Being successful as an Amazon seller is basically fun at first. But because tax offices, banks and the like are not known to take a joke, success also comes with obligations. When it comes to bookkeeping, at the latest, it’s finally the end of the fun for many retailers. But there is a way out of this misery. And that is via our Amazon Seller Accounting tips.
Antonia Klatt
Last Updated on 27 October 2021
How Amazon Accounting works for FBA sellers
You know how it is: the tax deadline is approaching and the pressure to bring the books up to date is growing. So it’s high time to get to grips with costs and sales again. And do it properly. Because if you only update your books once a month or once a quarter, you’ll either have low sales or miss an important opportunity to control your business. In the worst case, both.
Income and expenses do not arise at the moment they are written down, but form a continuous flow of money. Open invoices and own liabilities are just as much a part of this as depreciation, reserves and upcoming investments. After all, the goal is to reliably predict financial requirements for the future. This is especially important when financing is required or an investor is interested in your business.
Only those who have their finances firmly under control can also make the right decisions. Software solutions are a powerful tool for decision-making. But what problems arise and how does Amazon accounting software for sellers work?
Correct accounting from the beginning
Many sellers who are just starting to build up their business on Amazon are initially excited by the user-friendly platform and its possibilities. But it is precisely this supposedly easy entry that all too easily tempts them to neglect the tedious accounting tasks in favor of quick sales.
But anyone who shies away from dealing with the basic issues of accounting right from the start puts their business directly on a shaky footing. This approach takes its revenge. When it comes to the vat return, at the latest, there is suddenly an additional expense that is out of all proportion to the income generated.
Three pillars of accounting
It is not that difficult to prevent such problems from arising in the first place. Three prerequisites must be created for solid accounting:
- The accounting system must be designed to be scalable.
- It must be up to date and accurately documented.
- It must be tax compliant.
If you then consider that you can easily fulfill these three conditions with simple software solutions, even without a great deal of prior knowledge, nothing stands in the way of successfully building up your business.
Create accounting correctly
Of course, the first sales are often recorded on a notepad or in Excel spreadsheets because the office has only just been provisionally set up. But seriously, how long can that last? After a short start-up phase, the manual recording of all expenses and revenues alone quickly consumes half of the work capacity.
That is why it is important to create a scalable back office, especially in the start-up phase. Even, or especially, when manual bookkeeping appears to be a more cost-effective alternative. Because when sales increase – and that’s what every Amazon seller wants – paperwork quickly becomes a real obstacle to sales. And the tax audit, which will come sooner or later, will be a nightmare.
Keep back office scalable
This is where accounting software comes into play. There is a whole range of powerful software solutions to choose from, which can be used to monitor all accounting processes easily and conveniently. There are various offerings to choose from.
Amazon FBA accounting software is suitable, for example, for online sellers who want to align their back office in a scalable way. However, solutions are also available on the market that record multiple sales channels in parallel and are particularly suitable for online retailers who do not rely solely on Amazon.
Take sales very carefully
Amazon will only transfer you a total amount from your sales every two weeks. This may seem quite comfortable at first, but it brings some problems with it. The amount only represents the sum of all sales without breaking down which products generated which sales on which day. In short, you have no control over whether a sales campaign worked or whether special discounts were accepted by the target group, nor can you see which products made the most profit or how the fees are broken down.
At this point, you then have to search through endless Excel spreadsheets for numerical codes. Or you can be happy that you decided to use accounting software after all and simply ask them. In this way, you quickly gain clarity about the status of sales and the stock of your goods without having to sacrifice your weekend. The whole thing, by the way, to the hour and not just every 14 days.
And the merchandise is, after all, the counterweight to what’s currently in your account. When you use QuickBooks Desktop Enterprise for your accounting, you always have an accurate overview of what you still have in stock. It is best suited for inventory management and gives you an up-to-date overview in real time.
Ensure tax compliance with Amazon Seller Accounting Software
The third pillar of efficient accounting is tax compliance. It is also the most irrevocable pillar. So if there’s anything you should avoid as an online retailer, it’s missing deadlines or disregarding tax rules. Especially when it comes to the relevant authorities in foreign shipping countries. Here the receipt comes very late, but usually all the more merciless for it.
However, if you use a service such as hellotax, for example, you are constantly kept up to date on the applicable regulations. By using our software, you can avoid missing out on your vat return and stay on the safe side. Because ignorance of tax law has probably never been accepted as an excuse by any tax authority.
Summary
If you want to put your business on the road to success as an Amazon seller, you can’t avoid professional accounting. There are three things to keep in mind: Accounting must be designed to be scalable so that it can keep pace with the growth of the company. Secondly, it should be accurate and up to date at all times to enable good controlling. And thirdly, it must be designed to be tax-compliant in order to avoid difficulties with the tax authorities.
However, Amazon seller accounting software makes it easy to meet complex accounting requirements, so you will have more time to take care of the real business.
