Walmart, eBay, Etsy, Shop Pay, Paypal, etc. We sync the data on an order by order basis in real-time and map it to your P&L accounts using a 3-way reconciliation process: Sales channels→ payment processor→payout in your bank account.

Non-integrated ecommerce sales channels

We support many brands that also sell through non-integrated sales channels, such as Big Commerce, or Woocommerce. If you sell through non-integrated sales channels and payments come from non-integrated payment processors, we record your sales on a net basis directly from your bank account, without the breakdown between sales, discounts, refunds, and fees.

If you sell through a non-integrated sales channel but receive payments from an integrated payment processor, like Stripe, Afterpay, or Paypal for example, we record your sales, refunds, and processing fees based on the data from your payment processor.

Wholesale/ Retail / B2B sales

We sync wholesale invoices directly from Shopify, Paypal, or Stripe or you can create invoices directly in Finaloop for your wholesale sales. For other wholesale channels, we’ll record the sales on a net basis directly from your bank accounts.

Note: In many cases, if you sell through a non-integrated ecommerce or wholesale channel but have it connected to Shopify (for example, Faire), we can sync the data through Shopify instead of recording it on a net basis. In this case, please contact support for further information.

COGS are arguably the most important cost you will incur in your business. Keeping a constant eye on the margins are the best way to keep track of your profitability and financial health.

In the Finaloop P&L, your COGS are broken down by multiple sub-categories to reflect your key variable costs that increase every time you sell a product.

The way these numbers are calculated will differ depending on whether you record your COGS using a purchase based COGS method, sales based COGS method, or using InventoryIQ, our native inventory management module. To learn more, check out this article on choosing your COGS tracking method.

Your Net Sales less your Cost of Goods Sold will help you track your gross profit, or gross margin.

After reviewing thousands of consumer brands’ P&Ls, we built a super ecommerce-focused breakdown of operating expenses to provide you with granular details and insights to make better decisions without overwhelming you with unnecessary breakdowns that become inefficient to maintain.

Generally, the operating expenses in the P&L are broken down into the following main subcategories:

G&A can be broken down into hundreds of different accounts, depending on the needs of your business. Within each account, you can drill down further to actually track this expense per vendor. This is an extremely useful tool to track your expenses, for example your subscription fees each month, to determine where you can cut the fat.

Some commonly used examples of G&A accounts include Car & Truck, Contractors, Charitable contributions, Disputes, Financial services, Gifts, Insurance, Legal services, Meals, Office supplies, Product samples, Rent & lease, Service fees, Software & subscriptions, Travel, Utilities, and Warehouse.

The payroll category in your P&L is mainly broken down into Salaries & Wages, Employer taxes, Officer compensation, Employee benefits, Guaranteed payments, and Pension, retirement & profit sharing plans.

For companies using Gusto for payroll, we sync the data directly in real-time and automatically break down the payroll expense into the accurate subcategories. We can also sync your employee data by department. For companies using other payroll providers, we’ll ask you for the specific details we need to map your salary expenses to the correct categories.

Your advertising & marketing expenses are split between 2 very important subcategories: Variable advertising & marketing and Fixed marketing.

Tracking variable expenses separately is key to really understanding your contribution margin.

Your variable accounts include, Affiliate marketing, Email marketing, Influencers, Paid online ads, Offline advertising, Social media marketing, Text & SMS marketing, and Direct mail marketing, with each one further broken down by vendor.

The fixed marketing subcategory includes all other marketing expenses (with over 30 potential breakdowns), such as Marketing agencies, Trade shows & events, Content marketing, Marketing software & subscriptions, Branding, Public relations, Web design & development, etc.

R&D in your P&L includes Product design, R&D contractors, and Product development.

5. Depreciation

Our team calculates your depreciation and amortization expense related to any fixed assets or intangibles that you own and categories them automatically to ensure your financials are tax-ready.

After your operating profit, you’ll see a breakdown of your interest & financing income and expenses.

Your income includes Interest income.

Your expenses can include interest & financing expenses, bank charges & fees, and foreign exchange gain or loss. Each of these accounts will be automatically calculated by Finaloop to ensure they are 100% accurate and compliant with tax rules.

Your other income includes non-operating income earned by your business, including:

Your other expenses include non-operating expense incurred by your business, including:

In addition, you’ll see any uncategorized transactions from your Transactions screen as a separate category in Other income or Other expenses until the missing input is added.

See our article on categorizing and reviewing transactions.

The last section of your P&L includes your Federal taxes, Franchise taxes, State & local taxes, and foreign taxes. Your sales tax won’t be included here since they are typically collected from customers and not an actual expense of the business. Instead, you can see the details of your sales tax account in your Balance Sheet.

Your bank account section includes all bank accounts and digital banks used for the business. Examples of digital banks include Paypal, Payoneer, and BlueVine.

A note about Paypal: Paypal can function as a payment service provider (PSP) for your online store and can also act as a bank. Cash is often transferred from your bank account or credit card to Paypal or from Paypal to your bank account. We automatically match these transfers for you so you can be sure your transactions are not double-counted.

Your bank balances will either be synced automatically for any integrated banks, or we’ll ask for a CSV file with your transactions for any non-integrated banks (less common).

You may also see a Money in transit account in your banks. Money in transit includes transfer of cash from your stores, payment processors, or banks that haven’t yet reached the intended destination.

