Bookkeeping Services for Amazon Sellers
For Amazon sellers, bookkeeping is the process of recording and preserving a merchant’s ongoing financial transactions. Common financial transactions include sales, purchases, shipping costs, debt repayments, and advertising expenses. In the section that follows, we’ll discuss why maintaining accurate books is crucial to a company’s operations.
One of the most widely used platforms for online product sales is Amazon. In 2019, third-party sellers contributed about half of Amazon’s overall revenue. The competition to launch an Amazon FBA seller business is fierce given these figures.
Although bookkeeping is not the most exciting topic, it is essential to understand where your business stands financially if you sell on Amazon. Your small business will be more confident in its decision-making if it has effective accounting and bookkeeping systems and procedures. Understanding your FBA business numbers will help you see what is working and capitalize on trends, which will help you expand your company.
The best way to monitor the numbers that are crucial to the financial stability of your company is through bookkeeping. How much money did you invest in new stock? How much money did customers bring in for you? How much do you give Amazon each month? You can use bookkeeping to gain control over some of your most crucial business questions.
You can keep track of, organize, and comprehend what is happening in your business with the aid of bookkeeping and accounting. Even though there are many ways to manage this data, writing it down in a spreadsheet isn’t sufficient for long-term use. Instead, you need a standardized way to keep track of financial transactions so you can track the progress of your company over time.
This article will cover the best methods and pointers for monitoring your costs and income, providing you with a clearer understanding of how to better manage your Amazon FBA finances to support growth.
How Should an Amazon FBA Company Handle Accounting?
Find a cloud accounting program: Instead of using Excel, you should start using a cloud accounting program. A cloud platform allows you to access your data from anywhere in the world. A cloud-based platform will also be faster, more reliable, and more accurate. Many of these services are easily accessible via your Amazon Seller Central Account.
Before you buy the software, ask yourself the following questions:
- Is it simple to use?
- Is it supported by Amazon Seller Central?
- Does it sync with my credit cards, bank account, and financial software automatically?
- Is it safe and secure?
- What is your opinion of their customer service?
Bookkeeping is Essential:
You shouldn’t manage your books alone as an Amazon seller. You can employ a bookkeeper to help you with anything accounting-related. The challenges of growing your company on Amazon are challenging enough. Business owners must prioritize their bookkeeping if they want to maintain good standing.
Analyse your schedule to see if you have enough time to complete the tasks a bookkeeper could help you with. The time spent learning about finances may not always be worth the potential savings for your company. Utilize the financial reports that your bookkeeper and accountant have provided to plan the company’s future.
The significance of using accounting and bookkeeping for Amazon sellers
Seller bookkeeping is the cornerstone of a prosperous Amazon FBA small business. If your business is still in the startup stage, proper accounting will guarantee that your cash inflows and outflows are handled correctly.
Your company is operating in the dark if it lacks a strong foundation. While running in the dark, it is possible to strike it lucky, but it is also possible to trip and fall. As an FBA seller, you run the risk of experiencing cash flow problems, delayed supplier payments, and even payroll issues if you don’t have accounting.
Why Are Accounting and Bookkeeping So Important?
Bookkeeping is crucial for businesses that sell on Amazon for a variety of reasons. However, we’ll start with the most important one: Monitoring the company’s financial operations will allow you to gauge its performance over time.
Do you, for example, know how much profit the business has made? The amount of money it made, not the amount of sales revenue, is what matters most.
Remember that the money left over after deducting all other costs is referred to as the profit. Calculating the profits is easy when the books are kept in order. It will be impossible to assess the company’s health and long-term viability if you don’t know how much (if any!) profit the company is making.
What Benefits Can You Get from Selling on Amazon?
Most Amazon sellers are completely unaware of several important benefits that come with keeping accurate books and records. To begin with, the creditor will ask you for several financial details if you ever choose to apply for a loan for the business. This won’t be too difficult to do if the books are accurate and current.
Two, the buyer will want to review the financial records if the client ever decides to sell the business. This won’t be a problem for you if the books are kept up to date; however, if they aren’t, it will be a nightmare.
By producing Balance Sheets and Profit & Loss statements, our team reconciles your sales data and arranges it in a comprehensible manner. With our monthly accounting service, you’ll be able to interpret and analyse your data over time. You’ll be able to keep tabs on what has occurred in the past months and forecast how your finances should develop going forward. You’ll always be on top of your cash flow and feel ready for tax season, raising capital, or expanding your business if you maintain accurate and consistent accounting.
We recognize that you have a lot on your plate as an online merchant. Let the Seller Accountant team handle your bookkeeping and let us take care of your financial concerns.
