Category: Shopify Tutorial

Shopify Tutorial

The Top 16 Paid and Free Photo Editors Online in 2021

May 4, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/14263381-18-free-and-paid-online-photo-editor-tools-for-gorgeous-diy-product-photography

The best ecommerce sites all have one thing in common: amazing product photography. It’s one of the main factors that drive conversions. Customers can’t touch or experience your products physically, so it’s up to you to make them come to life online.

While getting the right shot is important, it’s what you do with it afterward that really takes it home. No matter how well you shoot your photos, there are always ways to improve them with photo editing.

That’s why we’ve put together this list of the best paid and free photo editors online as well as other resources for creating beautiful DIY product photos that shine online.

11 best free photo editors online

  • Taler
  • GIMP
  • Fotor
  • Inkscape
  • Pixlr
  • Photoshop Express
  • Photo POS Pro
  • BeFunky
  • Canva
  • Instasize
  • Scratch Photos

Note: Paid options usually offer the best photo editing software and tools available, since paid products often respond to feature requests and ship updates more consistently. However, if you’re on a budget or you just need a quick solution for simple editing, a free alternative should work for you.

1. Taler

Best free online photo editor with free graphic design templates

Taler is a scrappy new social design and photo editing tool that’s free forever and perfect for launching a new business, brand, or store. With Taler you can customize templates for Instagram Stories, t-shirt mock ups, and social banners for Facebook and YouTube. 

New templates are being added every week, with more design sizes for all social platforms coming soon. Think of Taler as a sandbox for creating your digital branding with some great starter styles to help entrepreneurs grow their Shopify stores faster.

Features include: 

  • Hundreds of customizable design templates tailored to size requirements for Facebook, Instagram, YouTube, and more.
  • Drag-and-drop editor for easily customizing visual content to match your Shopify theme.
  • Powerful suite of filters, overlays, and photo editing tools for carefully refining and adjusting your header template design.
  • Text tools to move, resize, and color text to amplify your message.
  • Over 17,000 high-resolution, royalty-free images to use in your design.
  • Free stickers, shapes, emojis, and graphics.

Available for: iOS and Android

Price: Free

2. GIMP

Best open source online photo editor for pixel art and animation

GIMP is a free photo editor online that’s considered the best free Adobe Photoshop alternative. It comes packed with professional tools for image retouching and editing, free-form drawing, and converting different image formats.

Whether you’re a hobby photographer or learning how to take photos with a smartphone, GIMP gives you sophisticated tools for making your images standout. GIMP also has a full customizable interface and, since it’s open source, you can add your own filters and features. 

Features include:

  • Fully customizable interface for making changes to the photo editor that meet your needs. 
  • Powerful photo enhancement tools for fixing distort and imperfections. 
  • Digital retouching for getting rid of minor details quickly and easily. 
  • Hardware support for various devices to create custom tools and speed up workflow.
  • File format support for JPEG (JFIF), GIF, PNG, TIFF and other special use formats, including the multi-resolution and multi-color-depth Windows icon files.

Available for: GNU/Linux, OS X, Windows

Price: Free

3. Fotor

Best free photo editor online for beginners

Free photo editor Fotor is a browser-based option with an interface that makes it easy for creatives, photographers, and marketers to edit photos. Unlike other web-based programs, Fotor is fast and won’t slow up your computer while using it. 

Fotor makes advanced photo editing techniques achievable for less-technical people. You can easily apply filters, add effect, and edit images on the go. It’s intuitive and simple application helps you do more with your photos even without a background in photo editing and graphic design. Fotor is one of the best free photo editors out there, though for a small monthly fee you can upgrade to Pro for added features. 

Features include:

  • One click batch processing for Scenes, Effects, and Borders.
  • State-of-the-art photo processing engine for adjusting exposure, brightness, contrast, white balance, and saturation, removing red eye, and more. 
  • Flexible text editing tool for adding text to any photo.
  • Collage tool with over 80 templates and up to nine photos per collage.
  • Batch resizing, renaming, and file format conversion.
  • 100+ exclusive photo effects, 30+ photo frames, and 300+ custom stickers. 

Available for: Web, iOS, Windows

Price: Free, ($4.99 per month for Pro) 

4. Inkscape

Best free photo editor online for creating vector graphics

One of Inkscape’s strengths as a stand-out free photo editor is its ability to create and manipulate objects. It’s considered an excellent free alternative to Adobe Illustrator, with an ease-to-use and clear interface. 

The software uses the SVG (Scalable Vector Graphics) file format, so you can create graphics and use them in other marketing assets, like banners or social media posts, without distorting them. Like GIMP, above, Inkscape is open source, which means you can customize the photo editing software to fit the needs of your business. 

Features include: 

  • User-friendly tool for creating vector graphics.
  • Suite of pencil, pen, calligraphy, and shaping and cloning tools for creating your own images. 
  • Compliant SVG format file generation and editing.
  • Easy-to-use object manipulation tools for moving, skewing, cropping, and rotating images.
  • Simple node editing for efficiently modifying images. 

Available for: Linux, Windows and macOS

Price: Free 

5. Pixlr

Best free photo editor online for Mac

If you want a lightweight editor you can use on your phone or laptop, Pixlr is a great free photo editor for you. With its robust suite of photo editing tools, you can make quick changes to your photos without any hassle—whether you’re at home or on the go.

Pixlr is built using Flash, so it requires a plug-in to use. Many experts in photo editing say the Pixlr editor has many of the same features as Adobe Photoshop, but the browser-based software is a lot simpler than Adobe. 

Features include:

  • Free-to-use web-based editing tools available for commercial use. 
  • Lightweight application that runs on any browser or operating system across a family of apps.
  • Tons of one-click features and robust toolset for quick and convenient fixes to colors and saturation, sharpening and blurring images, and combining multiple images.
  • Tutorials to guide you through more complex features.
  • Available as native app on Mac and Android.
  • Free vector graphics editor and selection of free stock photos for your creatives. 

Available for: Web, iOS, and Android

Price: Free

6. Photoshop Express

Best Adobe photo editor for mobile

Adobe, a company well known for elite image and video editing tools, also offers a free photo editor called Photoshop Express for your smartphone. Photoshop Express is easy to use, boasts impressive on-the-go editing features to crop, fix red eye, and even share your finished work on social media, and more. You can also sync the tool with other Adobe products if you are already using them. 

Features include:

  • Quick-fix tools that heal blemishes, adjust perspective, and more.
  • Hundreds of themes, effects, text styles, and stickers you can apply in one click to express your brand’s creativity. 
  • Edit, retouch, and create collages or combine photos in a tap.
  • In-app tutorials and playbacks that show you how to create and apply edits to your photos.
  • Ability to post favorite photos to social media sites or share them in email or messaging apps. 

Available for: iOS, Android, and Windows

Price: Free

7. Photo Pos Pro

Best free photo editing software for Windows

The beauty of Photo Pos Pro is that you can choose your interface right off the bat, including a simple, beginner-friendly one with core tools and editing features. There’s also a more professional interface equipped with advanced functions like layers and layer masks and tools for adjusting curves and levels manually. 

Photo Pos is a great option for store owners and marketers who want a simple photo editor to remove background and unwanted objects, apply color correction, and create borders and overlays. Because of its user-friendly interface, you can perform various image enhancement tasks from basic edits to more advanced photo effects, creating new works from scratch, and more.

Features include:

  • Support for all file formats, including RAW, GIF and PSD.
  • Customizable interface for editors for different levels of experience.
  • Pixel image-editing tools, including drawing, selecting the necessary area, adjusting the size, filling, eraser, and more. 
  • One-click browser tools to adjust size, resolution, reflection, rotation, and more.
  • Semi-automatic color correction and various filtering and effects options.

Available for: Windows

Price: Free (Pro Upgrade starting at $29.99)

8. BeFunky

Best free online photo editor with special effects for bloggers and influencers

BeFunky is a free photo editor that’s ideal for making basic photo enhancements and color correction quickly. If you have a specific area that needs retouching, the tool has a variety of options for taking your image to the next level. It’s simple, easy to use, and performs well in your web browser.

BeFunky also has another cool feature, called Graphic Designer, which allows you to create brochures, posters, social media posts, and even your own templates, right in the app. While it may lack certain professional features, such as editing layers, you won’t find a more efficient option for getting high-quality, creative images in little time.

Features include:

  • Resize tool to quickly resize images for printable and digital assets.
  • Background remover for easily creating solid and transparent backgrounds.
  • Cartoonizer for going from photo to cartoon in one click.
  • Suite of enhancer tools that use smart technology to sharpen photos, make colors vibrant, and more. 
  • Batch processing tool for editing hundreds of photos at once, saving you time in your photo editing process.

Available for: iOS, Windows, Linux, NativeApp

Price: Free ($1.99 for app)

9. Canva

Best online photo editor for collages and professional level editing

Canvais a free photo editor that runs in your browser and is perfect for turning your images into other business assets like social media posts, brochures, presentations, and more. This online design tool offers a ton of powerful editing features, including a drag-and-drop design tool and millions of stock photos, vectors, and illustrations. 

With Canva, you can easily edit photos using preset filters or get advanced tools like tints, vignette effects, sharpening, brightness adjusting, saturation and contrast, and more. If you want to build a consistent presence around your entire business—from product photos to marketing assets—Canva’s got you covered. 

Features include:

  • Image library with a wide variety of textured backgrounds for enhancing photo filters and transparency in your image.
  • Image cropper for trimming and transforming shots on web or mobile devices.
  • Ability to drag-and-drop speech bubbles and text into your designs to amplify your message.
  • Tons of trendy filters for giving photos your favorite signature looks. 
  • Photo-grid design collage maker to create everything from complex arrangements to mood boards. 

Available for: Web, iOS, Android

Price: Free (Pro starts at $9.95 per month)

10. Instasize

Best online photo editor for Instagram influencers and mobile editing

Instasize is one of the most popular Instagram tools and mobile photo editors for creatives. Its clean and easy-to-navigate interface helps you make photos look better instantly, with photo filters and editing tools including contrast, exposure, saturation, and clarity. You can also resize photos to fit any social media channel, like TikTok or Snapchat, with the photo crop tool. 

Even if you’re not much of a photo editor, Instasize makes it easy for any skills level to add a creative touch to their photos. With over 130 professional filters to choose from, including beauty tools, captivating borders, a collage creator and text editor, you’ll be well on your way to creating a unique look that’s just right for your brand.

Features include:

  • Full editing toolkit for social creatives to make visually engaging photos and videos. 
  • Free video editor with crop and export option for Instagram Stories, TikTok, and Snapchat. 
  • 100+ unique photo borders, from original white to trending designs patterns.
  • 20+ unique for adding a message on your photos and videos.
  • Free photo collage maker with hundreds of layouts and backgrounds. 

Available for: iPhone and Android 

Price: Free (Premium starts at $4.99 per month) 

11. Scratch Photos

Best free photo editor online to remove background

Scratch Photos gives social sellers a tool to remove the background of product photos quickly and easily. It’s powered by advanced AI technology that scans and removes backgrounds from even the toughest photos. After removing the existing background, you can use Scratch Photo to insert a different color or texture or source a background from Burst. 

