The Amazon Settlements are Complex
The main issue with accounting eCommerce is the character of the Amazon payout system. Amazon transfers a net amount in your bank account every two weeks. This appears as revenue to a layman. As a matter of fact, that one is the sum of hundreds or thousands of individual transactions, gross sales and refunds, and a host of other smaller fees.
An accountant of an amazon seller is specialized in unbundling these settlements. They make sure that referral fee, cost of storage and cost of advertising are properly included as expenses and do not just vanish as a figure in a net income statement. It is this granular breakdown that will never give you a clear picture of the health of your business in your Profit and Loss statement, which gives rise to poor decision-making and possible cash flow crises.
Learning Inventory and COGS
The inventory management is the blood-pump of an Amazon business, but it is the place where most accounting mistakes are made. Most vendors are recording inventory purchases as direct cost. But, tax and accounting wise, inventory is an asset until sold.
A professional accountant will assist you to adopt an accrual accounting system to properly track your Cost of Goods Sold. Your accountant can give you a clear idea of your gross margins by doing some calculations to determine the true landed cost of each unit; that is, the factory price, shipping, duties and packaging. This information is crucial in determining the products that are contributing to the growth, and those that are merely taking up costly shelf space within an FBA warehouse.
Surviving in Global Tax Compliance
Selling on Amazon can be a matter of a complicated mess of tax jurisdiction. The regulations keep changing whether it is GST in Australia, VAT in Europe and Sales Tax nexus in the United States. The Marketplace Facilitator laws have also passed part of the burden on Amazon, yet the final responsibility of getting the reporting accurate is still on the seller.
An amazon seller accountant will make sure that you are registered in the right jurisdictions and that you do your filing properly and on time. On the one hand, they give you the assurance that you are not paying too much tax, and on the other hand, they give you the assurance that you are not bringing the auditors in to audit you at an expensive rate. They have the expertise to help you to venture into new foreign markets with confidence that your tax plan is solid and within the law.
Visionary Development and Financial Transparency
In addition to minimum compliance, an eCommerce accountant is a strategic counselor. They assist you in knowing your burn rate and your reinvestment capacity by giving periodic financial reports, including balance sheets and cash flow projections.
The fact that you are going to raise money, or you are going to take out a business loan, or you are going to exit, it is indisputable that it is necessary to have professionally managed books. Investors and lenders need verified and transparent financial information. A specialist accountant keeps your business exit-ready and maximized as they will show a history of clean, professional accounting.
About Accountsly
At Accountsly, we specialize in accounting and bookkeeping services to the eCommerce industry. We are aware of the special challenges that Amazon sellers have to overcome and provide specific solutions to help you simplify your finances. Our team is equipped with the latest technology so that your books are correct and of the required standard which enables us to aid you in expanding your business without any doubt.
Frequently Asked Questions
Bank deposits are net figures which have already been deducted from fees and refunds; when you use them as your main income figure, it results in a low-stated revenue and false tax filings.
Yes, an expert will be able to detect the inconsistency in FBA storage or fulfilment fees, and you can reimburse Amazon in case you have been overbilled.
Accrual accounting will reconcile your revenues with the cost of generating the revenue and will be much more accurate in reflecting monthly profitability as compared to unsophisticated cash tracking.
ECommerce accountants are specially trained to handle cross-border tax issues, which makes certain that you comply with all the requirements in each country where you maintain an inventory or make sales.
Yes, accountants are normally operating in cloud-based systems such as Xero or QuickBooks and connect them with your Amazon account to automate data flow and make sure that it is accurate in real time.
