Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Because of the pandemic, eCommerce has exponentially increased in the past two years. Online shopping and selling have become a way of life, and it’s easy to see how it has grown so quickly.
We see vendors attempting to establish and cement themselves in the world of eCommerce. Merchants have been extremely inventive when it comes to marketing and selling their products on the internet. To help them compete in this industry, they have some unique and creative minds on their team.
But do you ever wonder how vendors and sellers track all the purchases made by their customers? Do they simply scribble every sale down and keep their notes neatly sorted and tucked away? Or do they rely on software to help them monitor everything in a secure and worry-free manner? Almost definitely, the answer is a combination of both.
What is Bookkeeping?
Bookkeeping is the process of putting your company's financial transactions into organized accounts on a regular schedule. It can also refer to the different recording methods offered to businesses.
Bookkeeping is an important part of your accounting process for various reasons. You can develop accurate financial information that helps you track productivity and profitability if you keep transaction data up to date. Detailed records will be useful in times of a tax audit.
So, where do you start? What is the most effective way to create a model that is suitable for you and your Amazon business? This article will take a complete look into bookkeeping for Amazon sellers. We'll go over what it is, why it's important, and how to begin. By the end of this article, you should understand the basics of bookkeeping and be well on your way to keeping track of your sold goods.
Why Is Bookkeeping Important?
Bookkeeping might seem like a daunting and unnecessary task for the small-time Amazon seller who is just starting to get their business off the ground. But trust us when we say that it's essential to maintain accurate sales records from the very beginning. This will not only help you keep track of your inventory and budget better, but it will also save you a lot of headaches in the long run.
To help you compete in this industry, take a look below at the importance of bookkeeping.
- It assists businesses in being compliant: Accurate financial records are required for compliance with tax laws and other requirements.
- Accounting software gives business owners the information they need to make educated resource allocation decisions.
- It helps businesses become more manageable: Maintaining accurate financial records is essential for easier management. Failing to keep proper records can lead to hefty fines and penalties.
- It makes it easier to apply for loans: Lenders will often request financial statements from the borrower when applying for a loan. Having accurate bookkeeping records makes it easier to provide these statements and increases the chances of getting approved for the loan.
How to Get Started with Bookkeeping
If you're new to bookkeeping, the best way to get started is by using software like QuickBooks or FreshBooks. These tools make it simple to keep track of income and expenses, generate financial reports, and adhere to tax regulations.
If you're selling on Amazon, a few bookkeeping tools are specifically designed for Amazon sellers. FBA Bookkeeper is one option that can help you keep track of your inventory, sales, fees, and more.
So there you have it! Now you know the basics of bookkeeping for Amazon sellers, what do you have to lose? Get started right away!
Bookkeeping for Resellers
If you're a reseller, Amazon accounting is still important! Like any other business, you need to track your sales, purchases, inventory, and expenses. The good news is that there are plenty of software programs and tools specifically designed for resellers.
Inflow Inventory is one alternative that helps firms manage their inventory and orders. Another option is ResellerCloud, which allows users to track Amazon sales, purchases, and expenses in one place.
The Benefits of Amazon Bookkeeping
Some benefits of Amazon bookkeeping include helping businesses keep track of their finances, staying compliant with regulations, and making it easier to apply for loans. Bookkeeping and inventory management can also assist organizations in better understanding their financial performance and making educated resource allocation decisions.
For resellers, bookkeeping is also important to track sales, purchases, inventory, and expenses. Bookkeeping can be made easier with the correct tools and software. As a result, any business owner should begin bookkeeping as soon as feasible.
Common Bookkeeping Mistakes
One common mistake people make when bookkeeping services is failing to maintain accurate records. Serious sanctions and fines may be imposed, so you have to be careful. Another mistake is not using bookkeeping software, making the task much more difficult. Additionally, people may forget to track important information such as sales, purchases, inventory, and expenses. Therefore, it is essential to be diligent when bookkeeping to avoid making these mistakes.
Accurate bookkeeping is necessary for any type of business to succeed. Cash flow, income statement, and cash accounting are considerably easier with the correct tools and software.
Bookkeeping FAQs
Some common questions people have about bookkeeping include:
- How to get started? Start by creating a system to track your income and expenses. This can be done by using software, manually, or a combination of both.
- What is the best accounting software to use? It depends on your business and needs, but some commonly used bookkeeping software includes QuickBooks, Xero, and FreshBooks.
- What records do I need to keep? Generally, you should keep all financial records including receipts, invoices, bank statements, and tax documents.
- How often should I reconcile my accounts? This varies depending on the type of account and how active it is, but generally speaking, you should reconcile your accounts at least monthly.
- What is double-entry bookkeeping? It is a method of documenting transactions in which each transaction is entered into at least two accounts. This helps to ensure accuracy and provides a clear audit trail.
If you know the answers to these questions, you'll be better equipped to start bookkeeping for your business.
Bookkeeping Tips
To avoid making common bookkeeping mistakes, follow these tips:
- Use bookkeeping software like QuickBooks Online or FreshBooks to make the task easier and more accurate.
- Reconcile your finances monthly. It's also crucial to maintain track of income and expenses, prepare financial reports, and adhere to tax regulations.
- Keep all financial records including receipts, invoices, bank statements, and tax documents.
- Use double-entry bookkeeping to ensure accuracy and create a clear audit trail.
- Understand what information is important to track and how bookkeeping can help your business.
In conclusion, adhering to these recommendations will make bookkeeping easier and faster.
Final Thoughts
We hope that this post has thrown some light on the basics of Amazon accounting. Bookkeeping is a vital part of running a business, but it doesn't have to be difficult. On the contrary, you can make bookkeeping much easier by using the right tools and software. So don't put it off any longer; get started right away!
Explore more of our website or contact us if you have any queries or would like additional information. We offer a variety of bookkeeping services and software to help you manage your Amazon account and Amazon clients. It’s time to make your small business management breezy!