Scratch Photos is also a great tool if you run Amazon and Google Shopping ads. At the moment, product images need white backgrounds, which Scratch Photos can make in seconds.

Features include:

  • AI-powered background remover that automatically takes out any background.
  • Auto-adjust feature for improving darkly lit images and photo quality.
  • Ability to cut and erase background and replace with plain pastel or custom background.
  • Undo and redo edits for best results. 
  • Direct sharing to social media.
  • Download images as PNG files.

Available for: iOS and Android

Price: Free

5 best online photo editors to buy 

If you’re feeling confident in your photo editing skills and want to take your photos to the next level, explore these five photo editor apps.

  • Photoshop Elements
  • Photoshop Lightroom
  • ON1 Photo RAW 2020
  • KeyShot
  • PicMonkey

1. Photoshop Elements

Best photo editor online for hobbyists

Photoshop Elements, at its core, is the Adobe Photoshop suite for non-professional photographers. Compared to Photoshop’s subscription pricing, you can buy Photoshop Elements outright for $99.99 or buy it with Adobe’s video editing software, Premiere Elements, for $149.99. The 2020 update for Elements includes auto-colorization, one-click subject selection, automatic skin smoothing, and object removal. 

What’s also cool about Photoshop Elements is the step-by-step instructions to help you make beautiful images for your brand. It has a tutorial for anything you can think of— creating memes, multi-photo text, sketches, watercolors, shape overlays, background replacements, double exposures, and more. 

Features include:

  • Intuitive home screen for learning new things to try, feature highlights, inspiration, and help.
  • AI technology powers automated options that make it easy to get started and add your personal touch.
  • Step-by-step guides for making stunning effects and creations with 55 guided edits.
  • Create collages for social media or order photo prints and gifts right from the software.
  • Organizer application lets you import, group, tag, and output your photos, as well as offers powerful search, auto curation, and sharing tools.

Available for: MacOS, Windows

Price: $99.99 one time fee

2. Photoshop Lightroom

Best photo editor online for professional photographers

While Elements leads the way for editing photos one by one, Adobe Lightroom focuses on pristine batch editing. It’s the complete package for professional editing workflows with top-tier organization tools, advanced adjustments, and all the printing and output options you could dream of. 

As of February 2020, Lightroom added new options for raw import profiles, support for big PSB files from Photoshop, and a faster graphic processing unit (GPU). It’s perfect for everyone from ecommerce store owners who want to develop their editing skills to photographers who want to sell photos online. 

Features include:

  • Advanced photo management and organization tools.
  • Lens-based and camera corrections.
  • Brush and gradient adjustments with color and luminance masking.
  • Face detection and tagging functionality.
  • Connects with mobile app and family of Adobe products.

Available for: Windows and macOS

Price: Starts at $9.99/m

3. ON1 Photo RAW 2020

Best photo editing software and Lightroom alternative

ON1 Photo RAW is a photo editor that brings photo organization, editing, and effects together in one program. It’s commonly referred to as the Lightroom alternative because it has the same robust feature set, only you can buy the software outright rather than pay Lightroom’s subscription fee. 

ON1 Photo RAW includes the company’s popular independent products HDR, Effects, and Resize, along with Layers, Pano, Focus Stacking and other editing features. You also get access to hundreds of presets, filters, textures, borders, and more to add some creativity to your photos—all in a few clicks.

Features include:

  • Fast photo browsing and catalogs for finding portfolios, favorite photos, or libraries.
  • Easy importing from your smartphone, camera, or other device.
  • AI Auto Tone to get equal tone and color on all types of photos.
  • Filter effects including color balance, weather, channel mixer, and sun flare filters.
  • Portrait tools to auto-detect faces and retouch to smoothen skin, sharpen eyes, whiten teeth, and more.
  • Mask layers with a wide range of masking tools, including the edge-detecting Perfect Brush.

Available for: MacOS and Windows

Price: $49.99

4. KeyShot

Best 3D photo editor app 

KeyShot is a 3D rendering and animation software that helps with features such as still images, real-time ray tracing, color libraries, material templates, and toon shading. Its powerful interface with advanced capabilities allows you to apply materials and real-world lighting to images quickly and see changes happen in real time.

KeyShot uses a render engine to replicate materials from the real world, resulting in extremely photo-realistic images. You can render using your CPU or GPU and can switch between modes with one click. 

It’s the most expensive photo editing software on this list, but you can play around with KeyShot using a fully functional license for free. 

Features include:

  • Simple, workflow-based interface with all the advanced capabilities for your visualization needs.
  • Realistic, 3D-rendered photos you can create with scientifically accurate presets or your own 3D materials. 
  • Advanced lighting capabilities to replicate studio shots or more complex interior lighting.
  • Highest quality visuals possible for still images and interactive web and mobile content.

Available for: iOS, Windows

Price: $994.98

5. PicMonkey

Best photo editing app for social media marketers

PicMonkey is an image editor for creatives who want to produce high-quality, professional content—without the expensive price tag that comes with complex, high-end editing software. It’s easy to use for people who aren’t trained on software like Photoshop or KeyShot and can help produce better product photos and social media content. 

PicMonkey offers templates for creating the best content for your brand. You can also create content by uploading your own photos or using the platform’s stock photos and editing tools.PicMonkey has a Brand Kit option for your business that lets you upload logos, colors, and templates to maintain a consistent brand identity. 

Features include:

  • Photo-editing tools to crop, resize, adjust color and exposure, touch up portraits, and remove backgrounds.
  • Flexible design features including textures, gradients and filters, and the ability to edit individual layers.
  • Thousands of design templates and graphics.
  • Ability to create images for Instagram Stories, YouTube, Facebook ads, custom highlight covers, and more.

Available for: macOS, Windows, and mobile devices 

Price: Free 7-day trial, then $12.99/m

Choosing a photo editing tool that works for your business

Now that you have a good understanding of the top paid and free photo editors out there, it’s time to get testing! If you don’t want to spend money on a photo editor, start with a free one or a free trial, then take it from there. 

The important part is that you’re on the right path to improving your brand’s visual identity, selling more online, and making the most of your marketing efforts. 

Best free photo editor online FAQ

What is the best free online photo editor?

  • Taler
  • GIMP
  • Canva
  • Fotor
  • Photo POS Pro
  • Pixlr X
  • Photoshop Express

What is the best online photo editor?

  • Pixlr X
  • Taler
  • Canva
  • Fotor
  • BeFunky

How can I edit photos online for free?

Use a free online photo editor, like Pixlr, right in your browser. You can experience intuitive photo editing with AI-powered tools for fast and professional edits. Use almost any image format, such as PSD (Photoshop), PXD, JPEG, PNG (transparent), WebP, SVG, and more.

What is the easiest-to-use free photo editing software?

The easiest-to-use free photo-editing software is Taler. 

What is the best free online photo editor to remove backgrounds?

One of the best online photo editors to remove backgrounds is Scratch Photos. It lets you remove backgrounds from your photos in seconds and offers basic editing options.

Shopify Tutorial

Saving Your Images for the Web

May 4, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/image-sizes

When it comes to choosing file types and dimensions for your images, keep in mind quality, page load times, zooming capability, and marketplace requirements, especially if you are selling on multiple platforms. Let’s take a look at the optimum dimensions for photos and how to choose your file type while keeping mobile in mind for improved user experience.

Choosing the Right Dimensions

It’s vital to strike a balance between images that are large enough so users can zoom in and those that are an optimum size so they don’t take up too much space and slow down your page load times. On Shopify, you can upload images of up to 4472 x 4472 pixels with a file size of up to 20 MB. But the website maker typically recommends using 2048 x 2048 pixels for square product photos. These are high-resolution images that give your store a professional and well-rounded look with great zoom capabilities. Keep in mind that for zoom functionality to work your images have to be more than 800 x 800 pixels.

Similarly, Amazon and Etsy, have a 1000 x 1000 pixels image requirement to enable zooming.

To maintain a uniform look along your product line and on your collection pages, you should keep the width and height aspect ratio of all your feature images the same, say square. Your feature image is the first image of a product that will appear across your store – on your home page, cart page, checkout page, and a variety of collection pages. Keep  all your thumbnails, too,  the same size and shape to convey a polished store look. Keep in mind, many of your customers will be browsing on mobile too and square images are easier to reposition for smaller screens.

Source: Beardbrand

Choosing the Right Format

Let’s take a look at the file formats most widely used in product photography and what they each bring to the table. They are listed here by how commonly they are used in product photography.

JPG

JPG is the most common digital image file format out there. It is widely supported and boasts a small file size with a good color range. Its compression allows you to strike a balance between file size and image quality. Shopify recommends JPG, in particular, because it can deliver images with a relatively small size and good quality, which works well for product photos.

PNG

PNG was created to improve the GIF format by removing its 256 color limitation. It’s widely accepted, lossless (reduces file size without reducing quality) and supports transparency (say for transparent backgrounds). The downsides are that PNG file sizes can be large because of the lossless compression and the format is not as universally compatible as JPG.

GIF

GIF offers small file size by compressing and reducing images to 256 colors. Although it has been widely replaced by PNG, it is still used for animation as it’s the only format that both supports it and is universally recognized by browsers.

TIFF

TIFF is a lossless compression format that is widely supported by a range of editing and web applications. It offers high quality resolution, and multiple images and pages can be conveniently saved in a single file. However, the file size tends to be large.

BMP

BMP is commonly used in the Windows ecosystem. It supports data compression, alpha channels (used in Photoshop to store additional information that you can use to manipulate parts of the image, like add transparent backgrounds), and almost universal compatibility. Uncompressed, it offers perfect images but file sizes can be very large as well.

Overall, JPG is certainly the most convenient when it comes to combining smaller size with decent quality. While PNG offers a higher quality lossless compression, it does so at the heavy cost of a larger file size. GIF is useful if you are offering 360 degree shots and want lightweight files. BMP and TIFF, by comparison, can offer great quality, but life sizes are usually rather heavy and impractical.

Source: Jaelynn Castillo

Sizing Images for Mobile

Shopify automatically resizes your images to fit smaller screens, but certain images can sometimes require manual editing. Keep in mind that desktop and mobile screens are not only different size but have opposite orientation. And while Shopify tries to accommodate that with gentle cropping, it will be best if your images are square and your product is vertically and horizontally centered.

Also, images with overly large resolutions, of say Shopify’s maximum of 4000 x 4000 pixels, can come out blurry when resized for mobile. So reducing your image to a more manageable size and shape that keeps mobile in mind can help your store look better across all devices. Keep in mind that large files also slow down your site’s loading time. And in ecommerce, and especially in mobile, every second matters, so optimizing your images should be a priority.

So, while lossless compression can give you the highest quality image, it often creates large files that take forever to upload (especially in bulk), and can slow down your page loading times, causing visitors to abandon your store. This is especially true on mobile where internet speeds can be slower and waiting for an image to finally appear frustrates shoppers.

While Shopify’s responsive designs and algorithms are good at resizing and displaying your images across devices, giving them a hand with thoughtful file sizes can mean an even smoother shopping experience.

