How to set up Etsy Xero integration: A step-by-step guide for sellers

Running an Etsy shop is exciting, but managing your books manually? Not exactly. 

The solution to this? Eliminating manual data entry and reducing errors.

How to do this? Simply by automatic data sync across channels, which gives you real-time financial insights.

Your Etsy shop's financial management gets tricky because Etsy deposits are not a simple reflection of your sales, as this marketplace may hold your funds before sending them to your bank account due to several reasons. 

This is where Etsy Xero integration enables your transaction data to flow naturally into your accounting system, making the reconciliation quick, easy, and accurate.

This article is for Etsy sellers who want to simplify bookkeeping, track inventory, and stay on top of their finances. 

What is Etsy Xero integration?

Xero is an online accounting software designed for businesses of all sizes, specifically small and mid-sized. It helps reconcile deposits and payouts by automatically matching bank transactions with bank feeds. 

Additionally, it enables real-time financial tracking and reporting for instant business insights and automates tax calculations. 

This integration connects your Etsy store with your Xero account. It transfers your financial data between these two platforms automatically. Having said that, instead of typing in every transaction yourself, the integration pushes sales, fees, or refunds straight to Xero where they get sorted and ready for reconciliation.

Common financial challenges for Etsy sellers

Here are some common challenges faced by Etsy shop owners:

• Manual data entry and reconciliation: You spend hours recording every sale, refund, and shipping cost manually. This process often leads to mistakes
  
  
• Unclear marketplace payouts: Etsy deposits are net of transaction fees, refunds, and taxes. This platform subtracts these elements beforehand, which makes it hard to match payouts to individual sales
  
  
• Time-consuming monthly closing: Without automation, month-end bookkeeping turns into a big task. You'll need to match bank deposits with sales, categorize different types of fees, factor in returns and refunds, and double-check that everything adds up

How does the integration work between Etsy and Xero?

Connecting your Etsy store to the Xero accounting system sets up a smooth link for data transfer. 

It sends every transaction from your Etsy platform straight into Xero categorizing and mapping details. This includes your sales, transaction costs, listing charges, advertising costs, payment processing fees, taxes collected, and refunds you process.

The data-sync runs in real-time or follows a set schedule, keeping financial records up-to-date. Advanced integration tools like Webgility can handle tricky things such as multi-currency dealings, inventory updates, and calculating COGS for profitability analysis.

Why Etsy Xero integration is a must for Etsy sellers

Connecting Etsy with Xero improves how you handle your finances right away. As your business grows, these benefits get better. Here are some examples:

1. Save time with automatic data input

Turn days of work into minutes of automation. Tasks that used to take hours now run in the background automatically without you doing much. This gives you time to focus on more tasks that matter, such as product development tasks or executing marketing campaigns. 

2. Reduced errors in financial records

Human error is inevitable when you enter hundreds of transactions each month manually. Automation removes errors like typos, wrong calculations, or missed transactions.

3. Real-time financial insights and reporting

Quickly see profit margins, cash flow, and sales details. Find out what's really driving business, and review your top products by sales and quantity. 

Pro tip: Using automation tools like Webgility can make Etsy Xero integration hassle-free. Its AI assistant allows you to delve deeper into insights to assess your business performance and increase operational efficiency.    

4. Simplified tax preparation and compliance

Handling sales tax can feel overwhelming when selling in different regions. The Etsy Xero integration categorizes your income and expenses. This setup helps you prepare tax returns and deal with questions from tax authorities.

5. Improved inventory tracking and cost management

For sellers who track inventory and costs in Xero, an integration makes it easier to match sales with stock levels and COGS. You can monitor profitability per SKU, track returns or restocks, and gain a clearer view of how product performance affects profits.

Etsy Xero integration: Step-by-step setup process

Method 1: Using third-party integration apps 

Most Etsy sellers choose third-party tools for more seamless, reliable integration with Xero. Several apps facilitate Etsy Xero integration, with Webgility being among the most popular choices. These tools are purpose-built for automating ecommerce accounting and offering features specifically designed for marketplace sellers.

