- Amazon accounting comprises building a solid foundation, maintaining accuracy, and staying tax compliant across state and local nexuses.
- Accounting automation software guarantees accuracy in bookkeeping and inventory management.
- Establishing a good workflow makes Amazon accounting a breeze.
Many ecommerce-minded entrepreneurs get their start by selling on Amazon, which offers a user-friendly platform and nearly instant gratification. That ease of entry leads many merchants to neglect their back office busywork in favor of sales. Soon, though, they’re neck deep in accounting issues because they never took the time to learn the language of accounting for Amazon sellers.
There are three main keys of successful accounting when you’re running an Amazon business: foundation, accuracy, and tax compliance. With the right tools and practices in place, you won’t even have to think about it and will instead be able to see your financial status at any given time.
Setting Up Your Business
Good habits are built early, which is why you should develop an accounting system that will be easy to scale when your business grows. Excel spreadsheets or accounting software solutions may work for the first few months, but soon you’ll find that manual data entry isn’t sustainable. Sellers who spend more than 71 hours each month on manual data entry reported a negative industry outlook because it was affecting their productivity in other areas of the business. This is where automation comes in and saves the day.
Choosing Accounting Automation Software
There are a few options if you’re looking for an Amazon seller accounting software, which will track the sales, fees, and more in your Amazon store and post them into your QuickBooks. However, it’s best to be prepared and choose a software that accommodates more channels than just Amazon, as multichannel ecommerce is the best way to find and sell to new customers. Webgility’s Amazon FBA accounting software is built for online sellers of any experience level looking to automate their bookkeeping workflows, so you can scale at your own pace. Automation is a key part of your foundation so you can focus on sales, marketing, and demand generation.
Because Amazon only deposits in your account every two weeks, it’s hard to get a more granular look at your sales data. The deposits only give you the net total at the end of a two week period. For accuracy, you need to be able to see which items are selling, what’s generating the greatest profit, and a breakdown of the many fees you pay as an Amazon seller. You can either do this manually by going through your store’s back-end and analyzing the data you pull into a spreadsheet, or you can simply consult your accounting software that has been automatically populated with data pulled from your store. It will be accurate to the cent and give you a full product-by-product breakdown.
Your inventory is the backbone of your ecommerce accounting, as all of your profits and fees are tied to selling items. Therefore, accurate inventory is a necessity. If you’re using QuickBooks Desktop Enterprise for accounting, you can simply use the same software for inventory management. Adding a third-party solution adds extra costs and risk, so it is wise to maximize the tools you already have. Even without this specific version of QuickBooks, you can achieve accurate inventory with Webgility’s automation solution. There is automatic two-way sync that updates on a self-set schedule so both your store(s) and your accounting software show the same amount of inventory.
The South Dakota v. Wayfair ruling of 2018 changed ecommerce sales tax and gave states the right to impose sales tax on companies selling to residents of those states. Businesses who don’t comply, regardless if it was unknowingly, are subject to hefty fines and other penalties. That’s why tax compliance is one of the three pillars of accounting for Amazon sellers and why you should be using a service like Avalara to keep your business on track. You’ll stay up to date on the state and local tax landscapes and will never have to worry about facing penalties.
Accounting may not be everyone’s favorite part of running an ecommerce business, but it is a necessity and doesn’t need to be something that you dread. (Webgility certainly helps to utilize an accounting automation solution, which ensures that your bookkeeping, accounting, and inventory management workflows are a breeze.) By simply building good habits from the very beginning, you can maintain accuracy and compliance even as your small business becomes an enterprise.