Shopify Tutorial

Design Your Line: 21 Ready-To-Use Online T-Shirt Templates and Mockups

May 4, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/19495812-22-awesome-t-shirt-templates-and-mockups-for-your-clothing-line

You have an amazing online store set up for your clothing line but one thing is missing: equally awesome product shots.

Maybe you’re having trouble with product photography, or maybe you’re using a print-on-demand service to run your store and don’t actually have any of your shirts on hand. 

That’s why we wrote this post. We’ve compiled a list of the best t-shirt templates and mock-ups you can use for your clothing line so you don’t have to worry about finding models and perfecting studio lighting.

All you have to do is find a t-shirt mockup you like and add your design. While you’re looking, consider the two types of t-shirt templates available: online t-shirt templates and downloadable t-shirt mock-up files.

Design your next t-shirt

  • What is a t-shirt mockup?
  • Top t-shirt mockup generators
  • Downloadable t-shirt template files (PSDs)
  • Your t-shirt design starter kit
  • T-shirt template and mockup FAQ

What is a t-shirt mock-up?

A t-shirt mock-up is a blank slate for designing a t-shirt with your own graphics, pictures, images, words, or branding. T-shirt mock-ups allow you to create a design and put it on a virtual t-shirt so you and your customers can get an idea of what it will look like in real life. T-shirt mock-ups might be flat-lay or on a ghost mannequin or real model.

When you design your own mock-ups, you might download a t-shirt outline and build your design within those confines. However, that requires knowing how to use a photo editor, as well as basic knowledge of apparel design. Luckily, those who don’t have such skills can use t-shirt design templates and mock-ups, available online. They make the design process much easier.

Top t-shirt mock-up generators

These tools can help you generate t-shirt mock-ups without any need for image-editing software. Their t-shirt design templates include a wide range of fits and styles and offer you all the flexibility you need to create great mock-ups. 

  • Placeit
  • Mockupworld
  • Printful
  • Print Aura
  • Custom Ink
  • Smartmockups

Placeit

Placeit is a well-known t-shirt mockup generator that lets you place screenshots into images of computers and phones. But it also has a wide range of t-shirt templates you can use to generate photos featuring your apparel design.

Choose from a wide range of t-shirt mockups, place your design on them, and buy the ones that fit your brand, all without ever opening an image editor. Placeit is a great t-shirt mock-up generator for those of us who aren’t experienced with image-editing software.

Why it’s good:

  • Tons of styles to choose from
  • Online tool is extremely simple to use

Mockupworld

Mockupworld is another great option for store owners who don’t have access to an image-editing tool but still need great t-shirt design template options for their store. You can upload your design, choose from different shirt styles, select white, black, or a different color, and even rotate the image—all from your web browser.

You can put your design on real people modelling your shirts, mannequins, or other perspectives like top view and folded. 

Why it’s good:

  • Different t-shirt template styles to choose from
  • Online tool is extremely simple to use

Printful

Printful isn’t just a great way to print products on demand for your store—it also offers a completely free-to-use mock-up generator and t-shirt design templates. You don’t need image-editing software to add your design to these t-shirt templates, and Printful offers templates for shirts, hoodies, and more. Whether you need a onesie template or a men’s t-shirt template, you’re covered.

Why it’s good:

  • Shirt template includes model wearing product
  • Includes a transparent background
  • Design t-shirt mock-ups for free

Print Aura

Print Aura lets you create t-shirt mock-ups in your browser, so you won’t need image-editing software to start your t-shirt business online. You start the process by selecting the brand of t-shirt you’re using, so your images will always be true to life. From there, you can customize it with your design and color choice—including gray, red, blue, yellow, green, orange, and many others.

Why it’s good:

  • Includes both shirt-only and model mock-ups
  • Design t-shirt mock-ups for free

Custom Ink

Custom Ink’s t-shirt mock-up generator is a great free tool that lets you see how your designs will look on a wide range of shirts, from t-shirts to tank tops to raglans. Custom Ink has a limited choice of colors available, which makes it a lot less intimidating than the wide world of “pick your own color!” Once you’re done, you can order your shirts directly from Custom Ink.

Why it’s good:

  • Free and easy to use
  • Mock-ups can be turned into physical products using Custom Ink’s online tool

Smartmockups

Smartmockups is home to over 700 free t-shirt mockups. All you have to do is upload your design, choose a t-shirt color, and download the mockup to 5K quality. You can find everything here, from v-necks to round neck t-shirts to kids t-shirts and more. Smartmockups even offers mockups for iPhone cases if you want to expand your product line. 

Why it’s good:

  • View tee mockups from all angles, including top view, front view, hanging t-shirt, and folded t-shirts
  • High-quality mock-up file to use in your online store

Downloadable t-shirt template files (PSDs)

These t-shirt design templates are all files you can use to create great mock-ups in image-editing software. Most of them are in PSD format, so you’ll need access to and basic knowledge of Photoshop to open them.

  • Cotton Bureau
  • Tyunderscore
  • Zipup Hoodie mock-up
  • Clothing Templates
  • Go Media mockup Templates
  • Graphic Burger t-shirt mockups
  • Behance
  • Freepik
  • Infinity color shirt
  • PixelBuddah
  • Baby onesie mockup
  • Tank-top mock-up shirt design
  • Vintage and classic t-shirt
  • Polo shirt mock-up
  • Short sleeve dress shirt mock-up

Note: The downloadable files will require access to and a basic understanding of image-editing software. Be sure to get some help from a designer if you need it.

Cotton Bureau

Cotton Bureau has quite a reputation as a source for high-quality, beautifully designed t-shirts, so it’s no surprise it also sells great t-shirt templates for entrepreneurs. Its t-shirt mock-ups come in a range of colors, fits, and styles, and they’re all based on American Apparel’s t-shirt line. Having fit and brand information available can really help your t-shirt mock-ups show a true-to-life image of what your customers can expect.

Why it’s good:

  • Beautiful high-quality shirt templates
  • A variety of different styles available for download, from women’s t-shirt mock-ups to black t-shirt mock-ups and more

Tyunderscore

Nothing looks weirder than a design that’s clearly added on top of a t-shirt image, but this t-shirt mock-up PSD from Tyunderscore avoids that problem When you add your design, the file is set up to adjust the design to the wrinkles in the shirt, giving you a much more realistic t-shirt mock-up. You can also adjust the t-shirt color and the background, add all-over patterns, and hide or edit the t-shirt tag. You’ll need image-editing software to open and use this t-shirt template.

Why it’s good:

  • Easy to use shirt mock-up
  • High-quality t-shirts with a variety of colors available

Zipup hoodie mock-up

Zipup’s high-resolution hoodie mock-up is a great template for all your hoodie image needs (people need to wear something over their t-shirt, right?). You’ve got both front and back views to accommodate your designs, and you can turn heathering (interwoven threads with different colors) on and off to accurately represent your hoodies in the template images. You’ll need image-editing software to use this file, but you’ll be able to adjust the color of the hoodie to accurately reflect your products.

Why it’s good:

  • Great quality hoodie mock-up
  • Both front and back shots available

Clothing Templates

Clothing Templates is another t-shirt template that’s based specifically on the American Apparel style. It has different t-shirt mock-up PSDs based on the style number of popular American Apparel shirts for men and women. It also offers tank-top templates, and all of its templates are fully editable using image-editing software. You can even add or remove a hanger, depending on what you want the image to look like.

Why it’s good:

  • Shirt templates with transparent backgrounds
  • Inexpensive for the quality of mock-up
  • Easily mock up different shirt styles using layered files in Photoshop

Go Media mock-up templates

There are multiple t-shirt and hoodie templates available for sale from Go Media, but one of the most interesting and unique features is that you can buy t-shirt templates that also have a side view of your design. If you have design elements that are best viewed from the left or the right, this might be the place to make your t-shirt mock-ups.

Why it’s good:

  • Variety of different clothing styles available
  • Easy to use and extremely high-quality designs
  • Sold in packs with instructions on how to use

Graphic Burger t-shirt mockups 

Graphic Burger’s free t-shirt template features front and back views. It also makes it look like you all of a sudden have very fancy hardwood floors. The file is free to download, but you’ll need Photoshop to open it and make changes.

Why it’s good:

  • High-quality and high-resolution shirt mock-ups
  • Includes a high-quality Photoshop file to edit
  • Free to use

Behance

Behance is the world’s largest online platform for showcasing and discovering creative work. It’s home to hundreds of t-shirt design templates and t-shirt outlines you can download for free. You’ll find everything from white t-shirt mockups to complete mock-up kits with hoodies, black t-shirts, long sleeves, and more. 

Why it’s good:

  • Endless variety of free templates for creating custom t-shirt designs 
  • Excellent filtering options to find the perfect mock-ups for your t-shirt business

Freepik

Another place to get free t-shirt mockup PSD files is Freepik. You can browse through over 5,000 different mock-up sets, from tri-blend crew tops to sports shirts and t-shirts with cool typography. You can also choose from vector t-shirt and clipart graphics if you don’t want to show your designs with models.

Why it’s good:

  • Choose from over 5,000 t-shirt outlines and templates in various styles
  • Easy to use 

Infinity color shirt mock-up

T-shirts aren’t always on hangers in real life, but it can be tough to find templates that offer alternate views. That’s what makes the Infinity color t-shirt template pack so great: you can showcase your designs on a range of different folded shirts, which makes it all feel much more natural. You’ll need image-editing software to add your designs, change the shirt colors, and update the background color in this PSD template.

Why it’s good:

  • Beautiful t-shirt templates that are available in multiple colors
  • Unique product shot angles to help display shirt artwork

PixelBuddah

This freebie from PixelBuddah offers downloadable photorealistic t-shirt templates to display your shirts outside of the typical flat-lay or hanger options. You can easily edit the t-shirt color, add your design (and have it follow the folds and wrinkles of the shirt), and edit the background color and texture. Although it requires image-editing software, it’s a great free t-shirt mock-up option.

Why it’s good:

  • Very high-quality and realistic t-shirt template
  • Unique product shot angle

Baby onesie mockup

If your t-shirts are of the tiny, baby variety (aka onesies), then this growsuit mock-up is a great way to avoid costly photoshoots with models who might need frequent naps. You can place your designs on the front and back, update the colors, and edit the background. You’ll need image editing software to work with this file.

Why it’s good:

  • High resolution
  • Front and back designs
  • Multiple background options

Tank-top mock-up shirt design

Sun’s out, guns out. This template is perfect to showcase your sleeveless designs on a unisex tank-top mockup. It includes a hanger, wall-textured background, and a tag you can customize. You’ll need image-editing software to add in your design and change the colors. It’s fully layered with Smart Objects to make creating your free t-shirt mockup an easy drag-and-drop affair.

Why it’s good:

  • Beautiful tank-top shirt mock-up
  • Colorful and easy to use
  • Shirt template includes layered PSD file

Vintage and classic t-shirt

This free vintage t-shirt mock-up template gives you everything you need for a classic on-hanger t-shirt image. All you have to do is open the file in your image-editing software and you can easily add in your designs, update the shirt color, and modify the background to suit your product’s look.