Watch how exactly Webgility solves integration and many more problems. 

It offers far more than basic sync:

• Full transaction sync: Automatically imports Etsy sales, fees, taxes, returns, refunds, discounts, order notes and promo codes, and shipping charges into Xero
  
  
• Smart reconciliation: Matches Etsy deposits with transactions in Xero for easy bank reconciliation
  
  
• Customizable mapping: Map each data type - Multiple order types (B2C, B2B, POS), Transaction classes and tracking categories for summary and granular reporting, marketplace and payment processor-specific transactions, individual products and inventory items (including bundles, assemblies, and variations), and customer and item-level details to the correct chart of accounts
  
  
• Multichannel support: Connect other platforms like Amazon, Shopify, Walmart, and eBay alongside Etsy
  
  
• Inventory & COGS tracking: Connect Etsy orders to track your inventory and sync data in Xero for real-time margin analysis

How to setup Etsy Xero integration with Webgility:

1. Connect your sales channel - Etsy to Webgility

Webgility + Etsy: Smart automation to simplify your workflow

• Sign up for a Webgility account
• Select your marketplace (like Etsy) as the sales channel
• Authorize Webgility to access your store data by following the prompts. This allows Webgility to import order, customer, and inventory information from your shop

2. Connect Webgility to Xero

Automate your Etsy storefront, from orders to accounting, effortlessly

• After your sales channel is connected, go to “Connect to Accounting Software.”

See how easy it is to connect your Etsy store to Webgility

• Select “Xero” as your accounting software and click “Next”

See how easy it is to connect Xero to Webgility

• Click “Connect,” then log in to your Xero account

Xero + Webgility connection diagram

Finalized integration screen between Xero and Webgility 

• On the Xero User Consent page, grant Webgility the required permissions by clicking “Allow Access.” If you have multiple Xero organizations, select the correct one
  

How to give Webgility access to your Xero account 

3. Authorize and sync data

• Once authorized, you’ll see a success message confirming Webgility is connected to Xero

Setup complete, Xero successfully Linked to Webgility

• Click “Finish.” Webgility will begin downloading contacts, items, and other relevant data from your Xero organization. This may take a few minutes, depending on your data volume

Adjusting your sync preferences in Webgility

4. Configure mapping and preference

• Set up customizable mapping in Webgility to ensure sales, fees, discounts, payouts, refunds, shipping, and taxes are posted to the correct Xero chart of accounts, tax codes, and tracking categories
• Configure sales tax settings to match Etsy's tax collection rules
• Set preferences for how orders, refunds, and other transactions are categorized and posted in Xero (e.g., as invoices, sales receipts, or journal entries)

5. Automate syncing and reconciliation

• Enable automatic syncing of transactions between Etsy and Xero. You can choose to sync in real-time or on a schedule
• Webgility will automatically reconcile sales, fees, refunds, shipping, and inventory updates in Xero, keeping your books accurate and up to date

6. Monitor and analyze

• Use Webgility’s dashboard and analytics tools to track business performance, inventory, and financial reports across all connected sales channels

Note: Webgility currently supports integration with US-based Xero organizations, and your Xero account’s default country must be set to the United States.

When evaluating integration apps, consider factors like pricing, supported marketplaces, automation features, customer support, and user reviews. Look for apps that specifically mention Etsy and Xero compatibility and offer trial periods to test functionality.

Method 2: Manual CSV import process

If you prefer not to use a third party integration app, you need to follow a manual process:

1. Log in to your Etsy Shop Manager and download order & payment CSVs.
2. Format the data to match Xero import templates.
3. Use Xero’s import tool to upload sales and expenses.
4. Manually assign categories, tax rates, and match transactions to bank feeds.
5. Repeat regularly (weekly or monthly) to stay up to date.