Undeposited funds are funds you already earned from sales but haven't yet been deposited into your account from your payment processor or PSP. Tracking this amount is important for understanding your expected cash flow and for making sure your income is correct for tax purposes.

Finaloop integrates with your various apps and PSPs and syncs this data real-time.

Your Accounts receivable account in your Balance Sheet can include various subaccounts, including:

Inventory is broken down by Inventory, Inventory-in-process, and Inventory-in-transit. The way these accounts are calculated is different depending on the method of COGS tracking you choose. See COGS in the section on P&L above.

Loans receivable are split into two categories: loans to related parties (like owners or employees) and loans from unrelated parties.

For related parties, you'll see further details, including traditional loans, accrued interest, and any "due to/due from" balances. This balance reflects any personal expenses covered by the business for an owner/ employee less than any business expenses paid by an owner or stakeholder that haven’t been reimbursed yet.

It's crucial to track these separately for both accurate business insights and tax purposes. For both loans receivable and loans payable, Finaloop’s expert loan team will calculate the interest income or interest expense based on the specific terms of the loan.

As our reconciliation processes run in the background, we may identify online sales or refunds with no matching payments or we may identify payments with no corresponding sales. Typically, this is just due to a timing difference and zeroes itself out.

Just in case, our team reviews and reconciles this account on an ongoing basis to ensure you have complete confidence in your numbers.

Prepaid expenses represent payments made for products or services that your business will receive in the future. These might include things like rent, insurance, or subscriptions paid in advance.

Essentially, prepaid expenses are assets because they provide value to your business over time. Tracking them separately helps you accurately reflect your business’s financial position and ensures that your expenses are recorded in the correct periods.

Other Current Assets include various assets that don't fit into more specific categories like cash or receivables.

Fixed assets and intangible assets are long-term assets used in your business with a useful life of more than 1 year. If you own these types of assets, make sure you are depreciating or amortizing them correctly to avoid issues from the IRS.

Fun fact: If you purchase a fixed asset for $2,500 or less, you can take the full expense this year rather than treating it as an asset and depreciating it over a few years.

This account shows you your long-term physical assets like property, cars, equipment, or machinery. It will also show you a corresponding negative account for any accumulated depreciation. These are essential for the ongoing operations of your business.

Net Intangible Assets cover non-physical assets like trademarks, patents, or goodwill, minus any amortization. Though intangible, these assets can add significant value to your business. Tracking both accurately ensures a clear understanding of your company’s long-term investments and financial health.

Investments include assets like stocks, bonds, or other financial instruments that your business holds to generate future income or capital gains. These investments are usually not part of your day-to-day operations but are crucial for long-term financial growth.

Security Deposits are funds paid in advance to secure a lease, contract, or service. These are typically refundable and should be tracked separately to ensure they are accurately accounted for when returned or applied.

In this account, you’ll see a breakdown of any loan due in more than 1 year.

Your credit card section includes all cards used for the business. When a credit card payment is made from one of the connected bank accounts, we will automatically match these transfers for you so you can be sure your transactions are not double-counted.

Your credit card balances will either be synced automatically for any integrated cards, or we’ll ask for a CSV file with your transactions for any non-integrated cards (less common).

Your accounts payable account will be broken down between operational vendors and inventory vendors. In addition, if you use InventoryIQ, your inventory vendors will be further broken down into Inventory vendors - Bills and Inventory vendors - rolling PO balance.

To learn more, check out InventoryIQ: Everything you need to know.

Deferred revenue includes income received but not yet earned, such as gift card liabilities from platforms like Shopify or upfront payments from wholesale customers. This section of your Balance Sheet tracks these liabilities until the revenue is recognized when the product or service is delivered.

Loans payable are split into two categories: loans to related parties (such as owners or employees) and loans from unrelated parties. For related parties, you'll find additional details like traditional loans, accrued interest, and any "due to/due from" balances.

These balances represent funds the business owes to an owner or stakeholder for expenses paid on the business's behalf, minus any personal expenses covered by the business. It's essential to track these separately for accurate financial reporting and tax compliance. Finaloop’s expert team calculates the interest expense based on the specific terms of the loan.

Payroll liabilities in your balance sheet include any payroll payable or payroll tax liability owed for wages, salaries, bonuses, and payroll taxes that your business owes but hasn’t paid yet.

These liabilities must be tracked carefully to ensure accurate payroll management and compliance with tax obligations. Finaloop automates the tracking of payroll liabilities if you are using Gusto as a payroll provider. For other providers, we’ll ask for some specific information in your Transactions screen to ensure that everything from employee wages to payroll taxes is accurately reflected on your balance sheet.

Tax liabilities on your balance sheet include any taxes your ecommerce business owes but hasn’t yet paid. This can cover a range of taxes, including sales tax, income tax, and payroll tax. For ecommerce brands, sales tax liabilities can be particularly complex, especially if you sell in multiple states with different tax rules. Finaloop helps you track all tax liabilities and syncs this directly from Shopify. We’ll reduce this by any payments made to the state taxing authorities.

Other Current liabilities include various liabilities that don't fit into more specific categories.

In this account, you’ll see a breakdown of any loan or accrued interest due in more than 1 year.

Money or assets invested by owners or shareholders. This section will be slightly different depending on whether you are a single member LLC, a partnership, an S corporation, or a C corporation. It will also include reductions to the capital, such a owner draw’s or distributions.

Profits that have been reinvested in the business rather than distributed to owners.