Why it’s good:

  • Retro shirt feel with hanger included
  • Easily change the colors of the shirt using the included PSD file

Polo shirt mockup

Finding a t-shirt template is easy enough, but what about polo shirt templates? There aren’t as many options out there, which is why this find from Pixeden is so great. It’s a PSD file, so you’ll need image-editing software to open it, but once you do you’ll have everything you need to create a polo shirt mock-up.

You can change the color of the shirt and of the background, and place your design on the shirt and the interior label. The blank-shirt template also comes with a wooden hanger in the image.

Why it’s good:

  • High-quality shirt template
  • One of the few polo shirt mock-ups available

Short sleeve dress shirt mock-up

If your shirts have collars, finding a blank t-shirt template to suit your product can be tricky. Don’t fret, because we found a great short sleeve dress shirt template that’s ready for you to use. This dress shirt template is fully editable, with options to select colors and add your designs. You’ll need image-editing software to use it, but once that’s handled, you’re off to the races (in a dress shirt).

Why it’s good:

  • Dress shirt is fully customizable
  • High-quality shirt template
  • Easily change the colors of the shirt using the included PSD file

Your t-shirt design starter kit

As you can see, there are endless t-shirt templates and mock-ups to start your t-shirt business online. Use these free and paid generators to find the right look and feel for your apparel and start building your brand. 

Illustration by Rachel Tunstall

T-shirt template and mockup FAQ

How do you make a t-shirt mock-up?

Once you’ve downloaded the t-shirt mock-up file, you’ll use image-editing software like Photoshop to manipulate the color of the shirt. This is also where you can add design elements. Many templates include options to manipulate the tag, labels, buttons, and other unique pieces of the t-shirt. Some mock-ups also offer options for long-sleeved shirts, tank tops, jackets, and other pieces of apparel.

Where can I find free mock-ups?

  • Placeit 
  • Printful
  • Print Aura
  • Custom Ink
  • Smartmockups 
  • Behance
  • Freepik

How do I put my design on a mock-up?

There are three main ways to create a t-shirt template:

  • From scratch in Adobe Photoshop.
  • Using an online t-shirt mock-up.
  • Downloading a t-shirt mock-up PSD file.

To alter your design in Photoshop, you can use smart layers to quickly and easily replace the graphics on the t-shirt.

How can I make my own t-shirts for free?

Many of the t-shirt mock-up generators listed above are free. You can upload your own designs for free. Or you can start with one of its pre-made templates and tweak it for your unique style. While you can design the t-shirts for free, there are costs associated with actually manufacturing them.

Shopify Tutorial

What To Do When Customers Force Refunds Through Their Banks

May 4, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/credit-card-chargebacks

Customer disputes are a reality of accepting payments. But that doesn’t make them any less frustrating. Chargebacks are the result of a customer questioning or disputing a transaction with their issuing bank. The issuing bank collects evidence from the customer and categorizes the chargeback using the appropriate, card network-specific, reason code.

There are 151 chargeback reason codes across the four major card networks. The good news for those using Shopify Payments, the hundreds of reason codes and buckets them into eight distinct categories. For those not using Shopify Payments, you’ll see the same categories of reason codes instead represented in their original reason code format.

By understanding the reason code associated with the chargeback, you’re able to submit a response that includes the appropriate compelling evidence. In this post, we’ll review the categories of reason codes merchants will see most often, the specific reason codes associated with the category, and what compelling evidence to include to submit a response.

Fraudulent chargebacks

For most merchants, fraudulent chargebacks represent the bulk of customer disputes they see. Chargeback reason codes used to categorize fraudulent chargebacks include American Express reason code 193, Visa reason code 83, MasterCard reason code 4863, and Discover reason code 6040.

However, just because a chargeback is coded with a fraud or no authorization reason code does not mean true fraud has actually taken place. By verifying the customer IP address and investigating AVS or CVV failures, , you can effectively protect yourself from the bulk of this fraud.

Automate fraud protection with Shopify Fraud Protect

Fraud Protect charges a small fee for every protected order, and if a protected order does result in a chargeback due to fraud Shopify will automatically reimburse your costs, including fees. To start using Fraud Protect, learn more about the eligibility criteria and opt-in to protect your orders.

Then why do fraudulent chargebacks still happen? Because the disputed transaction wasn’t actually fraudulent. In fact, true fraud accounts for just 29% of total fraud losses for ecommerce. The remaining 71% of losses come from chargeback fraud and friendly fraud. Fortunately, by submitting a response to chargebacks coded as fraud, you can win the chargeback and regain the transaction value.

What to include in the response

How you respond to fraudulent chargebacks hinges on the nature of your business and the circumstances of the transaction at-hand. If you obtained authorization from the cardholder and used AVS and CVV, then you should supply at least the following in your response:

  • Copy of the transaction invoice or signed order form
  • Proof of delivery
    • If the cardholder collected merchandise from your physical storefront/location, include:
      • Cardholder signature on the pick-up form
      • Copy of identification presented by the cardholder
      • Details of identification presented by the cardholder
    • If the merchandise was delivered to the cardholder’s address, include:
      • Evidence of delivery date at time
      • Proof that the item was delivered to the same address for which an AVS match of “Y” (match address and 5 digit ZIP) or “M” (non-U.S. match)
    • If the merchandise was delivered to the cardholder’s business address, include:
      • Evidence that the merchandise was delivered
      • Proof that the cardholder was working at the address at the time of delivery

Beyond the minimum required compelling evidence, you can (and should where applicable) also provide evidence in the form of photographs, emails, or otherwise that proves and/or displays:

  • A connection/relationship between the order recipient and the cardholder; i.e. a member of the cardholder’s family authorized the transaction
  • The cardholder disputing the transaction is in possession or using the merchandise
  • The IP address, email address, physical address, and/or telephone number was used in a prior transaction that was not disputed

Merchants selling digital goods have a bit more compelling evidence to collect to respond to a chargeback categorized as fraudulent. The chargeback response needs to include a description of the merchandise downloaded, the date and time of download, and at least two of the following:

  • IP address of purchaser at date and time of transaction
  • Device geographical location at date and time of transaction
  • Device ID number and device name
  • Name and email address linked to the customer profile on-record
  • Evidence that the customer profile was activated and verified by the cardholder before the date and time of transaction
  • Evidence that the cardholder accessed/used the downloaded digital goods on or after the date and time of transaction
  • Evidence that the same device and card were used in previous, undisputed transactions.

Unrecognized chargebacks

Unrecognized chargebacks are very similar to fraudulent chargebacks, in that the cardholder does not recognize a transaction on their statement. But in this case, the cardholder does not initially believe that their account information has been compromised. Chargebacks that occur due to unrecognized transactions are represented by numerous reason codes. Including, but not limited to: MasterCard reason code 4837, Discover reason code UA38, and Visa reason code 72. Chargebacks that occur due to a cardholder’s inability to recognize the merchant are nearly always the result of poor merchant descriptors.

If you use Shopify Payments, you’re in luck, setting a good merchant descriptor is simple. Payment service providers that aggregate and underwrite multiple services such as your gateway, processor and acquiring bank account, like Shopify Payments, Stripe or PayPal, will occupy some space in front of you on the descriptor so be as brief as possible without being confusing or cryptic. Shopify Payments cleverly only uses SP * reserving all but five characters for you.

For example, TruthPaste’s merchant descriptor is: SP * TRUTHPAST.COM 5303885883 CA 95959 US. Where truthpaste.com is the relevant URL and 530-388- 5883 is the contact phone number.

What to include in the response

With a clear merchant descriptor, you effectively prevent the majority of unrecognized-related chargebacks. But, for those that do still occur, you should treat unauthorized chargeback responses as you do chargebacks categorized as fraudulent. So, if you obtained authorization from the cardholder and used AVS and CVV, then you should supply the following:

  • Copy of the transaction invoice or signed order form
  • Proof of delivery (based on the method of delivery)
  • If available, evidence of:
    • A connection between the order recipient and the cardholder
    • The cardholder disputing the transaction is using the merchandise
    • The IP address, email address, physical address, and/or telephone number was used in a prior undisputed transaction

Subscription billing chargebacks

Subscription billing can prove to be wildly successful for merchants who execute recurring payments well. But even these merchants will see chargebacks related to subscription billing disputes. Here, the customer notified you of recurring payment cancellation, yet they continued to be charged in the following billing cycle.

If you’re a subscription billing merchant, there could be subscription billing related chargebacks that aren’t categorized under Shopify’s ‘Subscription Canceled’ umbrella. For example, customers might not recognize your merchant descriptor on their monthly statement. These chargebacks would come through as ‘Unrecognized’. Or, the customer’s credit card on record was expired or not yet valid when the recurring billing transaction occurred. Chargebacks representing this situation would likely appear as ‘General’.

What to include in the response

The contents of a subscription billing chargeback response depends on the unique circumstances of the transaction at hand. In some cases, a customer may have contacted you to cancel the subscription, but due to the terms in your subscription cancellation policy the cancellation would not go into effect until after the following billing cycle. This situation is represented by Visa reason code 41, MasterCard reason code 4841, American Express reason code 4544, or Discover reason code 4541. If the customer disputes this transaction, you need to provide:

  • The subscription cancellation policy to which the customer agreed
  • A description, usually a screenshot, of how the customer was shown your cancellation policy at the time of the transaction

In contrast, the situation could instead be one where the customer did not contact you to cancel their subscription. In this case, you need to supply documentation to prove that the subscription was not canceled and that you or your acquiring bank were not notified that the subscription billing was canceled. This documentation usually includes one of the following as compelling evidence to disprove the chargeback:

  • A notification sent to the customer renewal or continuation of subscription
  • Proof that the customer continued to use the product after claimed date of cancellation
  • If digital goods were provided:
    • Proof that the customer accessed the purchased digital goods after the date of claimed cancellation including:
      • IP address
      • Timestamps
      • Server or activity logs

Product not received chargebacks

With product not received chargebacks, the customer did not receive the merchandise they purchased. Shipping is arguably the biggest challenge in ecommerce. Merchants that don’t have a solid shipping and fulfilment policy can expect to see this chargeback category very often.

Each card network has specific reason codes to represent customer disputes where the cardholder claims they never received the products or services: American Express reason code 155, Visa reason code 30, MasterCard reason code 4855, and Discover reason code 4755.

What to include in the response

Winning these chargeback requires evidence that proves the customer received the product, service, or digital goods before the date they disputed the transaction. But the evidence you provide all depends on what type of merchandise you provided to the customer.

  • If physical merchandise was shipped, include:
    • Tracking number
    • Complete shipping address information
    • Date of shipment prior to the dispute date
    • Shipping carrier
    • Proof the address delivered to matched the address provided by the customer
  • If digital merchandise was provided, include:
    • Proof that the customer accessed the purchased digital goods, including:
      • IP address
      • Timestamps
      • Server or activity logs
  • If transaction occurred digitally where an offline service was provided, include:
    • Date of services
    • Documentation showing the services were provided to the customer on the specified dates

Product unacceptable chargebacks

‘Product Unacceptable’ chargebacks means that the customer feels the merchandise they received either arrived damaged, was defective, or was not as described by the merchant at the time of the transaction. A customer can also deem merchandise unacceptable if they believe it to be of low quality, counterfeit, or if the terms of sale were misrepresented. These variety of disputes can be represented by American Express reason code C31, Visa reason code 53, MasterCard reason code 4853, or Discover reason code 4553, among others.

