Monitoring your business's accounts payable is crucial to determine the state of its financial health. Accurate forecasting allows you to gain control of your cash flow. In addition, knowing when your payments are due builds a good relationship with your suppliers and opens up strategies for money-saving plans for your payables.
Forecasting accounts payable may not be your priority when handling business accounting, but it can benefit your business. In this blog post, we'll talk more about forecasting accounts payable so you know how to do it for your business.
Accounts payable refers to short-term liabilities a business needs to pay off within a year or a shorter time frame. Understanding and seeing your business expenses fully allows you to do the groundwork for building a suitable budget for your business.
Forecasting will help you prepare to meet your payments by considering different scenarios. For example, if the price of raw materials increase or third-party fees change their rates, you can ensure your business can still fulfill its obligations and make wise decisions regarding your business finances.
You can monitor the money going out of your business in several ways. Here are some things you can do to help you build an accurate accounts payable forecast.
The payment patterns for your business are an important piece of information in creating an accurate forecast. Your expenses on payroll and inventory are relatively consistent month to month and easier to track. But always look at past spending data to see accurate patterns.
For example, look at the months you spend more on inventory. Some of your items may be in demand in certain months, so be mindful of that so you can plan your budget accordingly. You can also accumulate your past invoices to have a picture of where your money is going.
Noticing the patterns will also help you see where you can save, which can be good for your cash flow.
Understanding trends in the marketplace, like technological advances and consumer behaviour, will help determine if these changes can affect your business payables. Changes in the industry are quick, and if you're not keen enough to see them, you may fall behind, which can make your forecast less accurate.
You can track some marketing trends by:
Using historical data is advantageous for forecasting because many methods maximize historical data. The most common way of using past data is through extrapolation. However, there's room for error with this method because it doesn't consider the changes that happened in your business.
Statistical modelling is a more accurate method for creating accounts payable forecasts. This method helps business owners identify behavior in ways businesses do their payments and create a forecast based on its current conditions. This forecasting method is the most accurate but requires a huge investment in time and resources.
If you're new to forecasting, it is best to use both methods for the best results. Then, play with the strength of each method to make better business decisions.
You need all the data to create an accurate forecast. That's why it is crucial that you keep track of your invoices and dues. Here are some ways to do it effectively:
Accounting software is a valuable tool for businesses. Think of it as a virtual assistant that handles certain tasks that you can't because your hands are full. For example, you can start with a Microsoft Excel spreadsheet to organize your cash flow in a certain accounting period. Although this may keep things organized, you still have to input data and create financial statements manually when needed.
If you want something more convenient, there are several accounting software you can choose from. These software options can perform basic accounting tasks and even more complex ones. Furthermore, they can produce financial statements like income statements, balance sheets, and other reports in just a few clicks.
Some even have a feature to create financial models for your business based on the data you input into the system. The right accounting software will help create your business's accurate accounts payable forecast.
Knowing how much you need to pay at the end of each period will help you plan your budget. Fortunately, there is a simple calculation method that allows you to get an overview of your expected accounts payables.
Here is how to do it:
Once you have this data, you can simply follow the formula:
(Current liabilities)/(Total operating cash/Number of days) = Expected accounts payable
So, for example, if your business has an outstanding liability of $10,000 and your total
operating cost is $25,000, and you have 25 days to complete your payments. You can calculate your expected payables by:
(10,000)/(25,000/25) = $10,000
You can expect your business needs to pay $10,000 by the end of 25 days.
Forecasting is an optional part of accounting, and some business owners find it unnecessary. However, forecasting is a good move for your business if you want a clearer view of your financial ratios. Here are some benefits of doing it.
The results of the accounts payable forecast are valuable for improving your cash flow forecasting. This will help get key insights into how much of your working capital is available for business growth and investment. In addition, a clear picture of your forecast will help you maximize your working capital more confidently and risk-free.
Nothing makes your suppliers happier than you paying them on time. Forecasting accounts payable will help you see your deliverables ahead of time so you won't incur late payments. In addition, timely payments build trust and good relationships with your suppliers.
Moreover, forecasting helps you identify if you will run into problems with your payments. This way, you can give your suppliers a warning if there's no choice but to delay your payments.
Knowing your expected liabilities will help prevent disruptions in your payments. Understanding how much working capital comes in and out of your business in a specific period will help you eliminate risks and other potential disruptions.
Now that you have an overview of how forecasting accounts payable can benefit your business, you should start planning how you can forecast. Forecasting is not an easy task, so it is better to have a professional handle this for you.
Unloop offers AP forecasting for small ecommerce businesses. Our team of experts will ensure:
Unloop can handle all your accounts payable needs and even other accounting needs. Our team is ready to work with you on your bookkeeping, income tax, payroll, financial forecasts, and accounting. Book a call and work with us today!
Cash flow forecasting can be tricky—it requires skills, attention to detail, and dedication. But when done right, cash flow forecasting can offer tremendous value and invaluable insight into the future of your startup business or project.
Many organizations face significant challenges while attempting this exercise, but some workarounds can help you achieve success in predicting your financial future with confidence.
