Maintaining the financial flow of Amazon business accounts isn't as easy as handling traditional businesses. Unlike typical businesses, your specific expenses under eCommerce businesses are lumped together under the umbrella of Amazon policies which makes it difficult to track them. Amazon is also constantly changing and evolving, so it can be difficult to keep up with the latest trends, financial guidelines, and best practices.
But did you know that accounting tools can help you avoid these financial shortages? Before that, let’s discuss some of Amazon sellers' specific challenges. Then, we will help you figure out how to avoid them using our recommended accounting solutions.
Rules and Regulations: The Specific Challenges of Amazon Sellers
Amazon sellers frequently operate their businesses as if they were regular brick-and-mortar stores. They have no idea that being obsolete is where they make the most errors. Here are some common Amazon policies that sellers must comply with if they're new to the business.
Amazon Fees
Most sellers fail to factor fees into their pricing strategy. There are two key costs to be aware of while selling on Amazon: the referral charge and the variable closing fee. The referral fee is a set amount per item sold, whereas the variable closing fee is a percentage of the overall sale price. These costs can quickly pile up, so it's important to manage these fees often.
Potential for Chargebacks
Customers can protest a charge on their payment card, which leads to a chargeback. In this case, Amazon will withhold the payment until the issue is resolved. This dispute is a major headache for sellers, so it's important to track the inventory of your business and purchase history of customers to avoid this situation.
Return Items
Sellers still incur the cost of shipping when a customer returns an item. Some customers abuse Amazon's generous return policy by "returning" items they keep or damage during use.
Inventory Management
When selling on Amazon, it's important to keep in mind that not all of the items sold on the site are fulfilled by Amazon. Many items are instead sold by third-party sellers, which can sometimes lead to issues with inventory levels. This is because Amazon doesn't control the inventory for these items the sellers do.
This task is quite challenging, since the Amazon seller needs to pay close attention to inventory levels—too much and they risk losing money on storage fees; too few and they risk running out of stock and disappointing customers.
Sales Tax
Collecting sales tax in various states is one of the responsibilities of Amazon sellers. It can be challenging if you’re unaware of the process.
Cash Flow
With the Amazon two-week payout to sellers, it's easy to fall behind on cash flow. This protracted payment period can lead to late payments to suppliers, missed opportunities to invest in new inventory, and other financial problems. To avoid these issues, Amazon sellers must know their cash flow and plan accordingly.
QuickBooks for Amazon Sellers: How It Can Respond To Specific Challenges?
Amazon sellers are swamped with business duties. They're managing inventory, fulfilling orders, dealing with returns, and trying to stay one step ahead of the competition.
To avoid the hassle, we recommend using QuickBooks for Amazon. This Amazon accounting software can take some of the stress out of selling by keeping track of your finances and providing valuable insights into your Amazon business.
Here’s how the integration of QuickBooks to an Amazon account can help with the problems mentioned above:
QuickBooks for Amazon Fees
With QuickBooks, you will see all Amazon's fees for each transaction—shipping fees, referral fees, and commissions. Using QuickBooks can also help you see Amazon fees over time. This information can be invaluable in budgeting business expenses and sourcing products. But, most importantly, it can help businesses stay on top of their cash flow and avoid late fees or other penalties.
QuickBooks for Chargebacks
QuickBooks can track chargebacks so that you can keep tabs on your finances and avoid being blindsided by a refund.
QuickBooks for Return Items
Simply enter the information into QuickBooks and mark it as a return. Then, QuickBooks will automatically deduct the returned item from inventory levels and track what needs to be reordered.
QuickBooks for Inventory Management
QuickBooks is a powerful tool that ensures enough stock is on hand to meet customer demand.
QuickBooks for Sales Tax
QuickBooks can manage your sales tax obligations and ensure that you are compliant with Amazon's requirements. It can track, calculate, file, and remit taxes to the appropriate state agency.
QuickBooks for Cash Flow
QuickBooks automatically generates Amazon sales and expenses, so you can see at a glance how much cash you have coming in and going out.
Burned Out? It’s Time to Hire an Accounting Team
Some Amazon sellers are so preoccupied with their business that they often neglect the financial mistakes they make. Little do they know that this is a recipe for disaster. That’s why it’s crucial to find the perfect team that can keep up with the demands of their business.
The good news is that plenty of reputable accounting and bookkeeping firms specialize in helping Amazon sellers get a handle on their finances. You can free up time to focus on other areas of your business and ensure that your funds are in good hands by outsourcing your accounting needs.
The Unloop Way: Handling Your Finances with Care
We hope that recommending QuickBooks helps you simplify Amazon’s financial challenges. This financial software is a great solution, so you won’t have to be burdened with more paperwork.
Finding the right team to work with to get the most out of the software is paramount. Fortunately, Unloop has years of experience working with Amazon sellers. We also know how to get QuickBooks working for your business.
Reach out and we'll show you how simple finances can be.