Recording Journal Entries in Finaloop | Finaloop Help Center

Recording Journal Entries in Finaloop

Learn how to add or adjust journal entries in Finaloop

Written by Emily Burrows
May 24, 2026

About

If you're coming from a traditional accounting system like QuickBooks or Xero, you're probably used to seeing detailed journal entries (JEs) for everything—from bank transactions to expense categorization.

Finaloop operates on a double-entry accounting system, meaning every accounting event – whether a transaction, adjustment, or accrual – is backed by a corresponding debit and credit JE in the background. These JEs update your General Ledger, Balance Sheet, Profit & Loss statement, and Cash Flow statement.

But, Finaloop works differently in order to create and maintain the most accurate books with the least amount of manual work needed from you or your accountants. We’re built for ecommerce brands that want real-time, accurate books without the complexity, delays, and inaccuracies of manual accounting. We designed our platform to do much of the heavy lifting behind the scenes.

Sometimes you or your accountant may want to add a JE to report an external transaction, adjustment, or accrual, or to reconcile with an external source. In Finaloop, JEs are created in one of 3 ways:

Automatically synced from your connected sources of truth (“ Automated Journal Entries”),
Adjusted directly through our platform (“ Customized Journal Entries”), or
Manually added by our accounting team (“ Manual Journal Entries”). **.

Let's walk through exactly each type of JE and how they work in Finaloop.

1. Types of Journal Entries in Finaloop

Finaloop has all the JE capabilities of traditional accounting software like QuickBooks or Xero, but with a streamlined approach designed for ecommerce.

Our mission is to provide fully reconciled and accurate books that require less manual work for you. Books closed by our accounting team have successfully passed many due diligence reviews and IRS audits with flying colors so you can breathe easy and know you are in good hands!

Automated Journal Entries

✅ These JEs are IRS-aligned and fully automated. No need to add or edit them.

JEs are automatically imported in real time from your connected data sources using secure API connections. Every transaction is matched to the original source, categorized based on ecommerce best practices, and validated for accuracy.

Because they reflect the official data that goes to the IRS, these entries are locked and can’t be edited manually.

These include:

Sales, merchant fees, and undeposited funds
Bank & credit card transactions
Payroll data from Gusto
Bills from Settle or Bill.com
Ecommerce loans through PayPal Working Capital, Stripe Capital, and Shopify Capital

Customized Journal Entries

🧠 You or your accountant can use Finaloop's built-in tools to enter the adjustment needed and our system will automatically generate the necessary JE accurately in your books.

These entries are for things that require some input from your side. Instead of asking you to write formal JEs, we’ve built user-friendly tools that take care of it in just a few clicks.

These include:

Shopify order adjustments (marking orders as void, product giveaways, uncollectible, etc.)
Wholesale invoices
COGS and inventory
Prepaid expenses and accruals
Recording transactions from an external bank account or credit card
Bills
Payroll (except for Gusto)
Equity adjustments

Manual Journal Entries

🧮 When it doesn’t fit into the first two buckets, our team will take care of the JE manually. These may be initiated and recorded by us or requested by you or your accountant and reviewed by our team.

Examples of Manual Journal Entries that are initiated and recorded by our team include:

Loans that are not automated
Fixed asset depreciation
Intangible amortization
Year-end adjustments

We take full responsibility for their accuracy and ensure they are properly recorded in your books.

But, we also know there may be additional adjustments you want to make or that are requested by your accountant. For these additional adjustments that don't fall under any of the previous categories, send the details to our accounting team and we'll push to get this done with only a 24 hour turnaround time.

Because we take full responsibility for the accuracy of your books, we review and validate all JEs before they’re recorded. This helps prevent duplicate entries and ensures compliance with accounting best practices and alignment with our system's validations.

2. First, A Note To Fellow CPAs & Bookkeepers

If you’re used to manually recording JEs in traditional accounting software, Finaloop’s process may feel different. However, rest assured that our system has all the JE functionalities you need—just with an extra layer of quality control.

We work with many CPAs and bookkeepers and work to save you time while improving accuracy, so you can focus on higher-level work, such as filing taxes, providing financial analysis and controllership, and/or providing strategic advice instead of repetitive, manual data entry.

Our books have been used to file over 10,000 tax returns, hundreds of our brands have been through successful financial due diligence reviews, and we passed over 25 IRS audits with no comments. You and your client are in good hands and we are here to help you with anything you need to get your job done efficiently.

You can find all the details you need in this article but if you have any questions, we’re here to help!

3. Automated Journal Entries

Let’s dive into the type of JEs that are fully automated in Finaloop (no work needed from you!)

a. Sales & Merchant Fees from Connected Sales Channels & Payment Processors

Any transactions or data from Shopify, Amazon, Walmart, Etsy, eBay, Shop Pay, Paypal, Stripe, Amazon Pay, Afterpay, or Klarna are fully automated.

JEs for gross sales, refunds, discounts, merchant fees, selling fees, shipping income, fulfillment fees, advertising, service fees, disputes, sales tax collected, and undeposited funds are automatically recorded, giving you a clear, real-time financial breakdown that aligns seamlessly with your sources of truth.

Our reconciliation process is built to cover all the complexities that arise in various use cases but we’ll outline some examples of how these JEs work.