For honest merchants, this category of chargebacks is usually the result of poor product descriptions or strict return policies. Your product descriptions should be robust and include all relevant specifications. And, most importantly, the product descriptions should accurately describe the product sold.

These chargebacks can also occur from customers who attempted to make a legitimate return with you, which was denied because of your return policy. They subsequently dispute the purchase claiming the product to be unacceptable. Strict return policies typically do more harm than good, particularly when it comes to chargebacks. While a customer-centric return policy can preserve long-lasting customer relationships.

What to include in the response

In most cases of product issue-related chargebacks where the customer claims the merchandise was not as described, the following compelling evidence will make the best case to prove the dispute to be invalid:

  • A rebuttal addressing the cardholder’s claims
  • Documentation (product description screenshots, copy, etc.) proving the merchandise delivered matched what was described
  • Documentation to prove the cardholder did not attempt to return the merchandise (if applicable)

In addition to the compelling evidence above, additional documentation needs to be provided based on the method of delivery:

  • If physical merchandise was shipped, include:
    • Tracking number
    • Complete shipping address information
    • Date of shipment prior to the dispute date
    • Shipping carrier
    • Proof the address delivered to matched the address provided by the customer
  • If digital merchandise was provided, include:
    • Proof that the customer accessed the purchased digital goods, including:
      • IP address
      • Timestamps
      • Server or activity logs
  • If transaction occurred digitally where an offline service was provided, include:
    • Date of services
    • Documentation showing the services were provided to the customer on the specified dates
Shopify Tutorial

Should You be Charging Sales Tax on Your Online Store?

May 4, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/16480780-should-you-be-charging-sales-tax-on-your-online-store

This is a guest post by Mark Faggiano from TaxJar.

Note: This post applies to U.S. based merchants only. 

Nearly every U.S.-based product seller is going to have a sales tax due date in January. Some sellers have to file sales tax often and have the whole sales tax thing licked. But many only have to file sales tax once per year. For those sellers, January and it’s many sales tax due dates can be a cold and unwelcome wake up call after the fun and profitable holiday season.

But never fear, the sales tax compliance process can be broken down into five manageable steps. Start here and you’ll be sales tax compliant in no time.

Determine where you have nexus

Forty-five states and the District of Columbia require merchants to collect a sales tax from buyers. The good news is that you only have to collect sales tax in these states if you have what’s called “sales tax nexus.” Nexus is established when you have a significant business presence in a state, which can include things like:

  • Having an office
  • Having an employee
  • Having a warehouse
  • Having an affiliate 
  • Storing inventory
  • Dropshipping from a 3rd party provider
  • Temporarily doing physical business in a state for a limited amount of time, such as at a trade show or craft fair

If you suspect you might have a physical presence in a state, you could check with that state’s taxing authority to determine whether or not you have sales tax nexus.

The first step to sales tax compliance is always to determine where you have sales tax nexus and to set up your online store (and any other channels you might sell on) to collect sales tax .

Once you’ve determined where you have nexus, your next step is to:

Register for a sales tax permit

States where you have nexus require you to secure a sales tax permit before you begin collecting sales tax. To register for a sales tax permit, go to your state’s Department of Revenue website or give them a call.

States use sales tax funds to pay for things like schools, roads and public safety, so they are very invested in any merchants with nexus in their state lines collecting and remitting sales tax.

Some states’ sales tax permits are free, while others cost a small amount.

Once you’ve registered, your state will tell you when and how often they want you to pay. This is generally monthly, quarterly or annually. Most annual due dates fall in January, which is why almost every ecommerce seller will be scrambling to file and pay this month.

Don’t skip this step! Some states consider it unlawful to collect sales tax without a permit.

Here’s a sample sales tax permit application from the state of Wisconsin:

Collect sales tax

Once you’re registered in any states where you have nexus, it’s time to set up sales tax collection.  To turn on sales tax collection in Shopify, simply go to Settings > Taxes. The Shopify Tax Manual quickly and thoroughly walks you through setting up sales tax.

Multi-channel sellers, keep in mind that you must collect sales tax from buyers in states where you have sales tax nexus through every channel that you sell on. Again, this is usually fairly easy if you only have sales tax nexus in one state. If you have sales tax nexus in multiple states, check with every platform on which you sell to make sure you’re automatically collecting sales tax from the correct buyers.

Calculate how much sales tax you’ve collected

As your sales tax filing due date approaches, now is the time to figure out how much sales tax you’ve collected from buyers in every state where you have nexus.

If you only sell via Shopify and are on the Professional or Unlimited plan, this can be fairly simple to determine by running a sales tax report on your Shopify store’s Reports tab. But if you sell on multiple channels or accept payments through multiple platforms, this gets more and more complex. Software like TaxJar will handle this task for you, but if you choose to do it yourself, you must pull a report on how much sales tax you’ve collected from buyers in each state from each channel on which you sell.

A few states are simple – they just want to know how much sales tax you collected from all buyers in a state. But a majority of states are more complicated. Not only do they want to know the total amount of sales tax you collected from buyers in their state, they want you to break that amount down by county, city or other special taxing district.  This can mean going back over your sales with a fine-toothed comb to determine where each of your buyers lived. This is where sales tax compliance can quickly become a time consuming nightmare.

Once you’ve calculated how much sales tax you’ve collected, your next step is…

File your sales tax return(s)

Now comes the part where you turn in the sales tax you’ve collected from buyers to the state or states where you have sales tax nexus.

Most states make it fairly easy to file online. In fact, some states require that you file online or pay a penalty. Check with your individual state on when and how to file.

Don’t think you’re off the hook if you didn’t collect any sales tax over this taxable period. Many states still require that you file what is know as a “zero return” even if you don’t have any sales tax funds to remit to them. A zero return is a sales tax return that just tells the state that you didn’t collect sales tax during that taxable period. They basically want you to check in and ensure them that you’re still in business. If you forget to file a zero return, you can receive a penalty, just as if you forgot to file and pay.

Speaking of paying, it pays to file your sales tax returns on time. Many states realize that sales tax is a burden and will award merchants a sales tax discount for paying early or on time. Don’t leave that money lying on the table.

Relax – you’ve put a lid on sales tax!

Once you’ve run through these steps, you’re finished with sales tax… for now. Your next step? Put your next sales tax due date on your calendar and get ready to do it all again.

Shopify Tutorial

Look Past Revenue: 6 Ways to Increase Your Profit Margins

Apr 30, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/profit-margin

Young woman working at home

Your business is likely going through a few stressors right now, like tackling cash flow management, keeping customers happy, and finding ways to increase profit. 

When it comes to improving profitability, managing and increasing profit margins are key to your company’s financial success. It’s an essential small business accounting strategy for those wanting to run a successful business both online and in-store. 

The only problem? Profit margins are a challenging world. It’s easy to get lost trying to figure out profit margin ratios, operating profit margins, net versus growth, and more. It can be tricky to overcome the information overload and actually learn how to increase profit for your business.

In this guide, you’ll learn how to find the ideal profit margin formula for your business, plus create a profitability strategy that can keep you thriving and successful during uncertain times.

Table of Contents

  • What is gross margin?
  • What is a good profit margin?
  • What is a good gross profit margin?
  • How to increase profit margin
  • Finding the ideal profit margin for your business
  • Profit margin FAQ

What is gross margin?

Gross margin is the difference between a company’s revenue and cost of goods sold (COGS) divided by revenue. It’s shown as a percentage. 

Gross margin helps a company figure out how much money it keeps after incurring the costs related to making the product it sells and/or the service it provides. 

The formula for gross margin is:

(Total Revenue – Cost of Goods Sold) / Total Revenue

The higher your gross margin, the more money a company keeps on each dollar of sales. Higher margins can indicate whether your company is running a profitable operation and if sales are good.

What is a good profit margin?

If you’re asking yourself, “What is a good net profit margin?” then you’re on the right track. It’s safe to say that a good profit margin for your company depends on your location, industry, and personal circumstances. 

For example, in 2019, industrial banks had the highest reported profit margin, with an average of 51.8%. While average profit margins in manufacturing hovered around 8.5%, according to the same research. 

Retailers usually have a low profit margin compared to other sectors: 

  • Brick-and-mortar retailers tend to have profit margins between .5 and 4.5%. 
  • Web-based retailers generally have higher profit margins, while building supply and distribution retailers have the best margins⁠—reaching as high as 6.5%.

The rise in shopping online has played a big role in keeping retail margins low. As a general rule of thumb, a 10% net profit margin is deemed average, while a 20% margin is deemed high and 5% low. If you want to compare your company’s performance based on profit and merchandise margins, check out the average profit margin for your industry. 

What is a good gross profit margin?

A good gross profit margin for online retail is around 45.25%, according to NYU Stern School of Business. To reach a higher gross profit margin, you’ll need to develop a pricing strategy for your business. 

Shopify’s profit margin calculator can help you find a profitable selling price for your product. It’s easy-to-use and leverages a simple profit margin formula to calculate what price you should charge customers for your product for an optimal merchandise margin ratio. 

Determining the best profit margin formula for a single product can help you figure out how to find net profit margin and improve profitability for your business. 

How to increase profit margin

  • Reduce operating costs
  • Don’t obsess over per order profits
  • Increase the trustworthiness of your store to generate sales
  • Increase your average order value
  • Create a customer loyalty program
  • Raise your prices

1. Reduce operating costs

Reducing operating costs is a quick way to increase profit margin and improve profitability. 

The tricky part to reducing operating costs is knowing what to cut, because these expenses—like utilities, payroll, and rent—vary from business to business. 

Start by auditing everything that’s running your business, including: 

  • Labor costs
  • Office space and utilities
  • Employee benefits
  • Equipment and maintenance fees
  • Licenses and tax deposits
  • Insurance

Then look at where you can cut back on expenses and how a premium software package can help. To choose the right technology for your business, ask yourself the following questions: 

  • What can I already do well? (For example, if you’re great at business financing, consider productivity or marketing software.)
  • What do my employees spend too much time on each week?
  • If I could take one time-consuming task off my mind, which one would it be?

For example, say you advertise a toll-free sales number on one of your sites, but it puts extra work on your plate without helping improve margins. Would you be willing to reduce your workload by 50% if it meant giving up only 15% of your business? 

If yes, you could take that savings—both in terms of time and money—and put it into, say, better serving multiple customers at once with a chatbot or improving your site. Phone support may be a rarity among many online businesses, but a number of ecommerce merchants still feel it’s necessary. 

 Browse the Shopify App Store for a live chat or Chatbot app.

Try to measure the impact removing an operating cost, such as a phone number on your site, has on margin improvement and customer satisfaction. Small business owners should always look for new ways to reduce operating costs without jeopardizing the quality of their store or making operations more difficult.

2. Don’t obsess over per order profits

Many businesses are unwilling to lose money on an order, even if that means ending the relationship with an unhappy or dissatisfied customer. You may have had a similar experience, which often goes something like this:

“I’m sorry, sir. We only made $X on your purchase, so if we [fill in your reasonable request here], we’d lose money on your business. I hope you understand.”

