Bookkeeping is essential for any business, but it can be especially complex for Amazon sellers. With so many different types of transactions to track, it can be difficult to keep up with everything. You may, however, take a few steps to make your small business bookkeeping, such as Amazon seller accounting, simpler and easier to handle.
Why is bookkeeping important for Amazon sellers?
If you’re a business owner and sell stuff on Amazon, you probably know that keeping track of your money is super important. For instance, if you run out of things to sell or set your prices too high, you might miss out on making money.
This is where bookkeeping comes in – it’s like your money manager. It helps you answer some important questions about your business, like how much you spent on buying things to sell, how much money you made from customers, and how much you owe to Amazon. Bookkeeping keeps all these financial details organized.
Think of bookkeeping as the way you write down and organize all your money-related stuff. While there are many ways to do it, just using a basic spreadsheet won’t cut it in the long run. Instead, you need a consistent and structured way to keep track of your money matters, so you can see how your business is doing over time.
Specific considerations for Amazon accounting
There are a few specific considerations that Amazon sellers need to be aware of when it comes to accounting. These include:
Amazon charges a variety of fees to sellers, including referral fees, closing fees, and shipping fees. These fees need to be accurately tracked and accounted for.
Returns and refunds
Amazon sellers often have to deal with returns and refunds. These transactions need to be carefully tracked and accounted for as well.
Amazon sellers need to track their inventory levels carefully to avoid overselling or underselling their products. Inventory levels also need to be accounted for in financial statements.
Ensure that your accounting system is right for your business’s needs
Amazon sellers can choose between two accounting methods: cash basis and accrual basis.
Accounting is the simpler choice. With this method, you record income and expenses when you actually receive or pay money. It’s straightforward but might not give you the most precise financial picture.
Accounting is more accurate but a bit more complex. Here, you record income and expenses when they happen, regardless of when money changes hands. It offers a more detailed view of your finances.
Read this blog to know more in detail – Best Practices for Handling Bookkeeping Struggles in the USA
Consider the price of overseas sales
If you sell internationally on Amazon, you need to be aware of the additional costs associated with international sales, such as currency conversion fees and shipping costs. These costs need to be accurately tracked and accounted for.
Make sure you comply with sales tax requirements
Amazon sellers need to comply with sales tax requirements in all of the states where they sell products. This can be complex, so it is important to consult with a tax advisor to ensure that you comply.
Getting started with bookkeeping for Amazon sellers
If you are new to bookkeeping, there are a few things you can do to get started
Step 1: Pick Accounting Software
Get a computer program to help with bookkeeping. There are easy ones like QuickBooks or Xero for small businesses. Choose one that makes sense to you. And if you don’t want to waste time on this software handling then get in touch with BookKeeperLive for accurate and efficient bookkeeping.
Step 2: Create Your Chart of Accounts
Bookkeeping is like a money detective. It helps you see where your money comes from and where it goes. But to keep things neat and tidy, you need to group transactions into categories. That’s where the chart of accounts comes in.
It tells you what categories to use for your money stuff. It’s like having boxes for different parts of your business, like when you spend money and when you make money. This way, you can keep a close eye on every part of your business and see how it’s doing financially.
Step 3: Keep Track of Your Transactions
Regularly put all your money info into your accounting software. When you earn money or spend it on things like buying products or paying Amazon fees, enter these details into the software. This keeps your records up to date.
Step 4: Reconcile Your Accounts
At the end of each month, it’s important to check if your records match your bank and credit card statements. This process is called reconciliation, and it ensures that everything adds up correctly.
Step 5: Determine your storage needs
When it’s tax time, you’ll have to show that your expenses are real and legit. So, it’s super important to keep your financial records safe and organized.
You don’t have to hoard paper receipts forever. The IRS is cool with digital records. We suggest using a cloud-based system, like Dropbox, Evernote, Google Drive, or BookkeeperLive, to keep everything safe and sound.
Step 6: When you’re prepared to outsource
When you start feeling like you’re spending too much time and effort on bookkeeping tasks, and you’d rather focus on making your business more profitable, that’s a sign it’s time to get some help.
You can hire a bookkeeper or an accountant to handle all the number stuff for you. Just make sure you choose the right level of help based on what your business needs right now.
Remember, as a successful small business owner, you have a lot to juggle, and you can’t do everything. If doing bookkeeping doesn’t feel like the best use of your time, it’s smart to let someone else take care of it for you. Plus, here’s a bonus: the money you spend on bookkeeping services can be taken off your taxes, so it’s a good business move.
There are lots of bookkeeping software on the market that makes our work easy, but have you ever wondered that to use that software, you need some expertise, and it might take time? On the other hand, when an bookkeeping outsourcing company assist you, it not only makes your work easier but also leads your finances in the right direction without any headache. If you live in the USA and want to make your bookkeeping smooth, then contact us; we will provide you with the best and most accurate bookkeeping for Amazon sellers at a reasonable price.