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.
As an Amazon seller, you know that staying in compliance with sales tax laws is essential to protecting your business. But tracking all of the various tax requirements in different states can be a daunting task. Luckily, there are tools available that can help make this process simpler. One such tool is an Amazon sales tax report. This report can help you track your sales and tax information, giving you a better understanding of your business's financial status.
Here are seven ways an Amazon sales tax report can help your business grow and succeed.
Knowledge of Amazon sales tax paid report
Amazon is considered a Marketplace Facilitator. Under the Marketplace Facilitator Legislation, collection and sales tax filing services are Amazon’s responsibility. With this, the daunting task of tax collection and remittance is taken from your plate. Nevertheless, you still need to have access to your Amazon monthly sales tax report. You can link the report into your accounting software and get a complete view of your business's financial status.
You can strategize further to lower your expenses and increase your profit by seeing the sales tax costs.
Visibility on your after-tax money
After checking how much sales tax was collected, you’ll be able to see your after-tax income. This is the money you will use to either invest in a new venture, pay some loans and debts, or save.
Here are the wise ways to spend your after-tax income:
- Pay any loan or debt
- Give yourself and your business partners your pay
- Invest in business expansion
- Office renovation
- Save money for emergencies
- Marketing investment
- Growing your staff
- Outsourcing some work
But you need to make sure all taxes are accounted for and deducted before you proceed with these expenses. This practice ensures that you are spending the profit and not the money that must be remitted when tax season comes.
Assurance of a tax-compliant business
You have to pay the price when you do not comply with taxation. The government department responsible for collecting taxes will surely come after you, and you may face the following sanctions:
- They can seize your valuable assets.
- They can acquire your bank accounts.
- They can require wages garnishing.
- You’ll pay additional interest rates for the taxes you did not pay.
The good news is when you sell on Amazon, the platform automatically collects and remits sales taxes for you. Nevertheless, you still need to pay attention to your income tax to ensure your business is tax-compliant. You’ll get both in Amazon reports.
Consciousness on changes in tax rates per jurisdiction
With numerous tax rules per country, state, province, and municipality, what you know about sales rates today may change quickly in weeks or months. Aside from the local laws, other bases of tax rate are also susceptible to change, like the type of product you are selling. For instance, what was once a commodity charged with lower taxes may increase because of high demand. Having access to Amazon sales tax reports allows you to see which states and goods have changed. The changes will affect your profit, so you need to strategize and adjust accordingly.
Knowledge on valid tax-exempted individuals
The Amazon system is configured to provide information about the tax rates of different countries, provinces, towns, and municipalities. And if there is one Amazon sales tax report for buyers to be concerned about, that is about their tax exemption. Your buyers need to familiarize themselves with the Amazon Tax Exemption Program. The tax-exempt steps are easy and will not take long to be approved. The buyer only needs to submit a tax exemption certificate and wait for approval, which takes about 24 hours. You’ll have visibility about this data too!
Awareness of the sales tax nexus
A basic rule you need to remember about sales tax nexus when selling on Amazon is that you automatically need to pay sales tax when you use Fulfillment By Amazon (FBA). When delivering goods from an Amazon fulfillment center, roads are considered an economic nexus.
You’ll learn plenty more considerations per country, state, and province regarding the sales tax nexus; each place may have different rules. When you know what the nexus is, you can figure out ways to save yourself some tax payment by working around the nexus. Nevertheless, if your transaction falls on the nexus, make sure to comply.
Helps in strategic decision making
You can integrate the sales tax report you get from Amazon into your accounting software for you to get a complete picture of your business finances. When your data is full, you or your accountant can generate all these reports:
- Income statement/Profit and Loss statement
- Balance sheet
- Cash flow statement
- Revenue by customer
- Accounts receivable and payable aging
As a small business, often convening to make sense of your business finances is essential. So schedule an accounting report weekly, monthly, quarterly, and annually. By doing so, you can adjust business strategies accordingly and timely too.
For instance, you can check if being an Amazon FBA seller is efficient for your business and if the costs are worth it when it comes to a sale. You can also strategize on pricing better when you see your costs.
Get Amazon Sales Tax Report From Unloop
The Amazon sales tax report is a great help for your business. You can use the information from this document to make strategic decisions on how you want to market and sell products and avoid penalties due to taxation issues. You’ll also know how much money goes to taxes and how much profit you can use to scale your business. Of course, the visibility of this information also makes it easier for accounting professionals to keep an eye on what things cost and track expenses over time. If you need assistance with your taxes and integrating the data you get from the platform to accounting software, Unloop can be your partner! We offer Amazon accounting and bookkeeping for businesses, and we can also help you with sales and income taxes. Contact us now at 877-421-7270. We’d love to explain all our services to you!