In this blog post, we'll explore some common cash flow forecasting challenges and solutions for improving your forecasts' accuracy. With these tips, you'll have valuable information to make better decisions about where to allocate resources and set appropriate expectations for revenue and expenses.
As an owner of a startup business, at the beginning, your cash flow may be slow and manageable using manual bookkeeping and accounting. A common mistake would be sticking to this day-to-day cash flow monitoring system and not forecasting. Seeing only daily cash flow and having no visibility about your company's future income and expenses is like operating a business in the dark.
Understand that cash flow management is essential for all businesses, even startups. Know that with it, you can see how much income and expenses you’ll have daily, weekly, monthly, quarterly, or annually. As a result, you can use the data as the basis of your financial game plans. You can use it to decide the following:
Having limited historical data is common to startups either because owners have failed to store financial data in the past or because the business hasn’t been running for a significant period of time yet. Historical data is the most basic information needed when creating a cash flow forecast, and the absence of these numbers makes the forecast result less reliable.
Despite the absence of historical data, there are still ways to get a reliable cash flow forecast. To begin, whether you lack past numbers because of a personal choice or not, it is time to invest in software and applications to help you track your business finances.
These apps and software can also help you conveniently create simulations, or before and after trials. Use the following data for your forecasts:
The biggest enemy of a cash flow forecast is inaccurate data, which can happen when tracking income and expenses manually. Although Excel sheets are readily available (and free), they may lose your business money in the long run as human errors bring costly damages to your finances.
Inaccurate data leads to making bigger loans, being overconfident in forecasting income, making fewer investments, and saving less—all detrimental to your business growth.
The most efficient workaround to the data inaccuracy problem is bidding goodbye to your company's manual systems. Accept that part of growth is optimizing your bookkeeping and accounting technology so that you can track your finances better.
Accounting software is highly automated, and you can also integrate various apps. As a result, you can minimize or even eradicate manual inputs, which can cause inaccurate data.
If there are a couple of teams in your company, you’ll need input for their income and expenses. This task becomes a roadblock when there is no collaboration between different departments. When different teams do not practise open communication, you might get incomplete or erroneous financial data from them. Another challenge is not having an established system for workflow and data submission processes in the company.
Excellent accountants and bookkeepers need to be well-versed in their tasks or have certifications and training to perform them correctly. On top of that, they should have communication skills and be team players. This is to make sure that they can connect to the various departments in your company to get the needed data. They also need to be forward thinkers to suggest and enact the best systems to make this data acquisition as smooth as possible for everyone.
Expect that a cash flow forecast doesn’t mean you’ll get 100% accuracy, as the following variables are prone to changes:
As a result, the final accounts receivable and payable won’t be exactly as what you forecasted.
The best workaround to ensure that you get the forecast closest to the truth is keeping numbers and data updated. Be in the know with the latest interest and foreign exchange rates. Know if there are changes in sales taxes and other tax dues you need to pay. If there are updates on commodity and raw material prices, they should also be reflected in your forecast. And do not forget about your customers too. Check sales trends to know when your peak sales occur.
Successfully launching a cash flow forecast is not the end of the cash forecasting process, but it becomes a problem if you make it so. As we’ve learned, some variables are subject to change, so if one variable adjusts, the income and expenses will as well. If you keep on using the old data without any adjustments, your business finances will suffer these consequences:
The best way to do a cash flow projection and actual cash flow analysis is through the help of software. An accounting software already has the forecast and the latest data of your business stored. They also have templates to show a comparison of current cash flow and forecast data. With software, generating reports is easier, and you can regularly analyze data to see if you need to optimize your cash flow plans and strategies.
Creating and maintaining a cash flow forecast is a major task for every company. Not having a dedicated team to handle it makes report generation impossible. And if even one is created, there wouldn’t be anyone to update it and let you know the latest data analysis results. Like a snowball, a series of the above mentioned challenges will surely accumulate.
There are plenty of choices a company can go for to hire a bookkeeper and accountant to handle forecasts. An in-house accountant is the traditional choice, but you can also choose to work with remote team members and freelancers. With these choices, building a dedicated team to handle forecasting becomes easier.
Your finance team will ensure your business has a defined forecasting process, an efficient way to acquire and manage data, and the best software to make forecasting cash flow easier and more accurate.
With cash forecasting being so important to any business’s success, startups must understand common challenges and how to avoid them. We hope that these common challenges startups face when forecasting cash flow and some workarounds have helped you. At Unloop, we have seen firsthand how important cash flow forecasts are to businesses. Proper forecasts can help businesses stretch their budgets and stay ahead of payments. With that in mind, take advantage of our forecasting services to experience the power of having a reliable and secure forecasting platform at your fingertips. Call us today!
Financial forecasting is the backbone of good financial planning. It directly affects your budget planning, investments, and strategic decisions for your business. If you're not doing budgeting and forecasting for your business yet, this year is the time to start.
There's more to forecasting than spreadsheets. Many things can affect a financial forecast other than numbers and some formulas. Fortunately for business owners, technology makes forecasting easier.
Businesses can use several budgeting and forecasting software to help predict their finances. To help you choose which one is best for your business, we've listed some of the best forecasting software options in 2023.
