Accounting for Amazon Sellers
Selling on Amazon is a pretty exciting prospect for any entrepreneur.
With billions of visitors, every month,Amazon.com is an advanced business armed with all the tools new sellers need to make a serious profit.
But the road to making money on Amazon isn’t always smooth. It can be made easier with smart planning direct- especially when it comes to how to do Amazon accounting.
This guide is a preface to setting up your accounting for Amazon FBA. It’ll cover the first five-way that every new seller should take ahead diving into product research, buying inventory, or listing any items.
These steps are based on advice from Amazon sellers themselves and their accountants. They’ve been collected from speeches by experts at industry events, and from calium case studies, so that you have access to the best insider information right from the get-go.
Learn from their mistakes, their insights, and their advice for the best Amazon accounting practices.
In the first part of our Amazon accounting series, we’re covering the 5 basics
Getting set up Amazon accounting software & business registration
First on the list from our experts and sellers is getting set uprightly from the start. What does this mean?
It means two things
Registering your business
Many Amazon businesses start small as hobbies and transubstantiate into something bigger over time.
For this reason, it’s tempting to put off registering a company and paying taxes in the early days. But this isn’t the best way forward.
Registering your company can cover you from certain liabilities if things go wrong, and allows you to separate your business from personal income. As the business owner, you’re wholly responsible for your legal and tax scores.
Whether you think your business is ready for it or not, it’s wise to get registered.
Top tip Always looks for the most over-to-date information. Obligations change all the time, particularly regarding e-commerce sales tax, so don’t get caught out. It’s a huge advantage to have an e-commerce accountant to help you, at least in the beginning if not in the long term.
Extra resource Check out this vid from Catching Clouds on setting up your Amazon business properly from the start.
Taking your Amazon accounting to the cloud
While spreadsheets and paper systems are a free and easy way to get started, they’re really only effective for managing small volumes of data. And even also, it’s time-consuming and easy to make mistakes.
Still, it’s important to make sure that your systems are robust so that they can handle larger transaction volumes without running into issues If you’re serious about selling on Amazon.
Once a proper accounting system is set up, it doesn’t take any longer to do the books, but you get much more reliable data as a result.
In history, digital accounting systems were operated on servers and company computers, which required constant backups and software updates. Now, most accounting systems are remotely hosted in the cloud.
This eliminates the need for duplicating accounts and updating software-or even downloading software in the first place. With cloud accounting systems, you can access your books from anywhere in the world, and securely share information as needed.
Top tip There are accounting software options out there that can start small and grow with you-your investment doesn’t need to break the bank. Check out the offerings of Quickbooks, Xero, and Sage for your Amazon accounting.
Extra resource Check out this video from Cyndi Thomason of bookkeeper for why starting with Amazon FBA accounting software on the cloud is the best way forward.
Getting organized Amazon business planning
Your accounting is just one of the multiple ways that having an Amazon business plan will profit you.
Business plans help you align your goals with your budgets and actions. They’re a sounding board throughout your business journey, can be adjusted over time, and give you a good place to start, relate back to, and measure progress.
A business plan, in short, helps you arrange and organize for now and for the future.
Another thing you need to keep organized is your Amazon documentation. This can be stored in your accounting software, but using an aggregator app like Hubdoc means every statement, bill, invoice, and the receipt is captured, recorded, and uploaded via an OCR system before it gets there.
Top tip In the financials section of your business plan, layout exactly what you need to keep track of in your Amazon accounting. This will help you prepare for exactly what information Amazon will send you that you’ll need to keep in a safe place-and crucially, recognize any gaps that you’ll need to fill in yourself down the line.
Extra resource Find our Amazon FBA business plan template right then with everything you need to include and how to figure it out.
Getting into the habit of Regular checks to avoid mistakes
Indeed with an optimized accounting stack (which we’ll explore coming), it’s important to maintain your own visibility and understanding of your financials at all times.
So, make a date for it. And make it regular-not formerly a month.
It doesn’t have to take further than 10-20 minutes of your time, but checking in every day or week will help you stay on top of your business’ movements and performance, notice any issues more quickly, and gain a feel for any patterns.
Online retail is fast and competitive, quick to change, and requires attention to detail. By managing your accounts in small, regular increments, you can save time whilst getting to know your business better.
Top tip Don’t count your inventory as an expenditure! This is a common Amazon accounting mistake. However, and check in regularly, you should be suitable to fix any issues like this before they compound If you’re set up correctly from the start.
Extra resource The penultimate guide in this series is all about common Amazon accounting issues and mistakes, and how to avoid them. So stick with us.
Getting to the next level Optimizing your Amazon accounting automation
Integrating your Amazon accounting software with Seller Central is a great way to share data instantly between the two platforms. But actually using that data effectively requires significant manual hours and calculations-not to mention accounting skills that many e-commerce sellers don’t have.
Amazon bookkeeping can be hugely time-consuming and full of gaps, as seller Nick Losciuto found increasingly challenging
Nick sought extra apps and Amazon accounting integrations to work the problem To save him time and wipe some of the number-crunching off his platoon’s task list. But it wasn’t until he found calium that much really changed
calium for Amazon automatically calculates every line item that goes into your Amazon deposits, crunching these totals into neat journal summaries to be sent to your accounting software. Books are organized via the addendum method, which is GAAP-approved, and the best way to get reliable data for robust forecasting.
With calium, Amazon sellers have clarity over their sales, fees, income, expenses, costs of goods sold, sales duty collected, and returns. Nothing is left to guesswork, everything is accounted for automatically and accurately.
Get ready to grow with books that can handle it with calium.
Top tip You can try Calium then for free and also pick a subscription that fits your business size. It can measure with you, expand across other e-commerce platforms and help your accounting software from slowing down as you grow.
Extra resource Find out further about the ins and outs of Calium for Amazon from LedgerGuru CEO Brittany Brown in this vid.