Squarespace accounting: Complete guide to software, integrations, taxes and more

Laura Tien September 13, 2024

Article E-Commerce

Squarespace is a powerful tool for e-commerce businesses with its built-in tools for both CRM and accounting to support your business’ growth. However, you may require more to handle accounting and taxes, which is why we have written this complete guide to give you everything you need to know about Squarespace accounting, giving you guidance on software, integrations, and taxes to give you both understanding and tools to set your Squarespace business up for success.

You might be familiar with Squarespace as it’s gained a reputation for being an easy-to-use tool for building websites. With Squarespace, you’re able to choose from many of the templates provided or from scratch but you’re also able to do the same as an e-commerce storefront with many of the features and benefits Squarespace supports, this is a great option if you’re just starting out with your e-commerce business. 

Squarespace accounting features

Squarespace offers a range of accounting features for e-commerce businesses. Here is a list of some of Squarespaces’ accounting features and tools:

• Payments management. Accept one-time/recurring payments via credit card terminals, online checkout, invoicing, subscriptions, and manual entry. View payment histories, transactions, refunds issued.
• Dashboard showing key metrics like sales, expenses, account balances, overdue invoices, recurring revenue, average sale value.
• Integrations with Stripe, PayPal, and other processors to accept customer payments through Squarespace. Transaction fees are automatically deducted.
• Inventory tracking (for stores) to manage product listings, quantities and pricing. Link inventory to products in your Squarespace store. Record cost details and run reports on inventory value and profit margins.

The Squarespace accounting built-in features are beneficial tools for any business but it does have some limitations where an accounting software is required. Cloud based accounting software possesses many beneficial features for businesses of any size. Some of these features include:

• Automatic software updates
• Safe data encryption
• It gives different levels of access to different people
• Connect apps to automate and streamline processes
• Provides real-time data on sales, expenses, and more

With these tools you’re able to gain insight into business performance overall which is important for tracking your growth

Choosing the right accounting software

When finding the right software you’ll need to look into which one has the right benefits and features for your needs both now and in the future. Before deciding, review how your business is currently tracking income and expenses, budget, and report finances. It’s also important to evaluate this along with your growth plans against costs and technical requirements. The right software solution depends on your size, industry, and goals as well as what your budget and staff can support.

Questions to ask yourself when choosing an accounting software

• What is your software’s capability for integrating with relevant e-commerce applications like Squarespace?
• What is your software’s capability for integrating with relevant e-commerce applications like Squarespace?
• Is the price of the software accessible within the company’s financial capacity, inclusive of any no cost options extended?
• Is the software designed to handle accounting in a variety of national currencies?
• Will the software facilitate compliance with both domestic and international requirements for remitting sales taxes? 
• Can the software be configured to interact with more than one business bank account?
• Does the software incorporate components to assist with managing cash flow?
• Are there features included to help maintain inventory records and determine cost of goods sold (COGS)?
• Will the software accommodate entering and categorizing both expense receipts and transactions?
• Does the software encompass functionality to generate invoices?
• Can accounts payable be handled using the software?
• Is bank reconciliation a capability of the software?
• Does the software allow for separate tracking of financial transactions for distinct company divisions or affiliated businesses?
• Does the software generate an assortment of reporting options to provide the insights salient to business management?
• Can the software calculate all applicable requirements for payroll including benefits, deductions, contributions, and payments?

With these questions, you’ll be able to narrow down the software that will enhance and organize your business accounting, ensuring you are set up for a win.

Integrating Squarespace with accounting software

Through Amaka’s integration, it’s possible for business owners to integrate Squarespace to various accounting software such as Xero, QuickBooks Online (QBO), and MYOB to get all your information in one place. This automation syncs financial data between the platforms, eliminating manual data entry and expediting monthly reconciliation.

All transactions from the Squarespace store sync to the selected accounting platform, automating the flow of financial data between the systems and ensuring accuracy. You’re also able to customize how orders import into the accounting software to suit your preferences. With an integration in place, reconciling Squarespace sales and payments within the accounting platform becomes streamlined. The result is increased time and cost savings. Because of this, an integration is considered vital for e-commerce merchants using Squarespace.

How to connect Squarespace to your accounting software

The process to connect Squarespace and accounting software is straightforward:

• Sign up or log into Amaka, a popular integration service, at their website.
• Select the desired integration, such as Squarespace + Xero, Squarespace + QuickBooks, or Squarespace + MYOB.
• Log into the Squarespace account and grant the necessary access permissions.
• Similarly, authenticate the accounting software account.
• Follow the remaining steps to choose import settings, map data fields, set a schedule, and complete setup.
• Review and activate the integration.

Key Squarespace KPIs to track

Tracking the performance of your Squarespace store is essential for achieving success. Selecting relevant key performance indicators (KPIs) is one effective way to do this. When starting out, it’s crucial to focus on the most applicable KPIs for your business.