Even a structured business model needs financial forecasting to prepare for the future. It's a big problem when businesses run out of cash or are not prepared for the surge of expenses to keep their business running and retain their clients.
Accurate financial forecasts are valuable to every business, may it be big or small. Most businesses start with an Excel spreadsheet to develop their financial forecasting. However, doing forecasting in spreadsheets can be complicated because of the following reasons:
Forecasting in Excel is doable, but it is time-consuming and tedious. Developers are continually making software solutions for more progressive, innovative, and convenient forecasting. With that, here are the top budgeting and forecasting software products you should check out.
Cube is one of the top-rated forecasting software for businesses. Here is a quick overview of the great features of Cube.
Cube is the best financial software for startups that want to quickly transfer their data from manual spreadsheets to forecasting software without having to study complicated interfaces. Cube is best for faster workflows and is optimized for easier collaboration. Some of the functions of Cube include:
AnaPlan forecasting software is designed to plan for complex scenarios and do intelligent forecasting for faster and more accurate decision-making. Some of the key benefits of using AnaPlan are:
AnaPlan is best for bigger businesses with a dedicated IT team that can handle the complex controls of the software. But for smaller businesses, Vena is a suitable choice and almost similar to AnaPlan.
Planful is an affordable cloud-based solution for structured and dynamic planning, consolidation, and reporting. Planful offers:
Planful has AI-enhanced operations and functions that allow businesses to lessen the number of people they need to hire in the financial department. This overall lessens expenses in hiring staff.
SAS Forecast Server is popular for businesses because of its ability to generate accurate forecasts in a short period. More than quick forecasts, SAS has many great features to let you be in full control of your finances.
The forecasting software has easy-to-use GUI that can:
Its scalability and modeling offers:
The SAS forecasting software has many great and advanced features which makes this forecasting software good for small businesses and large enterprises. It can take some time for business owners to familiarize themselves with the software, but the product has official demo videos to help new users out.
Bizview is another cloud-based solution that can streamline your planning, forecasting, and budgeting processes in one software. You can access this software anytime and on any device as long as you have a stable internet connection.
Here are some of the features of Insight Software's Bizview:
Bizview has an interactive Excel-like interface which is also why many business owners prefer to use this software. It is also the most affordable software you can use for small businesses.
Streamline is the leading forecasting software of the first quarter of 2023. Its revenue forecasting processes are realistic, innovative, and quick to ensure that your business is on the right track when it comes to planning budgets and making strategic decisions.
Here are some of the key features of this forecasting tool:
There are hundreds of financial budgeting software available for businesses to use. It is just a matter of choosing the right software for your needs. The aforementioned forecasting tools are some of the best examples you can get for your business, but don't be afraid to explore and find software to suit your liking and needs.
If you need a professional for your budgeting and forecasting needs, Unloop can do the job! Our services include revenue forecasting so we can help small businesses like yours in their growth trajectory.
We use your business's historical data to determine any pain points and fix them before they happen. We will also set your business up with reporting software for accurate forecasting. Monitor your financial performance today and book a call with our experts!
Taxes are every business owner's legal obligation. In ecommerce, sales tax is one of the most prominent. However, not all ecommerce businesses, particularly those with a platform on Amazon, pay taxes on sales the same way.
Here's a quick guide on Canadian sales tax policies so you can manage your taxes better as an Amazon seller in Canada ahead of tax season.
A sales tax is a value-added consumption tax that tax authorities include in the sales price of goods and services. The sales tax is paid at the buyer's expense, which the seller must file to the appropriate tax authorities.
The sales tax, while consistent among countries as an attachment to purchasing goods and services, comes in different computations depending on a nation's tax policy.
The Canadian government imposes three different taxes for the computation of a sales tax:
The federal goods and services tax, or GST, is a value-added tax imposed by the government on goods and services.
Provincial sales tax, or PST, on the other hand, is a different value-added tax levied locally on the same goods and services that business owners have sold.
The standard rate for the GST is 5%, while the standard rate for the PST is 7%.
The Quebec Sales Tax is similar to the Canadian provincial sales taxes (PST) in function, with only the rate being different. If the provincial sales tax is at 7%, then the Quebec sales tax is at 9.95%
The Harmonized Sales Tax (HST) is a uniform rate for five of the thirteen provinces and territories of the Canadian government. In provinces following the HST, the GST or the provincial sales tax PST do not apply. Instead, there is a single rate for all five provinces, which is 15% (except for Ontario, which charges a 13% sales tax but is still under the harmonized sales tax).
With the harmonized sales tax (HST), you only need to file one (1) tax return for all five provinces, removing a bit of the hassle of doing your taxes.
File name: amazon sales tax canada 2.jpg
Alt name: The Canadian Revenue Agency in a heading.
Now, here's where it can get confusing. You can compute Canada's sales tax in three ways.
First, there is the standard federal sales tax plus provincial taxes. In these provinces, you must add the federal goods and services tax to the local taxes.
For example, the sales tax in British Columbia and Manitoba is 12%, coming from a federal sales tax of 5% and provincial taxes of 7%.
However, some provinces do not impose provincial sales taxes and instead collect only the federal sales tax of 5%. Such provinces include Alberta, Nunavut, Yukon, and the Northwest Territories.
