Making a serious profit from selling on Amazon is a thrilling prospect. This is because the Amazon marketplace is still the leading ecommerce platform.
As your business grows, you will start dealing with many transactions and data to be analyzed. So as exciting as Amazon retail sounds, the road to making money on this platform isn't always smooth as some might expect. This is where learning the basics of accurate accounting comes in and resolves the situation.
This article outlines how beginner retailers can be the best in Amazon accounting and utilize it to their business's advantage.
Understand Accounting First
Many Amazon sellers find themselves asking how they can do accounting for ecommerce when they don't even have an accounting degree. The truth is, whatever your business is, you have to get a handle on your numbers regardless if you have an accounting degree or not.
Keeping a close track of your numbers, including records of all revenues and expenses, is important so you can project how much profit you will make in the next months. One way to do this is by setting up an accounting software that can help you automate most of these processes.
Implementing and getting used to ecommerce accounting is not easy. It will take a little time and effort from your end as an Amazon business owner, but you will also be able to reap benefits in the long run. If you are serious about making your business grow, you have to make a conscious effort to learn Amazon seller accounting.
If you are a beginner, don't be afraid to learn new things that can help you improve your business's financial performance. Consider yourself at a vantage point as it is best to start and build good habits early before your business fully scales up. However, it is never too late for Amazon sellers to invest in an automated accounting system.
One way newbies can familiarize themselves and have stress-free accounting is by using helpful resources available online such as articles, tutorial videos, and books from reliable resources. These will help build ecommerce retailers' foundational financial knowledge.
Build a Good Foundation
If you want to build good habits, start as early as now. Developing an accounting system during the earliest stage of your business will help you scale easily when it grows.
As a newbie Amazon seller, you may be using spreadsheets and paper records for, as these are free and easy ways to get started with accounting. However, these solutions aren't sustainable. The use of spreadsheets like Google Sheets for accounting can only be effective for managing very small chunks of data.
Allocating a lot of time every month on manual data entry affects your productivity. It takes up most of the time that you can use to accomplish other things for your business. Above all, manual data entry is prone to mistakes. These errors can give you an incorrect idea of how your business is performing, directly affecting your decision-making.
Your Amazon business needs a solid accounting foundation to help you with important and accurate financial data. This can be done with optimization of chart accounts, regular creation, and monitoring of financial reports every month backed by using cloud accounting software to automate most of the process and ensure precise data.
Create a Financial Report System
Financial reports serve as your backbone in ecommerce accounting. These reports are also important to make better budget plans for the succeeding months.
Here are some of the reports that you have to create and monitor to track your progress on your ecommerce business easily:
- Profit and loss statement - This is the income statement of your business. This will show how much your earnings and expenses are, and will help you determine whether your business earns at the end of the day.
- Balance sheet - This will help you track how much you have in assets and inventory.
- Cash flow statement - This report keeps an eye on sales, expenses, and other financial sources. This will help you better understand how money is getting in and out of your business.
Finally, after collecting all this financial information, summarize it into succinct reports so you can easily review and utilize them to scale your business properly.
Choose the Right Accounting Software
Ready to take accounting to the next level? Invest in a top-notch Amazon seller accounting software that will empower you to effectively monitor and improve your financial performance.
Purchasing the right cloud accounting software can be difficult if it is your first time taking advantage of such a service. Still, it guarantees accuracy in bookkeeping and the inventory management of your business.
While looking out for the best accounting software out there, consider if it is something you can easily learn and use on your own. It is also important for you to assess your business needs as there is no "one size fits all" in accounting software.
Here are some of the features that you might be interested in:
- Invoice and billing generation
- Tax management
- Budget preparation
- Result forecasting
Worry-Free Accounting with Unloop
Still struggling to balance numbers and business simultaneously? We've got you covered!
Unloop helps ecommerce sellers handle business finance. But, most importantly, Unloop also helps professionals set up the best accounting software for their business! The team also has the right expertise in the ecommerce accounting industry to help keep your business ahead of the curve.
Here are some of our available services:
- Amazon bookkeeping services
- Services for sales tax
- Compatible accounting software
Unloop also offers flexible payment plans based on your annual revenue, so you can purchase professional services without breaking the bank.
Many Amazon retailers let their accounting foundation fall through the cracks. However, as a beginner, you have the time to constantly learn more about accounting and to use it to propel your business.
It may not be an easy path but remember that we're here to help you reach your business's potential. Ready to master Amazon accounting to be profitable? Book a call with us and start nailing those ecommerce strategies today.