Here are five KPIs that can assist you in understanding your financial position and assessing the success of your store:

1. Cost per acquisition: The total cost incurred to acquire a new customer, which includes advertising, email campaigns, discounts, etc.
2. Customer lifetime value (CLV): The estimated revenue that a customer will generate throughout their lifetime with your company.
3. Average order value (AOV): The average amount that a customer spends per order.
4. Gross profit margin: The profit earned after subtracting the cost of goods sold (COGS).
5. Inventory turnover: The rate at which you sell your inventory within a year, determined by dividing total sales by the remaining inventory.

You can track KPIs through Amaka’s business activity tracker which is a tool that tracks your business data in real-time, allowing you to view the overall progress and health of your business’ operational goals. It provides you with an up to date health score and has reporting features where you can set and track specific goals.

Understanding Squarespace taxes

Squarespace makes it easy to handle sales taxes on orders by automatically calculating and collecting the appropriate amounts based on a business’s location and products automatically. Once you enter in appropriate tax rates, Squarespace will handle the rest. However, Squarespace itself does not assist with business income taxes. Integrating Squarespace with accounting software will help you to properly file annual tax returns. Through integrations, reports can be exported from Squarespace for income and expenses, revenue, assets, and other financial data.

Understanding international sales tax

For businesses who have expanded or are hoping to expand to other countries, it’s important to have an understanding of the different taxes you’ll need to apply to products and sales. These tax regulations can change depending on the country, region and your overall business revenue.

To gain a deeper understanding of which tax regulations you will need to adhere to, you can visit government websites that have more tailored information applicable to e-commerce businesses selling in the US, Canada, EU, and Australia or visit our sales tax guide for more information. With this information in mind, you’ll have everything you need to get your storefront ready to expand internationally, and comply with all your international tax regulations.

Tax write-offs

As a business owner you may be entitled to certain tax write-offs for business purchases.

A tax write-off, or tax deduction, reduces your taxable income, lowering your tax burden. Here are some common tax write-offs for e-commerce businesses:

• Business expenses: Things like hosting fees for your website, merchant account fees, shipping costs, and other operational expenses.
• Marketing and advertising costs: Expenses such as online ads, email marketing service fees, content creation, and more can be deducted.
• Accounting and legal fees: Fees paid to accountants, bookkeepers, and lawyers for professional services related to your business
• E-commerce platform and software subscriptions: Fees paid for services like your website platform, shipping software, inventory management tools, and other subscriptions used in your business.
• Business education: Costs related to seminars, courses, books, and other resources that help you improve skills or knowledge for your business

By keeping records of your expenses, you can claim tax deductions and take advantage of these tax write-offs. When you file your taxes, the more deductions you claim, the less you will owe. So keeping good records of expenses related to your business, health care, mortgage, charitable donations, and retirement contributions can save you money when tax time comes around.

3 Key financial statements

The three key financial statements provide a comprehensive overview of a company’s financial health. The balance sheet shows assets, liabilities, and equity at a single point in time. The income statement details revenue, expenses, and profit or loss over a period of time. The cash flow statement tracks how cash flows through the business.

Each of these three financial statements provide a comprehensive view of the financial status and performance of a company. Regularly analyzing these statements is crucial for effective business management and decision making.

Understanding balance sheets

A balance sheet provides insight into a company’s financial position at a single point in time. It is made up of three parts – assets, liabilities and owner’s equity.

• Assets are the resources owned by the company, such as cash, accounts receivable, inventory, equipment, buildings, land, vehicles, etc.
• Liabilities are the financial obligations owed by the company, including accounts payable, accrued expenses, loans and long-term debt.
• Owner’s equity represents the remaining value of the assets after deducting liabilities. It belongs to the owners of the company including shareholders.

Analyzing the balance sheet over time helps identify trends in the financial stability and performance of a company. Increasing assets, declining liabilities and growing equity or retained earnings are usually positive indicators of a company’s financial health.

Understanding income statements

The income statement calculates revenue minus expenses to determine profit or loss over a timeframe.

• Revenue includes income from sales, services, interest, and asset sales.
• Expenses and losses include costs of goods sold, operating expenses, interest, and asset losses.

The income statement indicates the financial performance and profitability of the company during a period. Analyzing trends in revenue and expenses over multiple periods can provide useful insights into the company’s financial health and growth. Fluctuations or anomalies in the income statement should be investigated thoroughly.

Understanding cash flow

The cash flow statement tracks how much cash comes in and goes out from operating, investing, and financing activities.

• Operating activities involve cash from revenues and payments for expenses.
• Investing activities include buying and selling assets.
• Financing activities involve raising and repaying cash from banks, investors, and shareholders.

The cash flow statement shows the company’s ability to generate cash flow and meet financial requirements.

There are two methods for preparing the cash flow statement. The direct method lists actual cash inflows and outflows. The indirect method starts with net income, then adjusts for non-cash items and changes in balance sheet accounts to calculate cash flow from operations. The indirect method is simpler but the direct method provides more detail.

Key takeaways on Squarespace accounting

Squarespace provides useful accounting capabilities for e-commerce businesses, especially for those just getting started. While it has core features like income statements, balance sheets, and accounts payable/receivable, integrating Squarespace with an accounting software will take your business finances to the next level. Overall, Squarespace is a convenient and affordable option for businesses with accounting needs and with the help of this article, our hope is that you’re able to be especially when integrated with third-party software and can focus on growing your business.