Second, there is the HST. Since the federal taxes and local taxes no longer apply, you can mark your sales tax in provinces under the HST at 15% (except Ontario, with an HST rate of 13%).
In case the numbers confuse you, we've provided a list of the different Canadian sales tax rates below:
Recent changes in Canadian tax policy have allowed marketplace facilitators (MPF) to handle tax work for third-party sellers. MPF legislation defines a marketplace facilitator as a marketplace that allows third-party sellers to sell physical and digital property, goods and services online. Amazon, being an MPF, can now collect, calculate, and remit taxes for their third-party sellers on taxable sales covered by MPF legislation.
However, some third party sellers are required to collect, calculate, and remit their own taxes. Regardless of how you go about collecting taxes, as an Amazon seller in Canada, you are expected to fulfill your tax obligations.
Fulfilling your tax obligations as a Canadian seller can be tedious, but it must be done. Failure to file and remit sales taxes could lead to criminal charges and could foresee the end of your time as a business owner.
As the business owner of a Canadian company, you're obligated to pay your taxes. But for your sales to be taxable, you'll have to open a sales tax account with the Canada Revenue Agency, also known as a GST/HST account.
Even foreign Amazon sellers with an online store who have a gross income of over $30,000 in Canadian sales are required to open a sales tax account to pay HST/GST.
If you're a Canadian seller with worldwide sales less than or equal to $30,000 for a period of 12 months, you're considered a small supplier and are prohibited from filing for and charging sales taxes. You can collect and remit sales taxes on the product or service that surpasses $30,000.
So, regardless if you're a Canadian seller or an international seller, you're going to have to pay GST/HST.
Sales tax filings in Canada usually run from January 1 until April 30, with income tax returns collected around February.
On the other hand, payment for Canadian taxes is usually collected monthly or annually. If your business income is less than $1.5 million in sales, then you can pay annually. In some provinces, however, the cap is lower.
Manitoba has a ceiling of $75,000 dollars before being required to pay annually; for Saskatchewan, it is $60,000. In British Columbia, you pay your sales taxes monthly during the first year of your business. Then if your taxes are paid on time during the first year, you'll be paying the next few years annually.
You can pay your GST/HST in three ways:
You can pay your GST/HST using a financial institution's transaction methods or online banking services. The Canadian Revenue Agency (CRA) has also established a new online payment method called MyPayment. You can try different payment options using MyPayment. Check their website for different payment options for businesses and individuals.
On the other hand, if you want to pay your GST/HST through a financial institution, use Form RC158, Remittance Voucher - Payment on Filing to pay the amount you owe. These forms aren't available online since they come in pre-printed format.
The following tax-related forms are also available in financial institutions:
You can also send your payment by mail. However, payment sent by mail should be under $50,000, regardless of currency. Any mail equal to or above $50,000 should be remitted electronically or through a financial institution.
If you're not paying in Canadian dollars, simply pay the equivalent amount in the available currency.
There are so many things to think about when it comes to taxes. Worse, getting something wrong can mean hefty penalties for your business. We understand that filing taxes can be complicated, especially for new ecommerce sellers like you. If filing your taxes is making you dizzy, then you might need the help of a tax professional.
Unloop can help you file your taxes and more! Our team of professionals can handle any accounting problem you can give us—just give us a call and see what we can do for you.
Business owners like you can deny it all you want, but you depend greatly on your customers for the money you receive each month. In some cases, unplanned expenses can disrupt your cash flow. That's why an accurate cash flow forecast is a must for every business. However, a precise cash flow forecast is easier said than done.
The forecast process should allow your business to plan and strategize any issues that may occur within the month. You'll surely thank yourself for avoiding huge cash flow catastrophes when the forecast is done properly. In this blog post, we'll share some tips to help improve your cash flow projections.
Cash flow forecasting is similar to budget planning, but in this process, you focus more on the money coming in and out of your business. It is rare for businesses to have cash shortages, especially when business is booming and you directly exchange cash for your goods and services.
However, there are some businesses that receive payments on schedule, and they must carefully plan their operation costs until the payment comes through. For example, you rent out a unit space for $1,000 a month. If you have ten units, you'll expect to receive $10,000 at the end of each month. But within the month, you should also have enough resources to pay for electricity and other bills.
Cash flow forecasting will help you see what to expect within a time frame. Will you get $10,000 at the end of each month? If not, how much cash will you receive, and how will your money move to cover the cost? All these forecasting results will be based on the past data of your business.
The more accurate the cash forecast, the better you can plan for your time-specific cash flow. Here are some practices you should note to improve your financial forecasting.
Most of the forecasting process is built around historical data. So it's important that you document all your business plans to build your cash flow forecast around it. For example, last year showed that your revenue increased by 40%. So it's possible that you will go on the same trajectory.
From there, you can make changes to your business plans. If your business continues to increase revenue, you may need to stock up your inventory to keep up with the sales. You can also create budget proposals to expand your business, get a new physical space, and hire more employees.
Once you know the changes that will happen around your business, don't let the plans stay as plans on paper. Instead, draw up a budget to transform a plan into action. Considering the previous example, if you plan to expand your business by getting a bigger space and hiring new employees, it's best to lay out the budget for the costs so you can picture what happens to your cash flow.