This is a penny-wise approach and a bad way to do business in today’s highly social and connected world. If you’re not losing money on orders to quickly and proactively resolve customer problems, you’re missing out on the chance to improve profit margin.

Customers are so accustomed to mediocre service that when a business goes out of its way to proactively resolve a problem—without charging them—they’re blown away. Apart from the life-long value of that customer, you’ll receive referral marketing and recommendations that are impossible to purchase.

If you’re running an ecommerce store, here are four ways you can invest in the future of your business and, ultimately, your long-term bottom line:

  • Did something inexpensive break? Ship customers a free replacement immediately without requiring them to hassle with the return.
  • If an expensive item needs to be returned, ship them a replacement as soon as they submit tracking confirmation of the return instead of waiting until it hits your warehouse.
  • If a long-time customer needs something ASAP, overnight it to them at no charge.
  • If a customer wasn’t happy with a purchase, proactively issue a partial refund to help compensate him for the disappointment.

Serving customers like this will cost a bit more in the short term, but will pay incredible dividends as you build a loyal and highly vocal fan base that results in a very healthy bottom line.

3. Increase the trustworthiness of your store to generate sales

Trust is essential for generating sales and increasing profit margins. Shoppers today have endless options to choose from when looking for a product, most of which are tracked by marketers and store owners. But trust is harder to measure and truly understand. 

At Shopify, we want to know what makes an online store trustworthy. In 2019, we ran a series of interviews with North American shoppers, having them review a recent purchase involving a store they were unfamiliar with or a product they’ve never bought before. We also asked them to make a purchase from a Shopify store they’ve never bought from before. 

The goal was to find out what makes a new shopper comfortable with buying a new item or buying from a store they were unfamiliar with. There were two patterns that influenced shoppers’ decisions on whether or not to buy a product:

  • Trust builders. Elements or design details that make first-time shoppers feel more relaxed and confident in their purchase.
  • Trust breakers. Elements that make first-time shoppers question the quality of a business and create feelings of distrust that their purchase is a safe choice. 

These findings also revealed five key ways your online store can build trust with new shoppers and sell more online:

  • Create a welcoming homepage that makes a good first impression for new shoppers.
  • Make product information easy to find with thorough product descriptions and precise search results.
  • Share your brand story to help shoppers feel like you’re an authentic business.
  • Show customer satisfaction by providing shoppers with social proof.
  • Make transaction costs and pricing transparent.

Building trust between you and a first-time shopper encourages them to make a purchase in your online store and, in turn, increase profit margin. 

4. Increase your average order value

If you want to increase profit margin, focus on increasing your average order value (AOV). Average order value is the average dollar amount a customer spends per transaction in your store. 

You can calculate average order value by using a simple formula: total revenue / number of orders = average order value.

Shopify customers reports can calculate AOV for you, or you can use a number of helpful apps in the Shopify App Store.

There are a number of ways you can increase AOV in your ecommerce store: 

  • Add product recommendations to product and checkout pages. By adding popular products, or products that other shoppers purchased in addition to what’s currently in a person’s cart, you can not only increase average order value but also make a shift from low-margin sales to high-margin sales. 
  • Upsell or cross sell complementary products. Rather than suggesting popular items in your store, you can surface products that go well with items in a shopper’s cart. For example, coffee filters for a brewing station or shaving cream with razors. 
  • Provide order minimum incentives. You can also increase AOV and get higher margins by encouraging customers to spend a minimum amount. This could be a 15% discount on orders over $75 or a minimum order amount for free shipping, which is easy to set up in Shopify.
  • Create product bundles or packages. To get shoppers to purchase more, create bundles of products that cost less when bought together versus individually. When you bundle products, you increase the perceived value of a customer’s purchase and can help create a better shopping experience overall.
  • Run deals and specials. A great way to generate more revenue for your store is to offer coupons or a special on higher margin products. Since these products make a higher profit per unit sold, you can afford to temporarily lower the price through enticing promotions for shoppers to take advantage of. 

5. Create a customer loyalty program

Customer loyalty programs are a surefire way to increase profit margins and improve profitability in retail and the service industry. As many as 84% of consumers say they would keep on with a company that offers a loyalty program. With that, 66% of customers state earning rewards influence their buying behavior. 

You can create a customer loyalty program to sell to existing customers rather than spend more money to acquire new ones.

Sephora is known for having a strong customer loyalty program. The program has over 17 million members who make up nearly 80% of the company’s sales. 

Members earn rewards for each purchase based on a point system. Once a member accrues enough points, they can choose how to use them—whether through gift cards or discounts to help offset the high prices without cheapening the product. 

The best loyalty programs focus on the customer. They provide real value that shows loyal customers you appreciate their business and want to do what’s best for them. While heavy discounts aren’t reasonable from a small business finance standpoint, you can still find reasonable ways to reward customers so they buy more frequently and make a shift from low-margin sales to high-margin sales. 

6. Raise your prices

Raising prices is an intimidating idea when it comes to a retailer’s profit margin. If they raise prices, they assume customers will abandon them, sales will dry up, and the business will collapse into the dust heap of failure. If you’re reselling an existing product in your ecommerce store, a small increase in price can do miracles for your bottom line, especially if there’s market demand. 

Imagine the following scenario for a popular item in your online store:

  • Item retail cost: $100
  • Wholesale cost: $80
  • Profit: $20
  • Profit margin: 25% ($20 profit / $80 cost)

Now image that, after being inspired by an article on the Shopify blog, you re-priced this item at $110:

  • Item retail cost: $110
  • Wholesale cost: $80
  • Profit: $30
  • Profit margin: 37.5% ($30 profit / $80 cost)

Our minor 10% increase in prices resulted in a massive 50% increase in profits and gross margin!

If you’re not sure where to start on raising prices, consider the following information from Statista on the average order value of US online shopping orders in the second quarter of 2019, differentiated by the type of device.

During the quarter, online orders placed from desktop had an average value of $135.07, while orders placed from tablet and mobile device had an average value of $101.95 and $94.85, respectively. 

Under the best-case circumstances—assuming you have a strong unique selling proposition and aren’t competing on price—your conversion rates won’t dive and you’ll have achieved an instant 50% increase in your overall profits. Even with a significant 30% drop in conversions, you’d still be making more money than under your old pricing model, but with fewer customer servicing costs to consider. 

When implementing this strategy, keep the following in mind: make sure you test different pricing levels. While raising prices is often very effective, you’ll need to confirm it for your market/business.

If you have a large catalog, testing pricing on thousands of products can be a tall task. Start out by performing an ABC analysis to find best-selling products  in your inventory, then test their pricing.

This strategy relies on having a unique selling proposition and offering value to your customers. The more price-sensitive your customers, the less effective this will be. If you don’t have a unique selling proposition, you need to get one.

Finding the ideal profit margin for your business

There’s no doubt improving profit margins is a valuable strategy for small businesses. As you go about improving profitability for your business, be sure to check out these tips on how to perform a break-even analysis. You’re bound to quickly figure out if a new product or service will be profitable and can make smarter business decisions for the future. 

With these tips on increasing retailers’ profit margins in mind, you can create a strong foundation for your business and weather any economic uncertainty for the long run. 

Profit margin FAQ

How do you calculate profit margin?

To find profit margin, divide your gross profit by revenue. To make the margin a percentage, multiply your result by 100. If the margin is 30%, that means you keep 30% of your total revenue.

What does the profit margin tell you?

Since profit margin is the ratio of your company’s profit (sales minus expenses) divided by revenue, it tells you how your company is handling finances and how efficient your operation is.

Is a high profit margin good?

Yes, a high profit margin is good, because it indicates that your company can make a reasonable profit on sales. Compared to the industry average, a lower margin can mean your company is underpricing. Investors typically pay more for a business with higher gross profit.

What is gross profit percentage?

Gross profit percentage, also known as gross margin, is the percentage margin you earn on a product or service after deducting production costs from the revenue. Costs can include labor, materials, overhead, and more.

What is a good profit margin for retail?

A good online retailer’s profit margin is around 45%, while other industries, such as general retail and automotive, hover between 20% and 25%.

What does operating profit margin mean?

Operating profit margin shows how much profit a business makes after paying for the costs of production including wages, materials, and other operating expenses. It’s expressed as a percentage and indicates how efficiently a company controls the cost and expenses associated with operations.

How do I calculate operating profit margin?

To calculate operating profit margin, subtract your total operating expenses from your gross profit to calculate operating profit. Divide your operating profit by gross revenue to calculate your operating profit margin.

Shopify Tutorial

Break-Even Analysis: How to Predict If Your Next Venture Will Be Profitable

Apr 30, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/break-even-analysis

Starting a business often carries risk. As the saying goes, “You have to spend money to make money.”While that’s not always true, there is one very effective way to lower your risk: do a break-even analysis. A break-even analysis will tell you exactly what you need to do in order to break even and make back your initial investment.

If you run a business—or you’re thinking about starting one—you should know how to do a break-even analysis. It’s a crucial activity for making important business decisions.

What is break-even analysis?

A break-even analysis is a useful tool for determining at what point your company, or a new product or service, will be profitable. Put another way, it’s a financial calculation used to determine the number of products or services you need to sell to at least cover your costs. When you’ve broken even, you are neither losing money nor making money, but all your costs have been covered.

For example, a break-even analysis could help you determine how many cell phone cases you need to sell to cover your warehousing costs. Or how many hours of service you need to sell to pay for your office space. Anything you sell beyond your break-even point will add profit.

There are a few definitions you need to know in order to understand break-even analysis.

  • Fixed Costs: Expenses that stay the same no matter how much you sell.
  • Variable Costs: Expenses that fluctuate up and down with sales.

Why you must do a break-even analysis

There are many benefits to doing a break-even analysis.

Price smarter

Finding your break-even point will help you price your products better. A lot of psychology goes into effective pricing, but knowing how it will affect your profitability is just as important. You need to make sure you can pay all your bills.

Cover fixed costs

When most people think about pricing, they think about how much their product costs to create. Those are considered variable costs. You still need to cover your fixed costs like insurance or web development fees. Doing a break-even analysis helps you do that.

Catch missing expenses

It’s easy to forget about expenses when you’re thinking through a small business idea. When you do a break-even analysis you have to lay out all your financial commitments to figure out your break-even point. This will limit the number of surprises down the road.

Set revenue targets

After completing a break-even analysis, you know exactly how much you need to sell to be profitable. This will help you set more concrete sales goals for you and your team. When you have a clear number in mind, it will be much easier to follow through.

Make smarter decisions

Entrepreneurs often make business decisions based on emotion. If they feel good about a new venture, they go for it. How you feel is important, but it’s not enough. Successful entrepreneurs make their decisions based on facts. It will be a lot easier to decide when you’ve put in the work and have useful data in front of you.

Limit financial strain

Doing a break-even analysis helps mitigate risk by showing you when to avoid a business idea. It will help you avoid failures and limit the financial toll that bad decisions can have on your business. Instead, you can be realistic about the potential outcomes.