Etsy Xero integration: Testing and verification

After setup, don’t skip testing, as it helps you understand if the settings are done as per your requirements or not, so make sure to follow these steps:

1. Run a sync test

Start by syncing a small batch of recent transactions, perhaps the last 3–5 days. This allows you to:

• Confirm that sales, fees, taxes, and refunds are pulling in from Etsy to Xero correctly
• Validate that they’re mapping to the correct accounts and tax codes
• Catch any configuration errors without affecting your entire accounting history

Most integration tools (like Webgility) offer a manual or test sync mode for this purpose.

2. Check for discrepancies

After syncing, closely review your entries in Xero. Watch for:

• Duplicate transactions, often caused by re-importing without filters)
• Missing entries, especially refunds or fees that may not be properly mapped
• Incorrect tax treatment, such as tax being double-counted or not captured at all
• Uncategorized items, which may indicate mapping gaps

Review a few example transactions end-to-end, from Etsy order to Xero ledger entry.

Keeping your Etsy Xero integration sharp

While automation reduces your day-to-day workload, ongoing oversight is key to keeping your Etsy Xero integration running smoothly and your finances accurate. This is how you should do it:

1. Monitor syncs regularly

Even the best integrations can occasionally run into sync issues: API disconnects, authentication timeouts, or platform changes. Set a habit to:

• Review sync logs weekly to spot any errors or failed transactions
• Confirm the sync schedule (e.g., hourly, daily) is working as expected
• Resolve any errors promptly, especially missing orders, tax mismatches, or failed payouts

Check out how you can do this on Webgility's dashboard.

2. Perform monthly reconciliation

At the end of each month:

• Reconcile Etsy deposits with what’s recorded in Xero to ensure completeness
• Verify that all sales, refunds, and fees have been posted correctly
• Flag any discrepancies before closing your books

This ensures accurate financial statements and keeps your books clean and the accountant happy during tax season.

3. Update integration settings as needed

Your Etsy business will evolve and so should your integration. Therefore, you should regularly:

• Add new SKUs or product categories and map them to the right accounts
• Update tax rules or rate changes, especially if selling in multiple states or countries
• Adjust fee categorizations if Etsy changes how they bill for services (e.g., ads or offsite fees)

4. Scale for seasonal spikes or growth

As your store grows or during high-volume seasons (like holidays), review and adjust your setup to handle:

• Higher transaction volume to ensure your plan and sync settings can scale simultaneously
• Etsy shop or new marketplaces (Shopify, Amazon, Walmart etc.)
• New team roles or accounting workflows, especially if working with a bookkeeper

Proactive management ensures your accounting stays streamlined even as your business expands.

Also read: Top 5 Etsy Accounting Software in 2025

Take control of your Etsy finances today!

When your sales data flows automatically from Etsy to Xero, you don’t just save time every week. But, reduce the headache of manual data entry, track inventory as items sell, and get clear insights into how your business is doing.

To find the right integration tool, you need to think about what fits your business best. Webgility is the ultimate solution for unifying your entire operations by connecting Etsy and Xero. 

It automates accounting and bookkeeping tasks, gives you detailed transaction insights, lets you customize order dashboard views and workflows, shows your true profit per product or channel, and grows alongside your business.

Thinking about switching? Webgility makes connecting Etsy and Xero straightforward, even if you're not tech-savvy. You get an extra edge by syncing data across sales channels, getting in-depth reports, and instant ecommerce experts' help whenever needed.

FAQs

How can I find integrations on Xero?

Go to the "Apps" section on your Xero dashboard or check the Xero App Marketplace online. You can search for "Etsy" or look through ecommerce categories to explore tools like Webgility.

How do I connect my Etsy shop to Xero?

Use a third-party tool like Webgility. Sign up, connect both your Xero and Etsy accounts, map your accounts and taxes, and then review and send the data to Xero. Then, reconcile the transactions in Xero to ensure accuracy.

Does Xero have an open API?

Yes, Xero offers a detailed API that helps developers build integrations. This lets tools like Webgility join your Etsy store with Xero so they can sync data.

How do I add a supplier in Xero?

Go to the Contacts section, pick “Add Contact,” choose “Supplier,” and put in the details they ask for.