Proposing a budget ensures that big and unplanned expenses will not strain your cash flow. Furthermore, seeing your budget helps you make better business decisions.
It's best for businesses to make long and short-term forecasts. Long-term cash flow forecasts can involve projecting your cash flow for the entire year, while short-term cash flow forecasts project your cash on a monthly basis.
Long-term forecasts are less accurate since they are mostly based on assumptions and greatly depend on your monthly cash flow outcome. There are different factors that can affect the annual cash flow forecast, but you can be optimistic when making your predictions.
On the other hand, short-term forecasts are more accurate, and it is crucial that you make these as realistic as possible. You can make a short-term forecast based on the business's past performance, making predictions more precise.
Every business wants a positive cash flow. Of course, there will be good days for your business, but it is also important to prepare for the worst. When preparing cash flow predictions, consider every possible scenario that can occur in your business.
If you predict that your monthly production and sales volume will increase, you can expect more revenue, but you also need to plan to cover the cost of increased production. However, when you don't hit your monthly quota, what will you do to cover the other expenses of your business?
There may also be times when a piece of equipment needs replacing or you need to renovate your space. You should also cover the big expenses in your forecast to ensure you are ready for every scenario possible and make intelligent decisions based on your planning.
Optimizing working capital is important to cash flow forecasting. As business owners, you should prioritize understanding your accounts receivables, payables, current assets at hand, cash flowing in and out of your company, and when it happens.
Optimizing your working capital gives you a clear picture of your business's cash position. As a result, you will have better and more accurate cash flow forecasts for a specific period.
You may think that cash flow forecasting is only for big companies. You’re wrong! Every business should know how money will move around their business. Here are some reasons why you should do cash flow forecasting.
Improving cash flow forecasts entails a lot of work. Of course, you want it to be as accurate as possible. But forecasts are greatly affected by human error. Accounting services can provide the best forecasts for your business if you want accurate forecasting.
Unloop is the all-in-one solution for your accounting needs, and yes, we do forecasting! We forecast revenue and cost of goods for every dollar. We identify potential strains on your business and make tailored plans for you. So book a call with us and work with our experts today!
Every seller wants tax exemption; there's no exception. If we can channel every dime we pay to our company instead of the government, we'd all be happy businesspeople.
That said, we need to know what tax exemptions apply to our businesses. It will help us get a financial advantage that we can leverage to grow our ecommerce enterprise.
If you're a business owner selling on Amazon, let Unloop shed some light on how to use tax exemption on Amazon and ensure you're set up to get this privilege.
Before you set up a tax exemption on Amazon, it's important to know that when you opt in for this privilege, you'll be under the Amazon Tax Exemption Program (ATEP).
This program lets you purchase your supplies or raw materials within the Amazon network without added taxes. In effect, you'll get a discounted price on your purchase because the tax on top of it is removed.
To know how to enroll for tax exemption as an Amazon marketplace merchant, we'll have Amazon explain the step-by-step procedure on how to do it. You may find out more about the ATEP and how to set it up on your account here.
To enjoy the ATEP, you'll have to fulfill certain things first, which will be discussed in the following section.
No, they can't. Amazon Seller Central is a merchant's selling platform. Consequently, it's also a channel where you collect sales tax from customers and remit them to the appropriate tax authorities.
The Amazon Tax Exemption Program applies to sellers who purchase their merchandise or raw materials from Amazon, their affiliates, and other Amazon sellers.
To get tax exemptions for their purchases, they must sign up for an Amazon Business account.
Yes, you do. In most cases, you'll have to apply for sales tax exemption if you're purchasing from another Amazon business or seller. But if you're a merchant that resells products, you will be enrolled automatically.
As a result, an Amazon seller who buys one product from another Amazon merchant and sells it for a profit will have their sales tax automatically waived due to ATEP.
On the other hand, remember that this may still depend on the taxing authority where the order is going. If a destination nexus state needs a requirement to be fulfilled, the merchant must submit it before any exemption takes place.
Documentation requirements vary by state or taxing authority. But the primary requirement for Amazon is called the tax exemption certificate.
You will have to enroll for this certification, depending on your industry. But if you're a reseller in the Amazon marketplace, the entity will automatically enroll you in the ATEP program and issue the seller a tax exemption certificate on your behalf.
This document proves that you are a person or entity exempted from paying taxes during purchase. It lets you opt out of the sales taxation system. The main objective of this is to help businesses boost their income and encourage more business.
Another benefit of a tax-exempt certificate is to give the marketplace seller convenience. If a buyer has an Amazon tax exempt account the seller is relieved of the obligation to collect and remit sales tax.
Yes, it does. A tax exemption certificate can be good for at least five years in most states. Though some are only good for a year.
If you have an Amazon account for business-to-business (B2B) transactions, you'll have to watch out for when your tax-exempt certificate will expire. You don't want to be surprised with a high sales tax amount to pay because of a huge volume of purchases.
On the flip side, if you're an Amazon marketplace seller, you also may have to watch out for Amazon sales tax exemption certificates. If a customer claims they should be exempt and presents no certification, it may cause some trouble.
