Bookkeeping for Amazon Sellers Bench Accounting

Not how much revenue you generated in sales, but how much you earned in profit. After an ecommerce business submits the “Match Me” form, the A2X team will look to pair them with a partner who fits the specified criteria. The logos on the right side of the screen will update in real time based on your selections. Sales tax expertise – With global selling comes complex tax obligations. Make sure they’re up to the task or have a network of experts to help out.

Tax Planning

Inventory is your business, when COGS is high that means you have been holding onto inventory too long, or are not selling it at optimal pricing. This metric will be a good indicator of any changes that need to be made to your product lines. At the very least you will need to perform COGS calculations at the end of the year. The other aspect is asking lots of questions to learn more about them, how they work, and what processes they follow.

When you’re doing ecommerce accounting, you’ll likely want to look for a double-entry accounting system. Timely, accurate, detailed accounting provides you business intelligence to arm you in making the most informed business decisions around sales, customer acquisition, inventory management and operating expenses such as owner pay. When you sell in multiple states, you need to account for different sales tax requirements as well. While accounting software can help you keep sales tax up to date in your books, knowing which documents each state will require at tax time is beyond the scope of a spreadsheet. You’ll need to know the basics of sales tax liability in every state where you do business.

Accounting For Amazon Sellers

1. The other aspect is asking lots of questions to learn more about them, how they work, and what processes they follow.
2. Again, you’ll need a specialized ecommerce accountant to help you with that.
3. If you can figure out what caused the spike in sales, you can then double down on what’s working.
4. These would be things like meals, travel, continuing education, consulting, product samples, and any one-time costs.
5. This can lead to over- or under-paying taxes, and then result in inaccurate data about your business performance.

Download our free checklist to get all of the essential ecommerce bookkeeping processes you need every week, month, quarter, and year. The ecommerce business can anticipate contact from the assigned accountant or bookkeeper within 48 hours. Inventory management know-how – They should be able to navigate the complexities of inventory, from calculating the cost of goods sold to understanding dropshipping and third-party logistics.

Proper accrual accounting requires revenue to be recognized when it is earned, regardless of when the payment is received. This means you should record sales that occurred in August within August and sales from September within September. When you file your taxes, you’ll need to report your income and expenses, but if they’re not classified correctly, you may be missing out on huge savings or may even incur a quickbooks self employed vs quickbooks online penalty. You’ll also want to have your financial records on hand in the event that you are audited by the IRS. If and when you choose to outsource, you can hire a bookkeeper, an accountant, or a CPA to keep track of the numbers on your behalf.

Unlike the cash method, accrual accounting records revenue and expenses when they’re earned, not when they’re paid. This offers a more realistic idea of income and expenses over time, leveling out the sometimes unpredictable swings of cash accounting. The main advantage what is a product of hiring a full-time accountant in-house is that they are paying them to work directly for your online business. As an employee, they’ll get to know the ins and outs of your business and can help you make strategic financial decisions and not just daily operations and daily accounting processes, including bookkeeping, invoicing, and payroll.

Myth 2: If you DIY your bookkeeping with Amazon’s default reports and an Excel spreadsheet, you’ll save money.

While bookkeepers and accountants sometimes do the same work, they have different skillsets and levels of expertise. A CPA, or certified professional accountant, will charge considerably more than a bookkeeper to do your books. Be sure to find the level of help you need for the current state of your business. At tax time, you’ll need to prove your expenses are valid, so figuring out the proper storage for all of your financial records will be crucial.

Ensure your accountant or bookkeeper is well-versed in ecommerce tax laws and helps you stay compliant to avoid penalties or legal issues. While every new sales channel brings a potential new group of viable customers, it also brings its own set of transaction types, payment processing systems, and other factors that can complicate bookkeeping. An accountant who has worked with multi-channel sellers can help make sure you’ve got all your financial bases covered. Businesses with inventory are almost always required to use accrual accounting (though there are exceptions). Getting your VA to do it alongside any general, administrative work you assign to them isn’t much better.

COGS and FBA Inventory

This doesn’t account for all of the additional expenses incurred with full-time employees, like payroll taxes, paid bookkeeping for massage therapists sick leave, benefits, etc. This is especially important at tax time to ensure you are reporting the right financial numbers. For example, if your VA has access to your bank accounts, running a reconciliation report on a regular basis ensures they aren’t stealing from the company. A2X’s COGS feature is designed to help sellers better understand their gross profit margin (sales minus COGS).