Fund your business

A break-even analysis is a key component of any business plan . It’s usually a requirement if you want to take on investors or other debt to fund your business. You have to prove your plan is viable. More than that, if the analysis looks good, you will be more comfortable taking on the burden of financing.

When to use a break-even analysis

There are four common scenarios when it helps to do a break-even analysis.

1. Starting a new business

If you’re thinking about starting a new business, a break-even analysis is a must. Not only will it help you decide if your business idea is viable, but it will force you to do research and be realistic about costs, as well as think through your pricing strategy.

2. Creating a new product

If you already have a business, you should still do a break-even analysis before committing to a new product—especially if that product is going to add significant expense. Even if your fixed costs, like an office lease, stay the same, you’ll need to work out the variable costs related to your new product and set prices before you start selling.

3. Adding a new sales channel

Any time you add a new sales channel, your costs will change—even if your prices don’t. For example, if you’ve been selling online and you’re thinking about doing a pop-up shop , you’ll want to make sure you at least break even. Otherwise, the financial strain could put the rest of your business at risk.

This applies equally to adding new online sales channels, like shoppable posts on Instagram. Will you be planning any additional costs to promote the channel, like Instagram ads? Those costs need to be part of your break-even analysis.

4. Changing the business model

If you’re thinking about changing your business model, for example, switching from dropshipping products to carrying inventory, you should do a break-even analysis. Your costs could change significantly and this will help you figure out if your prices need to change too.

Break-even analysis formula

Before we start calculating break-even points, let’s break down how the formula works.

Your break-even point is equal to your fixed costs, divided by your average price, minus variable costs.

Break-Even Point = Fixed Costs/(Average Price — Variable Costs)

Basically, you need to figure out what your net profit per unit sold is and divide your fixed costs by that number. This will tell you how many units you need to sell before you start earning a profit.

As you now know, your product sales need to pay for more than just the costs of producing them. The remaining profit is known as the contribution margin because it contributes cash to the fixed costs.

Now that you know what it is, how it works, and why it matters, let’s break down how to calculate your break-even point.

Before we get started, get your free copy of the break-even analysis template . After you make a copy, you’ll be able to edit the template and do your own calculations.

Step 1 – Gather your data

The first step is to list all the costs of doing business. Everything from the cost of your product, to rent, to bank fees. Think through everything you have to pay for and write it down.

The next step is to divide them into fixed costs, and variable costs.

1. Fixed costs

Fixed costs are any costs that stay the same, regardless of how much product you sell. This could include things like rent, software subscriptions, insurance, and labour.

Make a list of everything you have to pay for no matter what. In most cases, you can list the expenses as monthly amounts unless you’re considering an event with a shorter time frame, such as a three-day festival. Add everything up. If you’re using the break-even analysis spreadsheet, it will do the math for you automatically.

2. Variable costs

Variable costs are costs that fluctuate based on the amount of product you sell. This could include things like materials, commissions, payment processing, and also labour.

Some costs could go in either category, depending on your business. If you have salaried staff, they will go under fixed costs. But if you pay part-time hourly employees who only work when it’s busy, they will be considered variable costs.

Make a list of all your costs that fluctuate depending on how much you sell. List the price per unit sold and add up all the costs, or use the spreadsheet which will add them up automatically.

3. Average price

Finally, decide on a price. Don’t worry if you’re not ready to commit to a final price yet, you can change this later. Keep in mind, this is the average price. If you offer some customers bulk discounts, it will lower the average price.

Step 2 – Plug in your data

Now it’s time to plug in your data. The spreadsheet will pull your fixed cost total and variable cost total up into the break-even calculation. All you need to is to fill in is your average price in the appropriate cell. After that, the math will happen automatically. The number that gets calculated in the top right cell under break-even units is the number of units you need to sell to break even.  

In the break-even analysis example above, the break-even point is 92.5 units.

Step 3 – Make adjustments

Feel free to experiment with different numbers. See what happens if you lower your fixed or variable costs, or try changing the price. You may not get it right the first time, so make adjustments as you go.

Warning: Don’t forget any expenses

The most common pitfall of break-even analysis is forgetting things—especially variable costs. Break-even analyses are an important step towards making important business decisions. That’s why you need to make sure your data is as accurate as possible.

To make sure you don’t miss any costs, think through your entire operations from start to finish. If you think through your ecommerce packaging experience, you might remember that you need to order branded tissue paper, and that one order lasts you 200 shipments. If you’re thinking through your festival setup, you might remember that you’ll need to provide napkins along with the food you’re selling. These are variable costs that need to be included.

Limitations of break-even analysis

Break-even analysis plays an important role in making business decisions, but it’s limited in the type of information it can provide.

Not a predictor of demand

It’s important to note that a break-even analysis is not a predictor of demand. It won’t tell you what your sales are going to be, or how many people will want what you’re selling. It will only tell you how many units you need to sell in order to break even. It’s also important to note that demand isn’t stable. As you change your price, the number of people willing to buy your product will change as well.

Dependent on reliable data

Sometimes costs fall into both fixed and variable categories. This can make calculations complicated and you’ll likely need to wedge them into one or the other. For example, you may have a baseline labour cost no matter what, as well as an additional labour cost top that could fluctuate based on how much product you sell.

The accuracy of your break-even point depends on accurate data. If you don’t feed good data into the formula, you won’t get a reliable result.

Simplistic

The break-even point formula is simplistic. Many businesses have multiple products with multiple prices. It won’t be able to pick up that nuance. You’ll likely need to work with one product at a time or estimate an average price based on all the products you might sell. If this is the case, it’s best to run a few different scenarios to be better prepared.

As prices fluctuate, so do costs. This model assumes that only one thing changes at a time. Instead, if you lower your price and sell more, your variable costs might decrease because you have more buying power or are able to work more efficiently. Ultimately it’s only an estimate.

Ignores time

The break-even analysis ignores fluctuations over time. The time frame will be dependent on the period you use to calculate fixed costs (monthly is most common). Although you’ll see how many units you need to sell over the course of the month, you won’t see how things change if your sales fluctuate week to week, or seasonally over the course of a year. For this, you’ll need to rely on good cash flow management, and possibly a solid sales forecast .

It also doesn’t take the future into account. Break-even analysis only looks at here and now. If your raw materials cost doubles next year, your break-even point will be a lot of higher unless you raise your prices. If you raise your prices, you could lose customers. This delicate balance is always in flux.

Ignores competitors

As a new entrant to the market, you’re going to affect competitors and vice versa. They could change their prices, which could affect demand for your product, causing you to change your prices too. If they grow quickly and a raw material you both use becomes more scarce, the cost could go up.  

Ultimately, break-even analysis will give you a very solid understanding of the baseline conditions for being successful. It is a must. But it’s not the only research you need to do before you starting or making changes to a business.

Strategies to lower your break-even point

What if you complete your break-even analysis and find out that the number of units you need to sell is too high? If the number seems unrealistic or unattainable, don’t panic. You may be able to make some adjustments to lower your break-even point.

1. Lower fixed costs

See if there’s an opportunity to lower your fixed costs. The lower you can get them, the fewer units you’ll need to sell in order to break-even. For example, if you’re thinking about opening a retail store and numbers aren’t working out, consider selling online instead. How does that affect your fixed costs?

2. Raise your prices

If you raise your prices, you won’t need to sell as many units to break even. The marginal contribution per unit sold will be higher. When thinking about raising your prices, be mindful of what the market is willing to pay, and expectations that come with a price. You won’t need to sell as many units, but you’ll still need to sell enough—and if you charge more, buyers may expect a better product or better customer service.

3. Lower variable costs

Lowering your variable costs is often the most difficult option, especially if you’re just going into business. But the more you scale, the easier it will be to reduce variable costs. It’s worth trying to lower your costs by negotiating with your suppliers, changing suppliers, or changing your process. For example, maybe you’ll find that packing peanuts are cheaper than bubble wrap for shipping fragile products.

Shopify Tutorial

Basics of Small Business Accounting: 12 Steps to Get Your Company on Track

Apr 30, 2021 , by 露露

This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/15334373-small-business-accounting-101-ten-steps-to-get-your-startup-on-track

If you’ve just launched or are about to start your small business, congratulations! It takes uncommon passion and perseverance to get to where you are today.

However, as you know, business ownership is a constant flood of satisfying milestones coupled with expanding to-do lists. With your launch, you’ll need to get on top of the accounting tasks that come along with owning a store.

This list of small business accounting steps will give you the confidence to know you’ve covered your bases and are ready to move on to the next item on your business to-do list.

How to do accounting for a small business

  • Open a bank account
  • Track your expenses
  • Develop a bookkeeping system
  • Set up a payroll systems
  • Investigate import tax
  • Determine how you’ll get paid
  • Establish sales tax procedures
  • Determine your tax obligations
  • Calculate gross margin
  • Apply for funding
  • Find high-quality accounting partners
  • Periodically re-evaluate your methods

1. Open a bank account

After you’ve legally registered your business, you’ll need somewhere to stash your business income. Having a separate bank account keeps records distinct and will make life easier come tax time. It also protects your personal assets in the unfortunate case of bankruptcy, lawsuits, or audits. And if you want funding down the line, from creditors and investors alike, strong business financial records can increase the likelihood of approvals.

Note that LLCs, partnerships, and corporations are legally required to have a separate bank account for business. Sole proprietors don’t legally need a separate account, but it’s definitely recommended.

Start by opening up a business checking account, followed by any savings accounts that will help you organize funds and plan for taxes. For instance, set up a savings account and squirrel away a percentage of each payment as your self-employed tax withholding. A good rule of thumb is to put 25% of your income aside, though more conservative estimates for high earners might be closer to one third.

Next you’ll want to consider a business credit card to start building credit. Credit is important for securing funding in the future. Corporations and LLCs are required to use a separate credit card to avoid commingling personal and business assets.

Before you talk to a bank about opening an account, do your homework. Shop around for business accounts and compare fee structures. Most business checking accounts have higher fees than personal banking, so pay close attention to what you’ll owe.

To open a business bank account, you’ll need a business name, and you might have to be registered with your state or province. Check with the individual bank for which documents to bring to the appointment.

2. Track your expenses

The foundation of solid business bookkeeping is effective and accurate expense tracking. It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and legitimize your filings.

From the start, establish a system for organizing receipts and other important records. This process can be simple and old school (bring on the Filofax), or you can use a service like Shoeboxed. For American store owners, the IRS doesn’t require you to keep receipts for expenses under $75, but it’s a good habit nonetheless.

There are five types of receipts to pay special attention to:

  • Meals and entertainment. Conducting a business meeting in a café or restaurant is a great option, just be sure to document it well. On the back of the receipt, record who attended and the purpose of the meal or outing.
  • Out of town business travel. The IRS and CRA are wary of people claiming personal activities as business expenses. Thankfully, your receipts also provide a paper trail of your business activities while away.
  • Vehicle related expenses. Record where, when, and why you used the vehicle for business, and then apply the percentage of use to vehicle-related expenses.
  • Receipts for gifts. For gifts like tickets to a concert, it matters whether the gift giver goes to the event with the recipient. If they do, then the expense would be categorized as entertainment rather than a gift. Note these details on the receipt.
  • Home office receipts. Similar to vehicle expenses, you need to calculate what percentage of your home is used for business and then apply that percentage to home-related expenses.