Yes, you do! Picking up from the last segment, you may have gotten exposure for an Amazon sales tax because there's a claim of exemption, but no tax exempt certificates are given.
The good news is that Amazon has a robust system for sales tax collection, especially if you're a marketplace seller. But ultimately, setting up and remitting the correct sales tax is the merchant's responsibility.
Tax exemptions go both ways. If you want to know how to add tax exemption to Amazon purchases as a merchant, you need to enroll for it, except if you're a reseller. On the other hand, your customer (business or individual) can also get tax exemption when they purchase a product you sell.On both occasions, you will need to consult with your accountant about handling tax exemption on Amazon. But if you want assistance setting up your Amazon sales tax collection, Unloop can help you out. Call us at 877-421-7270 for a consultation, or check out our ecommerce services now.
Accounting is an essential part of any business. Whether you're an online seller, a small business owner, or the head of a big company, making sense of your business numbers through thorough accounting will show the state of your business's financial health.
However, finances are not many people’s strong suit, and selecting the best expert to assist you is essential. For example, do you need an ecommerce accountant or a CPA? Additionally, are these two professionals even different? This blog post will help you decide who you should hire. We'll differentiate their roles, so you’ll know which professional is suitable for your ecommerce business.
Many people use the term accountant and CPA interchangeably. The confusion is understandable since both jobs involve accounting. But the two roles differ greatly from one another. Although not all accountants are CPAs, all CPAs are accountants.
To help you tell the two apart, consider these significant differences.
Licensure is the primary distinction between an accountant and a CPA. Accountants don't need to take and pass a state-mandated exam to offer their services. However, before becoming a CPA or a certified public accountant, they must first obtain a license.
Furthermore, before CPAs are qualified to take their licensing exam, they should earn a bachelor's degree in financing and accounting. They must also complete rigorous training with specific hours in advanced accounting, auditing, and business courses.
Accountants can have a bachelor's degree in related courses like finance, business management, and accounting. From there, they will gain experience and training from school internships. After getting their diploma, accountants can expand their careers by getting certifications from accredited accounting organizations.
There is no doubt that both professionals can help you with tax planning, returns, and filing. These basic tax services are covered in their training. However, when it comes to taxation laws and codes, a CPA has a more in-depth understanding.
Also, only CPAs can represent a business in front of the IRS. There are times, especially with big companies, when a business gets audited. Only CPAs can answer for your business and sign tax documents when necessary.
A governing body handles certified public accountants. Naturally, organizations have strict regulations and requirements to follow. The American Institute of Certified Public Accountants establish these professional standards, which fall under five broad categories and include:
A key CPA responsibility that accountants cannot do is act as fiduciaries for their clients. This means that an individual or an organization is legally allowed to represent and has authority on behalf of their client's best interest.
If you need representation in front of banks, board members, and government auditors, you should hire a licensed CPA.
Although ecommerce accountants don't have the exact detailed and rigorous training as CPAs, they still have significant roles to play that could benefit ecommerce business owners. Here are some duties they do so you can see if they are suited for your business.
There are many financial statements accountants should handle. There are the balance sheets, profits and loss statements, sales and expense reports, tax return forms, and many more. An accountant should be able to organize financial documents, create copies, and keep them secured and prepared for analysis.
Small business owners can rely on accountants to do accurate financial analysis for their businesses. Since small businesses don't involve many departments, owners can ask for financial advice from their accountants. In addition, ecommerce clients often turn to professionals when it comes to decision-making involving finances, and accountants should be able to help with situations like that.
Financial reporting is essential for an ecommerce company to know the status of its business health. It is an accountant's duty to make these reports in a timely manner. For example, inventory management reports should be done at least once a month to know the exact number of your products.
Reports like these can also determine which products are fast selling and which stay in storage longer. As a result, timely financial data assists businesses in making better corporate decisions. Furthermore, in some situations, these reports are presented to board members, so they should always be prepared beforehand to ensure their accuracy and validity.
You can expect that CPAs can cover the roles and responsibilities of accountants. But with more training, they can offer more services. Let's look at the duties that CPAs can provide for your business.
Accounting services are broad, but a CPA understands and can perform all of the tasks if needed by the business. CPAs are interested in the company's bigger picture and focus their expertise on ensuring that their client's financial and business goals are achieved. Furthermore, CPAs ensure that the money circulates around the business well, so that all business functions are running.
CPAs spend most of their time researching the business and diving into financial data to analyze its performance. Research can identify the strengths of a business and develop them. Furthermore, it can pinpoint weaknesses and potential issues.
You can think of the CPA as the head of all the accountants in one company. Naturally, bigger companies will need a team of accountants to handle their finances. You can think of the CPA as the head of all the accountants in one company. CPAs make sure they delegate responsibilities properly for the accounting system to function.
Furthermore, it's a CPAs duty to talk with the members of the business. They directly report to higher-ups and different business managers, and update and make them understand the business plans moving forward.
Now that you know the difference between CPAs and accountants, you can decide which professional to hire for your business. There is no doubt that both professionals can help with your finances but choosing the right one can affect your business greatly.
