Bookkeeping for Amazon sellers seems like an unnecessary step in the sea of other tasks you need to accomplish. However, bookkeeping, as well as accounting, is very important in optimizing your sales. By keeping track of your income and expenses, you can ensure that the path you are paving for your Amazon business is towards growth and higher net profit.
Bookkeeping is also an essential step to ensure your business operations are organized, and that you are on top of your finances. You will be able to avoid unpleasant financial red flags and tax time problems later. Here are eight more reasons why you should start Amazon bookkeeping today!
Fulfillment by Amazon is a service many beginner Amazon sellers are eyeing to utilize. The fulfillment method brings convenience to sellers because it offers product storage, packing, shipping, and 24/7 customer service.
An FBA marking on your store is also appealing to customers as it increases the product’s reliability. Buyers are more confident that their orders will come on time and in perfect condition because Amazon handles them. These two benefits work together to boost your Amazon sales, and you can efficiently monitor them through Amazon seller bookkeeping and accounting.
There are different ways Amazon sellers can send orders to customers:
You’ll have visibility on the fees you need to pay for these various shipping and fulfillment methods through bookkeeping. You can compare the costs you incur through the various methods and check which method is most efficient for your business.
You’ll have visibility of the FBA fees you’re paying through bookkeeping. The books will reflect whether you are paying an FBA Individual Selling Plan or the Professional Selling Plan.
You’ll also see how inventory storage fees vary depending on the weight and dimensions of your package, how long packages have been stored, and the fees changes during peak and non-peak months. The fulfillment fees which vary depending on the package size are also jotted down on the books.
You can make a calculated move to continue with FBA or halt it when you do bookkeeping because you’ll see all these other fees Amazon charges you with:
These fees can go into your bill depending if you take advantage of them. However, some fees are charged by Amazon automatically, especially when the packaging does not follow the FBA packing and preparation requirements. When you have your bookkeeping established early, these costs are categorized and calculated accordingly, letting you see your FBA sales to costs ratio.
Launching your store on various platforms outside Amazon is a wise move to reach as many customers as you can. Amazon also handles the fulfillment of orders sold out of the platform through the MCF.
Many fee types on FBA are similar to MCF, like per unit sold, fulfillment, monthly, inventory storage fees, and more, but the amount you need to pay is different. When your bookkeeping is in place, you’ll see the MCF costs and decide whether the method is sustainable for your business.
Damaged items and returns get problematic when you get more of them than sales. You’ll see this right away when you monitor your inventory and numbers through bookkeeping. Are there only a few instances that can be considered isolated, or is the number you are getting alarming that you need to boost your quality check?
Through bookkeeping, you can raise the red flag right away and pinpoint the root cause of why you have damaged products and returns, and formulate solutions right away.
FBA also offers label, prep, and repacking services. This service is helpful if you ship your products directly from the manufacturer to Amazon fulfillment centers. You can save time and effort in receiving and packing the products yourself because you’ll delegate the tasks to Amazon. However, you need to determine if you are ready for the costs.
Through bookkeeping, you’ll see whether the label, prep, and repacking services costs are less than what you’ll incur when you receive and pack the products yourself.
When you set up your FBA bookkeeping, you’ll have income and expense data you can turn into reports. The reports will guide you to generate action plans to make FBA sustainable, or to reflect if it is the right fulfillment method for your business.
If you have just begun using FBA, get reports as often as you can, so you can address success roadblocks right away. An expert team-up between a bookkeeper who monitors everything and an accountant who creates understandable reports will make this process successful.
If you’re still on the fence about bookkeeping for Amazon FBA, we’ve hopefully provided some convincing reasons why you should start as soon as possible. It will help you have a clear view of your income and expenses, and it can also give you a better understanding of how FBA affects your business as a whole.
Luckily, Unloop offers comprehensive bookkeeping assistance that takes all of the hassle out of this tedious task. We have a team of trained bookkeepers ready to assist you. So book a call with us today to get started!
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.