Bookkeeping for Amazon Sellers in Australia: Everything You Need to Know
The opportunity to sell on Amazon Australia is amazing and can enable reaching millions of customers, yet the financial background is soon lost in the labyrinth of complexities. Among handling Goods and Services Tax (GST), Amazon payment reports, and managing inventory at an international level, numerous sellers are lost in numerous complications. Learning how to do bookkeeping for Amazon sellers in Australia is not only about remaining in line with the Australian Taxation Office (ATO); but also about acquiring the financial visibility to effectively grow your business.
Types of Goods and Services Tax (GST) Obligations
The Goods and Services Tax is one of the most important issues of bookkeeping for amazon sellers in Australia. A business in Australia is required to register GST in case of a business turnover of 75,000 or expected to do so in twelve months. After this registration, you must add 10 percent on your taxable sales.
Amazon sellers are frequently faced with the difficulty of the “Marketplace Facilitator” regulations. Although Amazon might receive and remit GST on some transactions like low value imported goods, you should continue reporting on your total sales and claiming GST credits on your Business Activity Statement (BAS). Proper bookkeeping will make sure that you do not pay twice the tax or fail to claim the GST you paid on business expenses such as shipping, storage and professional fees.
Amazon Settlement Report Decoding
The payouts made by Amazon are net figures unlike a conventional retail store where a sale is a straightforward one. In cases when a deposit is deposited into your bank account, it has already been deprived of numerous expenses. These are referral fees, Fulfilment by Amazon (FBA) fees, storage expenses, and advertising expenses.
Misstatements that are likely to result in improper financial reporting include simply recording the bank deposit as revenue. In order to keep clean books, these settlements must be broken down to reflect gross sales, refunds and each individual fee. This detail will be needed in order to know what your real profit margins are and make sure that your income tax and GST returns are also prepared using the right figures instead of imprecise totals.
Inventory Control and Cost of Goods Sold
A significant portion of the assets of Amazon sellers is also inventory and the greatest thorn in the flesh. Good bookkeeping needs a powerful system to monitor the Cost of Good Sold (COGS). This goes beyond the cost of your purchase of goods and includes landed costs i.e. freight, customs duties and packaging among others.
Australia ATO expects you to value your inventory at the end of every financial year. Gross profit can be calculated by keeping a real-time record of stock quantities and unit costs in order to determine the gross profit. This information assists you to know the products that are performing well and those that are costing you in terms of high storage costs or low mark-ups.
The Significance of Separate Business Finances
One of the general principles of bookkeeping for amazon sellers in Australia is the rigid division between personal and business money. It is strongly suggested that the Australian business bank account and credit card should be dedicated to all transactions with Amazon.
It is hard to separate personal expenses and business income making it very hard to reconcile and exposing them to making mistakes during tax time. With clean and separate records, it is possible to have a paper trail that will be essential should the ATO ever demand an audit. It further makes the incorporation of your bank feeds with the use of cloud accounting software easier, which is the standard of the modern e-commerce enterprises.
Taking advantage of Cloud Accounting and Automation
The manual spreadsheets can hardly handle the huge number of transactions that an Amazon store produces. The majority of the most successful Australian sellers use such accounting programs as Xero or QuickBooks which are cloud-based. All these sites could be easily integrated with tools such as A2X that will automatically retrieve the information about Amazon settlements and match it to your chart of accounts.
Automation saves time and hours spent on manual data entry saves time and minimizes human mistakes. It also makes sure that you are calculating your GST properly and your financial reports are correct like the Profit and loss and Balance sheet are constantly updated. This real time visibility will enable you to make wise decisions on the restocking, marketing budgets and the expansion into new market places.
About Accountsly
We are the partners of your e-commerce development at the Accountsly. Our main focus is to offer detailed bookkeeping and tax services to Bookkeeping for Amazon Sellers in Australia. Our team works with a progressive cloud technology to effectively optimize your financial operations so that you are not in violation and at the same time maximize your profitability. We take care of the figures so that you can concentrate on the development of your brand.
Frequently Asked Questions
Is an ABN required to sell on Amazon Australia?
Yes, an Australian Business Number (ABN) is required to identify your business to the government and a requirement in case you are required to register GST.
How many times would I have to file a BAS?
The vast majority of small to medium Amazon vendors in Australia submit their Business Activity Statement at the end of every three months, but some can or even be obligated to submit at the end of each month.
Am I entitled to claim GST on the seller fees of Amazon?
Yes, in the case of GST-registered persons, Amazon imposes GST on fees such as storage, referrals, etc., you can usually claim it as input tax credit in your BAS.
Does this matter whether a settlement or a sale?
A sale is the single payment to a client and a settlement is the sum of money Amazon deposits in your bank account after subtracting the fees and costs.
What is the best way to record FBA fees in my books?
The FBA charges are to be listed as an expense in your accounting software and it should not be associated with the cost of the actual product so that you can have a clear picture of the cost of operations.