If you're a small business owner, you'll need an ecommerce tax accountant more. Sales tax can be a handful for new business owners, but since the number of financial transactions is not significant, accountants can handle accounting for you.
But when your company expands, it will be advantageous to work with a certified public accountant. They can do more, and backed with their accounting expertise, you will be sure that your business finances stays in good hands. However, allocate money in your budget for CPA. Because of their training and expertise, they will cost more than professional accountants.
Hiring a professional is beneficial for every business. It is just a matter of choosing the correct one for your needs. Accountants and CPAs are almost similar in work, but to ensure that your resources are used effectively, be sure to understand what exactly your company needs.
If you're looking for a reliable accounting firm that will handle the needs of your ecommerce business, Unloop is the ecommerce accounting solution for you. We have a team of dedicated professionals that can help you with your business’s finances. Book a call with us today and learn more about our services now.
Accounting software is necessary for businesses to run on a daily basis. With these tools, business leaders can monitor the financial state of their companies. While looking for the best accounting solutions available, you’ve probably come across multiple web- and application-based accounting software. But a quick rundown of the best accounting software for small businesses can help you narrow down the choices.
Two top names are QuickBooks Online and Xero, and we understand if you’re struggling to decide which of the two online accounting software programs to use. To help you out, we will give you a comparison of their features, core differences, advantages, and even the prices of each platform.
QuickBooks Online and Xero both provide basic accounting solutions, but each provides extra benefits tailored to different sorts of organizations. Xero and QuickBooks Online are both web-based services, and you can sign in and view your account from anywhere as long as you have an internet connection.
Moreover, you may pick from a variety of monthly or annual subscription plans for both QuickBooks Online and Xero, with higher-level subscriptions including extra features. Many third-party add-ons can be integrated with both Xero and QuickBooks Online to enhance their core accounting functions and increase functionality and productivity.
QuickBooks Online (QBO) is a cloud-based invoicing and accounting program that offers factual data, analytics, and dashboards designed specifically for small business owners. Small business owners can download QuickBooks’s mobile application so they can check their accounting transactions wherever they are.
There are a few functions available in QuickBooks Online's mobile application. Regarding customer support, QBO offers free support but only within certain hours depending on the package you've chosen. Still, the fact that QBO offers automatic data-encrypted backups and feature updates that can restore firm files with data are some reasons to think about using it.
Business owners and accountants planning to make use of QuickBooks Online have a choice of three subscription packages. Simple Start is the most basic QuickBook plan available. The Simple Start subscription package is affordable for newly established small enterprises and independent contractors.
The best features of this package include tracking VAT, issuing personalized invoices and quotes, linking your bank accounts, and tracking income and expenses. There will be two logins—one for you and one for your accountant. Simple Start costs $17 per month.
For expanding enterprises, however, there is no better choice than the Essential Membership Package. This package includes three user logins, including one for your accountant.
It is perfect for tracking income and expenses, issuing personalized invoices and quotes, linking your bank accounts, tracking VAT, creating insights and reports, managing employees, and handling multi-currency payouts. Get Essentials for $26 per month.
For established firms to maintain their management, the Plus plan—QuickBooks’s most expensive option—is best. This plan gives you access to all of the aforementioned accounting features, but with extras like managing recurring transactions, tracking inventories, tracking projects and locations, and managing budgets.
You receive five user logins in addition to your accountant’s. You can get Plus for $36 a month. Additionally, enjoy their 30-day free trial if you're not sure which plan to subscribe to.
Xero is a powerful accounting system. It is an online accounting tool created to serve the needs of small businesses across all industries. Unlike QuickBooks Online, Xero has more mobile features and supports unlimited users.
With Xero, business owners can record transactions using double-entry accounting software. They can also fill out forms like invoices, checks, sales tax tracking, and many others. The program is mainly used by small business owners to handle their accounts on an individual basis and in collaboration with outsourced accountants.
The key functions of Xero include online accounting—which allows for access from any location at any time—tracking of suppliers and customers, inventory management, invoicing, managing bank transactions, and many more capabilities.
If you intend to subscribe to or upgrade your Xero plan, see below for the various features and add-ons that are available.
The Xero Early subscription level is ideal for sole proprietors, startup companies, and independent contractors. You may send quotes and up to 20 invoices with this membership package, as well as reconcile bank transactions, record bills, and receipts, and get company and short-term cash flow snapshots. Get this plan for as low as $13 per month.
While their Growing membership plan delivers the same accounting features as Early, it does so without the first plan's limitations. Small business owners and their accountants can send an unlimited number of invoices and quotes.
Users can also enter bills, and reconcile bank accounts and transactions, collect bills and receipts, bulk reconcile transactions, and create summary cash flows and business snapshots. This is helpful for expanding small enterprises. The growth plan is available for $37 a month.
Xero also offers an Established plan. Bigger firms will benefit from an Established monthly subscription. With this plan, you can send an infinite number of quotes and invoices. This plan eliminates the restrictions and constraints of the other two and maximizes the full capacity of the accounting software. This plan is available for a monthly cost of $70.
It's tricky to declare that one software program is inherently superior to another when comparing QuickBooks Online vs. Xero. And it is challenging to find the best accounting software program for your business.