When a Shopify order comes in:
- Debit “Accounts receivables (A/R) - Shopify,”
- Credit “Sales - Shopify” or “Deferred revenue - Shopify”, depending on the specifics of your business setup.
When a customer pays via connected payment processor, e.g., Stripe:
- We sync data from your sales channel, payment processor, and bank payouts using a robust three-way reconciliation process to match the order data to the payment data to the payout data.
  - Debit “Undeposited funds - Stripe”.
  - Credit “Accounts receivables (A/R) - Shopify,”
- When Stripe deposits cash into your bank account:
  - Debit “Money in transit” (until it hits your actual bank account)
  - Credit “Undeposited funds - Stripe”
When a customer pays via cash payment, e.g., check, ACH, or cash:
- Debit “Accounts receivable (A/R) - cash orders - Shopify”
- Credit “Accounts receivables (A/R) - Shopify,”
- When the payment is received in your bank account, mark it as “Cash payment received for store orders”:
  - Debit your Bank account
  - Credit “Cash payments received for store orders”

b. Sales & Fees for Non-Integrated Sales Channels & Payment Processors

If a sales channel isn’t integrated, we pull sales data through the payment processor. If both the sales channel and payment processor aren’t integrated, we pull the sales data on a net basis based on bank deposits.

c. Bank & Credit Card Transactions

Your bank and credit card transactions are automatically synced through our banking integration.

Over 95% of your transactions are automatically categorized (i.e., a JE is recorded) based on our ecommerce-specific chart of accounts and based on our expansive vendor database from working with thousands of brands.

d. Payroll with Gusto

If you are using Gusto as your payroll provider, we automatically record all JEs related to salary, employer taxes, fees, and benefits directly from the data we import from Gusto.

e. Bills/ Payables from Settle or Bill.com

We’ll automatically sync the data on your vendor bills from Settle or Bill.com and map them to the correct category in your P&L or Balance Sheet.

4. Customized Journal Entries

There are also various JEs that can be easily created or adjusted right in Finaloop.

a. Adjusting the Treatment of Specific Shopify orders (Void, Uncollected, Product Giveaway, etc.)

On the Orders page in Finaloop, you can easily adjust the treatment of specific orders in Finaloop. For one or multiple orders, you can:

Add deductions
Link them to one or multiple payments
Void orders
Close uncollected or overcollected balances
Mark an order as a product giveaway
Mark an order as COGS only with no corresponding sales (e.g., replacement orders, exchanges)

b. Wholesale/ B2B Invoices (Accounts Receivable)

When creating invoices in Finaloop, a JE will automatically be recorded debiting your Accounts receivable and crediting sales for the specific sales category you selected in your invoice (e.g., Sales - Wholesale).
You can also add discounts to the invoices, shipping, and tax charges to adjust the JE accordingly.

c. COGS and Inventory

Finaloop makes it easy to manage inventory and COGS journal entries no matter which inventory method you use in your books.

Purchase-based COGS

Inventory transactions are automatically recorded as COGS.
At year-end, we’ll request your year end inventory balance and record the adjusting JE based on reported values.

Sales-based COGS

Inventory-related purchases are recorded as inventory. COGS are recorded automatically for Shopify or Amazon sales.

d. Prepaid Expenses and Accruals

Need a JE to amortize a prepaid expense or record an accrued expense? With Finaloop’s Spread feature, you can take full control of when expenses show up in your P&L or Balance Sheet by matching them to when you actually benefited from the expense you paid for. This allows you to manage ongoing transactions related to prepaid expenses or to accrue specific transactions to an earlier date.

e. Recording Transactions from an External Bank Account or Credit Card

On our Transactions screen, you can report business transactions paid from or deposited in accounts which are not connected to our banking integration. Here are the most common examples of when you should be recording business transactions:

Business expenses paid by the owner of the business, a related business, employee or contractor (even if the business will reimburse them)
Business income received by the owner (e.g., in a personal account) or by a related business
Expenses paid through a third party lender directly to supplier
Business transaction paid from, or received in, an account that isn't synced to Finaloop (either through an integration or through a CSV upload)

f. Bills (Accounts payable)

When creating bills in Finaloop, a JE will automatically be recorded debiting the relevant expense account and crediting Accounts payable.
When linking bills to payments in your bank account , we will credit your bank account and debit Accounts payable.

g. Payroll (For Non-Connected Payroll Providers)

If you are using a payroll provider that is not Gusto:

If you process payroll with a provider that is not integrated with Finaloop, our system will ask you for specific inputs as part of our ‘smart’ tailored flow to ensure we get all the numbers we need from you to get everything completely accurate in your books. After the flow is completed for each payroll cycle, our system automatically 'translates' the answers into JEs.

h. Equity Adjustments

Need to adjust equity? Go to More > Owners. Provide the relevant details, and our team will ensure JEs are accurately recorded.

5. Manual Journal Entries

a. Loans

Ecommerce loans can be notoriously tricky and complex, especially when it comes to revenue-based loans or merchant cash advances instead of traditional loans.

Loans are typically detected and categorized automatically, requiring minimal manual work from you.

b. Fixed Asset Depreciation & Intangible Amortization

For fixed asset or intangible balances that were paid before you joined Finaloop, we’ll request the data for this as part of our Balance Sheet creation process and manage the opening balance JEs.

c. Year-End & Other Adjustments

Do you have other JEs you want added that aren’t included in this list? For year-end adjustments or other JEs not included in this list, such as advances from customers, contact our bookkeeping team via chat or email.