Managing your finances is essential when running an Amazon business, especially if you're a small business owner. If you're not careful, you could quickly find yourself in financial trouble.
In this article, we'll share 10 Amazon accounting tips to help you keep your finances in check. By following these tips, you'll be able to run a more efficient and profitable Amazon business. So let's get started!
Keep a close eye on your account activity.
Whether you're an Amazon FBA seller or a third-party vendor, keeping a close eye on your finances is critical. This means regularly checking your account activity to ensure everything is in order.
You should look for any unusual charges or activities, as these could be signs of fraud or unauthorized activity. Additionally, you'll want to track your sales and expenses. By monitoring your account activity and keeping tabs on your finances, you can help ensure that your Amazon business runs smoothly.
Set up regular budget reviews.
Stay on top of your finances and budget by setting up regular budget reviews. This way, you can track your spending, income, and profit over time. Budget reviews can also help you catch any financial red flags early on.
To set up a budget review, decide how often you want to review your finances. This could be monthly, quarterly, or yearly. Then, gather all of the financial documents you need, including your income statement, expenses report, and profit and loss statement. Once you have all the essential documents, sit down and carefully review them with your CPA.
Pay attention to any changes in your income or expenses. If you see any concerning trends, take steps to correct them. For example, if you notice that your expenses are increasing, but your income is not, you may need to adjust your prices or cut back on some costs.
Make sure you're taking advantage of Amazon's tax service.
There are several complexities to consider when you're selling on Amazon, including taxes. That's where Amazon's sales tax services can come in handy.
Amazon offers a broad tax exemption program that can help you save time and money if you decide to participate. The Amazon Tax Exemption Program (ATEP) provides individuals and businesses the ability to make purchases without taxes for every sale by Amazon, its affiliates, and third-party sellers.
ATEP is offered to third-party vendors, but they are not law-bound to participate. That's why applying for the tax exemption program will save you time with your sales tax compliance if you're an Amazon Seller.
Use inventory management tools to stay organized.
Tracking your inventory levels and using good inventory management practices are important for every Amazon seller. Luckily, there are great tools out there to help you stay organized.
Amazon FBA accounting is made easy with Inventory Placement Service. This FBA-exclusive service allows you to track your inventory levels and automatically replenish them when they get low. That way, you never have to worry about running out of stock.
Amazon Seller accounting, on the other hand, allows for more flexibility and has a lot of options you can choose for inventory management software. But the best tool is the one that works best for your business. So take some time to research your options and find the tool that will help you keep your business running smoothly.
Set a marketing and advertising budget.
A successful Amazon business is all about reaching the right audience. Therefore, you need to carefully track your expenses and revenues to ensure that you are staying within your marketing budget and making a profit.
One of the most substantial aspects of healthy finances is setting a budget for marketing and advertising expenses. This will help you keep track of how much you are spending on these paid ad campaigns and whether or not they are generating enough revenue to justify the expense.
There are different ways to set a marketing budget, but one approach is to base it on a percentage of your overall sales. For example, you might decide to spend 5% of your total sales on marketing and advertising. Once you have set your budget, it is important to track your actual spending so that you can make adjustments as necessary.
You can use accounting software or hire a bookkeeper to keep track of your spending and revenue. Whichever approach you prefer, make sure that you update your records regularly so that you can accurately assess your business's financial health.
Monitor your fulfillment and shipping costs.
Shipping and fulfillment costs can quickly add up, eating into your profits and putting a strain on your cash flow. You can take these simple steps to stay on top of your costs and keep your business finances in check.
- First, make sure you're utilizing the most efficient shipping method possible.
- Second, get multiple quotes from different shipping providers and compare their rates.
- Finally, consider using fulfillment services like Amazon FBA that can help you save on shipping costs.
By following these steps, you can keep your financials healthy and ensure that your bottom line doesn't take a hit.
Use Amazon's tools to manage your finances.
Amazon has long been a leading force in online shopping, but did you know that the e-commerce giant also offers a suite of tools to help manage your finances? From payment processing to budgeting and tracking expenses, Amazon has plenty of features that can save you time and money.
You can also check your reports on the Amazon Seller Central dashboard.
Understand Amazon's customer refund policy.
Amazon offers a variety of options for customers who want to return items, and the rules vary depending on the type of item being returned.
For example, digital products can be refunded within 24 hours of purchase, while physical items must be returned within 30 days.
Amazon's refund policy is pretty straightforward: if a customer reports that they didn't receive their order or if the condition of the received item is different from what was described in the listing, then the seller is responsible for issuing a refund.
If a customer changes their mind about a purchase, they'll have to contact the seller directly to request a refund; Amazon Marketplace sellers are not required to offer refunds in these situations.
So what does this mean for your business?
If you're seeing a lot of refunds being issued, it could indicate that there's something wrong with your product or your listing, and you'll need to take action accordingly.
Understanding Amazon's refund policy can keep your business running smoothly and avoid any nasty surprises when you check your books.
Keep an eye on your overall profitability.
By accurately calculating and tracking your costs of goods sold (COGS), you can ensure that your business is turning a profit and not running at a loss. There are key details to consider when calculating your COGS, such as product cost, shipping cost, and Amazon fees.
Considering all of these factors will allow you to get a clear picture of your business's profitability and make adjustments accordingly. In addition, it's important to regularly review your pricing strategy to ensure that you stay competitive and maximize your profits.
Get help from a professional if needed.
While you may be able to handle your finances on your own if you are a small business, there are times when it makes sense to get help from a professional.
An Amazon accountant can help you understand and manage your business finances.
An experienced bookkeeper can keep track of your income and expenses and provide you with financial statements that will help you make sound business decisions.
If you're unsure where to start, a financial planner can assess your situation and develop a plan to help you reach your goals. While there are many things you can do on your own to keep your finances in good shape, don't be afraid to seek out professional help when needed. It could be the best decision you ever make for your business.
Stop the Guesswork with Amazon Accounting Services
The accounting process can be a bit tricky to navigate, especially in e-commerce, but with a little know-how and some helpful tips, you can keep your finances accurate and healthy.
Are you an inventory business located in the US or Canada? If you're having difficulty managing your finances, Unloop your troubles with us.
When you partner with our accounting firm, you'll have access to a dedicated bookkeeping team who can help you get your books in order. We also offer accounts payable, forecasting, tax, and payroll services.
Stop guessing at what might be going on with your Amazon account, and let us take a look for you. Book a call now to get a quote!