The decision between Xero and QuickBooks Online comparison ultimately comes down to your company, the functionality you require, your budget, and the features that matter most to you. In the end, whichever accounting software platform you select—Xero or QuickBooks Online—will enable you to effectively manage and optimize your accounting procedures. Make sure to check out their free trials before subscribing to any plan.
Using accounting software may be one of the best options for small business owners or entrepreneurs on a small budget, but to make the most out of these tools, you’ll need the guidance of a professional. Business bookkeeping and accounting can be overwhelming, especially when you lack a background in finance.That’s where Unloop comes in. With Unloop, you'll receive the best services to help your business's profit grow exponentially. Maximize every opportunity, know your next moves, and improvise plans on how to further improve your business. Waste no time and book a call now to know more about what we can do for you!
It must be every online seller’s dream to launch a successful store in the world’s largest ecommerce platform. What a thrill it is to be officially tagged as an Amazon seller! The beauty of opening a store on Amazon is the endless possibilities and growth, especially for sellers in Canada. You can begin selling within Canada, and later on, you can expand your scope and sell to US customers too.
However, before you get to this point, you’ll need to know some complicated information. Let us help you prepare for one of the most dreaded tasks you’ll handle as an Amazon seller—sales tax! This article will discuss facts about Amazon Canada sales tax and Amazon US sales tax. Read on to stay informed!
There is no shame if you aren’t well-versed in the sales tax laws of your own country. As you read through the information below, you’ll realize that Canada has complicated sales tax laws. But you’ll have to learn them to know how to charge your customers online.
To understand sales taxes in Canada, you must first know the differences between these four different types of sales tax.
This is the 5% sales tax applied to eight provinces in Canada, namely Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon.
PST rates vary per Canadian province and are charged on top of GST. British Columbia and Manitoba charge 7%, Saskatchewan 6%, and Quebec (where it is known as QST) 9.975%.
Five provinces combine GST and PST into one sales tax called HST. New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia charge 15% HST, while Ontario charges 13%.
Quebec charges 9.975% QST on top of the 5% GST. (See information underneath “Provincial Sales Tax”).
When selling on Amazon, you must familiarize yourself with the Marketplace Facilitator (MPF) Law. This law cites that third-party sellers like Amazon should handle the collection, filing, and remittance of sales taxes.
There was a time when Canada wasn't covered by this law. Thankfully, MPF now applies to the country. Unless otherwise declared by specific provinces, Amazon will handle the collection, filing, and remittance of the sales taxes charged to your customers. All you have to do is to track and check to ensure accuracy.
Canada has a simple rule regarding which sales tax rate to follow—use the sales tax rate of the package’s destination. For instance, you must charge a 5% sales tax if your client is in Alberta. Do not be confused with the sales tax of your location. If your business is in Ontario, where the sales tax is 13%, it won’t apply to your customers unless they reside in the same province as you.
Another area you should be familiar with when selling on Amazon are tax exemptions. In Canada, there are three basic instances when buyers can be tax exempted:
How do you find Canadian sales tax? Just like any new information, it may be confusing initially, but as you continue exposing yourself to the task daily, you’ll learn the ropes. And as you master Canadian sales tax, familiarize yourself with Amazon US sales tax too. For online sellers like you, expanding to a neighboring country is an ideal game plan for your business’s growth.
The United States has 50 states, each with its own sales tax rates, rules, and regulations. Unlike Canada, where the package destination is the basis of the sales tax rate (unless stated otherwise), US states have different rules.
Some states base the rate on the package's source and others on the destination. Hence, aside from the different rates, check whether to apply the rate in the location of your business address, or the rate of the state where your customer resides.
MPF started in the US, and when you sell here, Amazon will collect and remit sales taxes for your business. This is helpful to Canadian sellers like you who might be confused about America’s tax laws.
Despite the presence of MPF, be knowledgeable about the US “sales tax nexus.” You must think that since your business is in Canada, you won’t need to file sales taxes. In the same way, you might think that storing your products in an FBA warehouse in the US does not make you liable to sales taxes.
A sales tax nexus will compel you to file sales taxes as long as they see any connection of your business or any company resources to the US. For further information about sales tax nexuses, it is best to read about US sales tax laws.
Like in Canada, there are also tax-exempt individuals and groups in the US. Government workers, diplomats, non-profit organizations, charitable groups, and members of indigenous groups are tax-exempt.
For these clients to enjoy their benefits, they must upload a tax-exempt certificate and other necessary documents to Amazon. Amazon will be the one to process the documents through the platform’s Tax-Exempt Program.
Whether you are only selling in Canada and planning to expand to the US, or you are already selling in both countries, it’s important to be aware of the sales tax requirements of both countries. As a seller, it's also important to stay up-to-date on any changes and ensure you're tax compliant. If you’re still unsure of how to navigate the ins and outs of sales tax in either country, our team at Unloop can help. We offer various services to eliminate the hassle of staying compliant with ever changing sales tax laws. We can provide comprehensive financial management assistance so you can focus on growing your business. Contact us today to learn more about how we can help you streamline your operations and keep your business running smoothly.
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.