Starting your business at home is a great way to keep overhead low, plus you’ll qualify for some unique tax breaks. You can deduct the portion of your home that’s used for business, as well as your home internet, cell phone, and transportation to and from work sites and for business errands.

Any expense that’s used partly for personal use and partly for business must reflect that mixed use. For instance, if you have one cell phone, you can deduct the percentage you use the device for business. Gas mileage costs are 100% deductible, just be sure to hold on to all records and keep a log of your business miles (where you’re going and the purpose of the trip).

3. Develop a bookkeeping system

Before we jump into establishing a bookkeeping system, it’s helpful to understand exactly what bookkeeping is and how it differs from accounting. Bookkeeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements.

Accounting is a high-level process that looks at business progress and makes sense of the data compiled by the bookkeeper by building financial statements. As a new business owner, you’ll need to determine how you want to manage your books:

  • You can choose to go the DIY route and use software like Quickbooks or Wave. Alternatively, you could use a simple Excel spreadsheet.
  • You have the option of using an outsourced or part-time bookkeeper that’s either local or cloud-based.
  • When your business is big enough you can hire an in-house bookkeeper and/or accountant.

With so many options out there, you’re sure to find a bookkeeping solution that will suit your needs.

Canadian and American business owners need to determine whether they’ll use the cash or accrual method of accounting. Let’s take a look at the difference between the two.

  • Cash method. Revenues and expenses are recognized at the time they are actually received or paid.
  • Accrual method. Revenues and expenses are recognized when the transaction occurs (even if the cash isn’t in or out of the bank yet) and requires tracking receivables and payables.

Technically, Canadians are required to use the accrual method. To simplify things, you can use the cash method throughout the year and then make a single adjusting entry at year end to account for outstanding receivables and payables for tax purposes.

American business owners can use cash-based accounting if revenues are less than $5 million USD, otherwise they must use the accrual method. 


Bookkeeping 101

Bookkeeping is something that you either have to learn or outsource when you’re running a business. Luckily, it’s possible to learn how to manage your own books and there are a few notable benefits to tackling it yourself.

4. Set up a payroll system

Many online stores start out as a one-person show. When you’ve reached the point where it makes sense to hire outside help, you need to establish whether that individual is an employee or an independent contractor.

For employees, you’ll have to set up a payroll schedule and ensure you’re withholding the correct taxes. There are lots of services that can help with this, and many accounting software options offer payroll as a feature.

For independent contractors, be sure to track how much you’re paying each person. American business owners may be required to file 1099s for each contractor at year end (you’ll also need to keep their name and address on file for this).

5. Investigate import tax

Depending on your business model, you may be planning to purchase and import goods from other countries to sell in your store. When importing products, you’ll likely be subject to taxes and duties, which is worth noting if you run a dropshipping business. These are the fees your country imposes on incoming goods. Learn about importing goods into the US and Canada, and the associated taxes, so you know the rules from the get-go.

Also, if you’re importing goods, a duty calculator can help you estimate the fees in your own business and plan for costs.

6. Determine how you’ll get paid

When sales start rolling in, you’ll need a way to accept payments. If you’re a North American store owner on Shopify, you can use Shopify Payments to accept credit card payments. This saves you the hassle of setting up a merchant account or third-party payment gateway.

If you want to accept credit card payments without using Shopify Payments, you’ll either need a merchant account or you can use a third-party payment processor like PayPal, Stripe, or Square. A merchant account is a type of bank account that allows your business to accept credit card payments from customers.

If you use a third party payment processor, fees vary. Some processors charge an interchange plus rate, typically around 2.9% + $0.30 per transaction. Others charge flat fees for each transaction, while some have a monthly membership model for unlimited transactions. You can consult this list to help you find a payment gateway that will work for your location.

7. Establish sales tax procedures

The world of ecommerce has made it easier than ever to sell to customers outside of your state and even country. While this is a great opportunity for brands with growth goals, it introduces confusing sales tax regulations.

When a customer walks into a brick and mortar retail store, they pay the sales tax of whatever state or province they make the purchase in, no matter if they live in that city or they’re visiting from somewhere around the world. However, when you sell online, customers may be located in different cities, states, provinces, and even countries.

Canadian store owners only need to start collecting GST/HST when they have revenues of $30,000 or more in a 12-month period. You can submit the GST/HST you collect in installments. If you want, you can collect GST/HST even if you don’t earn this much in revenue, as you can put it toward input tax credits.

Selling to international customers can be easier than domestic sales. Canadian store owners don’t need to charge GST/HST to customers who are outside of Canada.

For American store owners, sales tax gets a bit trickier. You’ll need to determine if you operate your business in an origin-based state or destination-based state. In the former, you must charge sales tax based on the state where you run your business. The latter requires sales tax to be applied based on the purchaser’s location.

International purchases are tax exempt for US-based businesses. This can all get a bit complicated, so check in with your accountant for detailed information about your specific state’s regulations regarding international sales tax.

8. Determine your tax obligations

Tax obligations vary depending on the legal structure of the business. If you’re self employed (sole proprietorship, LLC, partnership), you’ll claim business income on your personal tax return. Corporations, on the other hand, are separate tax entities and are taxed independently from owners. Your income from the corporation is taxed as an employee.

Self-employed people need to withhold taxes from their income and remit them to the government in lieu of the withholding that an employer would normally conduct. For American store owners, you’ll need to pay estimated quarterly taxes if you’ll owe more than $1,000 in taxes this year. Canadians have it a little easier; if your net tax owing is more than $3,000, you’ll be required to pay your income tax in installments.

9. Calculate gross margin

Improving your store’s gross margin is the first step toward earning more income overall. In order to calculate gross margin, you need to know the costs incurred to produce your product. To understand this better, let’s quickly define both cost of goods sold (COGS) and gross margin.

  • COGS. These are the direct costs incurred in producing products sold by a company. This includes both materials and direct labor costs.
  • Gross margin. This number represents the total sales revenue that’s kept after the business incurs all direct costs to produce the product or service.

Here’s how you can go about calculating gross margin:

Gross margin (%) = (revenue – COGS) / revenue

You can also use our free profit margin calculator to plug in your numbers for a quick calculation.

The difference between how much you sell a product for and how much the business actually takes home at the end of the day is what truly determines your ability to keep the doors open.

10. Apply for funding

There are many scenarios where a growing ecommerce business might need to secure external business financing, be it through a line of credit, investors, a small business loan, or even a business partner.

For instance, you might have an unexpected downturn in sales due to uncontrollable external circumstances, or maybe you need a financial boost during slow periods in a seasonal business. Brands with big growth goals often need to secure funding to make investments in new product developments, inventory, retail stores, hiring, and more.

Remember, to get a small business loan, you’ll likely have to provide financial statements—a balance sheet and income statement at the very least, possibly a cash flow statement as well.

But before you sign off on the debt, it’s important to make sure the numbers make sense. In other words, it’s a good idea to calculate the ROI of the loan. Add up all the expenses you need the loan to cover, the expected new revenue you’ll get from the loan, and the total cost of interest. You can use our small business loan calculator to find out the total cost.

11. Find high-quality accounting partners

Whether doing your own accounts is too much for you or you just want a little external guidance, small business accountants and financial professionals can help you get more control of your money. There are a few individuals you might want to consider enlisting:

  • Accountant. A small business accountant can advise at many different points, including your business structure, creating financial statements, obtaining necessary licenses and permits, and even writing a business plan.
  • Certified public accountant (CPA). In case of an audit, a CPA is the only individual who can legally prepare an audited financial statement.
  • Bookkeeper. The bookkeeper manages the day-to-day records, regularly reconciling accounts, categorizing expenses, and managing accounts receivable/accounts payable.
  • Tax preparer. Your tax preparer fills out necessary tax forms and may file them on your behalf. Some will also set up your estimated tax payments.
  • Tax planner. These professionals help optimize your taxes before you file them, helping you learn ways to lower your tax burden.

12. Periodically re-evaluate your methods

When you first start out you may opt to use a simple spreadsheet to manage your books, but as you grow you’ll want to consider more advanced methods like Quickbooks or Bench. As you keep growing, continually reassess the amount of time you’re spending on your books and how much that time is costing your business.

The right bookkeeping solution means you can invest more time in the business with bookkeeping no longer on your plate and potentially save the business money. Win-win!

Small business accounting FAQs

How do you keep accounting records for small business?

You can set up basic small business accounting records in a spreadsheet, though this is more tedious, prone to manual errors, and time consuming than a comprehensive small business accounting software. At the very least, you’ll want to track expenses and income in a secure cloud-based platform.

What is the easiest accounting software for small business?

There are many user friendly accounting software options for small businesses, ranging from free to paid models. In our small business account tools roundup, we recommend checking out easy-to-use software like Quickbooks, Freshbooks, Xero, and Zoho Books. You can also browse the Shopify App store for an accounting software that will seamlessly integrate with your ecommerce store.

How much are accounting fees for a small business?

Accounting fees vary wildly based on your business structure, needs, technology and tools, and hired experts. Some accounting software, like Wave, is free to sign up—though you’ll have to pay to use features like payment processing. Other tools may cost hundreds of dollars per month, though these typically come with additional features like an open API, customer support, and other business management features.

How much is an accountant for small business?

Small business accountants range in price, depending on a number of factors. If you’re hiring in-house, the US Bureau of Labor Statistics estimates accountants make an average annual salary of $70,000. Bookkeepers come in at $17.26 per hour, according to PayScale. If you’re outsourcing to an external contractor or one of many accounting firms, costs vary from a few hundred dollars per month to thousands per month—depending on the level of services provided and complexity of your small business accounting needs, among other factors.

What does an accountant do for a small business?

A small business accountant does many things, including the following:

  • Form your business
  • Help write a business plan
  • Audit your cash flow
  • Find cost-cutting opportunities
  • Advise on business strategy
  • Manage debt
  • Chase down payments
  • Write and submit loan applications
  • Plan budgets
  • Set up your accounting software
  • Manage inventory
  • Recommend business tools
  • Help open new bank accounts
  • Oversee payroll
  • Year-end financial reporting
  • Prevent audits
  • Advise on personal finances

What does a bookkeeper do for a small business?

Bookkeepers handle ongoing, administrative duties for small business accounting, including:

  • Reconcile accounts
  • Record transactions
  • Manage accounts receivable and accounts payable
  • Adjust entries
  • Prepare financial statements
  • Send invoices
  • Set up and manage technology and tools
  • Stay up to date on laws and regulations
  • Basic payroll
  • Work with your accountant, tax preparer, and tax planner

Know your numbers to grow your business

Starting a business can be an overwhelming process, but if you follow this list, you’ll have your new store’s finances in order from the beginning. From opening the right type of bank account to determining how much you’ll bring in per product, these tasks will all contribute to your business’s success, now and as it grows.

About the author: Kendra Murphy is a product designer at Bench, the online bookkeeping service that pairs you with a professional bookkeeper and uses simple, elegant software to do your books for you.