Accountant for Amazon Sellers:
There’s a good chance that you’ve thought about using Amazon as your sales platform if you sell on the site. But because there are so many other sellers on Amazon, it’s simple to get lost in the digital weeds.
We are e-commerce experts who work closely with dozens of Amazon sellers who generate over $50 million in yearly sales, so we are familiar with how to deal with issues specific to Amazon, like Seller Central and FBA services.
We know how to assist your brand in realizing its full potential so that you can maximize your profitability on Amazon
The Best Accounting Practices for Amazon:
Updated Chart of Accounts:
Your chart of accounts serves as an index for all the categories you’ll use to arrange your transactions. Maintaining a chart of accounts is easy. The best course of action would be for you to continue the weekly or monthly categorization of your transactions. After that, you’ll have clearly defined categories that reflect your spending patterns. Are accrual or cash accounting methods preferable for your Amazon business? The best response is that it is dependent on the business.
As their companies grow, many business owners start with cash-based accounting and then transition to accrual accounting. Accrual accounting works well for FBA businesses that are expanding quickly and experience significant sales spikes throughout the year. Before making these choices, it would be best if you discussed them with your Amazon accountant and bookkeeping expert.
Reconciliation of bank statements:
You can identify any mistakes and discrepancies between your bank and credit card statements and the information displayed in your financial software by running a reconciliation report. When submitting financial information for tax season, reconciliation is particularly crucial. To automatically sync every bank transaction to your feed, cloud accounting software and apps are helpful resources. On occasion, there might be a problem with the bank feed, or a few transactions might not be recorded.
Reconciliation reports can also aid in preventing fraud in your business. Running a reconciliation report will help you make sure your VA is not stealing from your business if they have access to your bank accounts.
Well-Categorized Inventory:
Before placing an order for inventory, you must determine how much and when to order. Additionally, you need to decide whether to mark down any extra inventory or let it take up space in the warehouse. You’ll also need to understand how to take shrinkage into account. These are significant difficulties faced by Amazon sellers.
You can then use data rather than just your intuition to properly categorize inventory and maintain a real-time balance sheet.
Compliance with tax laws:
At tax time, it is preferable to be safe than sorry. Even if you have a high-risk tolerance, it is best to avoid putting your taxes at risk.
For businesses operating in the US, the IRS has the power to levy fines, seize assets, garnish wages, and imprison offenders. Many Amazon sellers find it difficult to manage their taxes. It can be difficult to read all the sales tax text information. But you don’t have to go through with it alone.
Financial Reporting Systems for Amazon Sellers:
Most Amazon FBA business owners use bank balance accounting. checking their bank accounts frequently, such as every few days. They are content and do not question if that account is growing. However, there is much more to consider from the perspective of accounting and bookkeeping.
Your expenses should scale along with the expansion and growth of your business. Simply checking the balance in your bank account can result in cash flow issues, inventory shortages, and significant debt.
Be mindful of the expense of selling internationally:
The ramifications of international sales, which may also include additional duties and fees as well as currency exchange rates to consider, should also be very well understood by Amazon FBA sellers.
You must keep track of your accounting for each of your distinct business lines if you use more than one Amazon channel. You must track income and expenses for each of those channels separately, for instance, if you sell in the US and the UK through their respective Amazon sites.
Ensure that you adhere to sales tax requirements:
You must also take into consideration the various sales tax laws in each state where you sell. While accounting software can assist you in keeping your books up to date with sales tax, it is beyond the scope of a spreadsheet to know which documents each state will require at tax time. You must understand the fundamentals of sales tax obligations in each state where you conduct business.
You might live in one state but have a sales tax nexus in another, in which case you must apply for a sales tax permit there and charge sales tax to customers there.
How we can assist with bookkeeping for Amazon sellers:
Even though it’s enjoyable to see Amazon sales rise as your e-commerce business expands, managing your books requires time, which you might not have. Your bookkeeping team manages the numbers for you at our services, saving you time and a ton of uncertainty. We are professionals at creating precise, dependable, and tax-ready financials because we collaborate with tens of thousands of other e-commerce merchants.
Even though starting a business can be challenging, you don’t have to forgo the necessary time and funds to focus on Excel or QuickBooks. You can concentrate your efforts on the areas of your business that most need them. The rest, we can help you with.
Our extended financial services offer unlimited tax advisory services and tax strategy planning if you require a little extra assistance. Even your taxes will be filed by us!
Conclusion:
Your account will be cleared out so you can concentrate on expanding it. We are experts at handling any monetary problems that arise when operating an Amazon FBA business. Allow us to handle it so you don’t have to worry about these problems. We comprehend the financials of the Amazon FBA business.
Do you have a query regarding the financial standing of your FBA company? Make an appointment below for a prompt, welcoming consultation.
