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.
So you've landed a spot on Amazon to market your small business, which is excellent news! You're ready to embark on a new journey with plenty of opportunities to expand your customer base, but brace yourself for new challenges incoming, too. In carving your path to success, there are some not-so-fun things you need to work through to accomplish your goals. For example, bookkeeping management is one of the most challenging aspects of Amazon selling.
Small business bookkeeping can be challenging. Having a smaller scale doesn't make bookkeeping and accounting tasks easy to manage. Sometimes, not having enough finances, knowledge, and workforce to handle financial data adds to the company's problems. Moreover, it can be more difficult for a small business owner to take them all at once with Amazon's complex financial system.
So here's an article about the challenges you might face with Amazon bookkeeping. It's significant to be aware of these challenges so you can spend some time contemplating methods to counteract them.
The Most Common Bookkeeping Challenges Small Businesses Face on Amazon
Product launching on Amazon is exciting—the possibilities are almost endless, and the entry requirements are not very strict. Still, sellers face difficulties in bookkeeping and accounting jobs. The most common roots of these issues are the lack of bookkeeping and accounting experience and workforce. As a result, most brands make the following Amazon accounting and bookkeeping management mistakes:
Calculating a Web of Seller Fees
Amazon has a complex system of seller fees (monthly fees, referral fees, and shipping fees via Fulfillment by Amazon (FBA)) which can be difficult to navigate, especially if you lack adequate knowledge and experience on the platform. Moreover, these fees have a more specific breakdown of charges, complicating the system further. Unfortunately, Amazon doesn't provide single-entry invoices that help you get an in-depth understanding of your costs, so it can be very challenging to estimate seller fees.
Updating Balance Sheets for Inventory
To successfully manage your inventory, you need a kickass and consistent way of tracking your units. You need to track customs, FBA (if you opted for it), the physical store, and product returns. If you're not using an automated tracking system, it will be harder for you to monitor inventory and update your balance sheets accurately. As a result, it will add an unnecessary burden on your cash flow and prevent you from making the right business decisions.
Returns, the Nightmare of Accounting
Product returns are stressful in the first place—you have to keep adjusting the inventory and potentially lose customer loyalty at the same time. It's the negative kind of "killing two birds with one stone." With Amazon, things are more complicated because FBA returns are classified into various categories: sellable, damaged, customer damaged, defective, and carrier damaged returns. It may seem organized at first, but Amazon sometimes makes incorrect inventory placements, making a mess of your books.
Where Do the Taxes Go?
Tax preparation can be incredibly challenging for small eCommerce businesses due to the demand for multi-channel tracking. Today's tax regulations are over 10,000, and the variety of these systems is confusing when updating your books. Although Amazon takes the stress of tax collection and remittance away from the seller, you still need to track and accurately state multi-channel transactions in the paperwork to meet tax demands.
Work With Unloop for a Stress-Free Small Business Bookkeeping and Accounting System!
Are you looking for a team of experts offering efficient small business bookkeeping services? Then, Unloop might be the perfect business partner for you! We understand Amazon's bookkeeping and accounting challenges, so we want to help you manage them the right way. Our team of small business bookkeeping and tax services experts collaborate with reliable accounting firms to ensure the accurate completion of your books. Through our services, you can focus on growing your small business without worrying about documentation and analysis of financial information.
Conclusion
As a small business seller on Amazon, it's important to properly set your bookkeeping and accounting systems during the earliest stages of online marketing. Finances roll fast, and it can be challenging to keep track of them in a massively complicated marketplace. Of course, you can try learning the basics of financial management, but it will be hard to manage all bookkeeping and accounting tasks independently.
If you find yourself having a hard time learning the processes of Amazon bookkeeping, you can always look for a dedicated expert or team to help figure things out. In addition, by outsourcing your accounting and bookkeeping tasks, you can concentrate your hard work on other aspects of your business.