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.
Home to about 14 million people, Ontario is the center of Canadian culture and economy. It's located between two of the country's prime cities, Ottawa and Toronto, and its common industries are related to machinery, cars, and electrics. However, because of diversity, you'll see almost all types of businesses here.
If you're one of the successful business owners in Ontario, this article will give you a few ideas on how to spend your Ontario after-tax earnings, regardless of your line of business.
After-tax income is the money you get by subtracting the taxes you need to pay from your net income. To determine your taxable income as a business operating in Ontario, check the Ontario tax income brackets first and see your tax rate. The higher income you have, the higher your income tax. The way you compute your personal income tax using the tax bracket is the same as how you'll compute your federal corporate tax.
You can then deduct this amount from your current income. You'll get your business profit or the company extra money, which you can use in different ways. What ways? Check out the five brilliant ideas below.
Your company's greatest assets are your people. Despite the high dependence on machines, nothing can replace human passion, intelligence, innovation, and connection. So, reward your employees, especially the top performers and contributors, by offering additional benefits or skills and personal development training.
This human asset also includes you as the owner and manager. If your business is earning, reward yourself, too, either through a salary or by equipping yourself with knowledge about operations and people management so you can handle your business better. If your company has shareholder ownership, you can use the eligible dividends method.
Developing your workplace— either the place itself, your business processes, or your market— positively affects your workforce by boosting their morale and trust in the company. So, this is another perfect idea where you can spend your profit.
Expand your customer reach by marketing more. You can also expand your product line and sell more products. In both situations, make sure to strategize to ensure the return on investment. Finally, you can make your employees' lives easier by investing in new office equipment and software.
Business development comes with new software and office tools and by adding new skilled members of the team. Check out which parts of your business need help, and self-reflect on the capabilities you are good at and the tasks you should delegate to experts. For instance, you can delegate the technical task of bookkeeping and accounting to Certified Public Accountants. Search engine optimization is also a specialized skill you can outsource to specialists. Your investment in new hires who will assist you with difficult tasks will be worth it in the long run.
A lot of businesses are built with loans from banks or from family and friends. If your business owes some people and entities, it is a wise decision to slowly pay on your debts first before any business expansion to avoid interest piling up and for you to run your business clean from loans. You may also pay your taxes in advance before the yearly deadline so that you have visibility to your after-tax income right away. Besides, you can always have income tax e-filing help from accountants.
Lastly, the best way to spend your profit is— not to spend it at all! Know how much costs your company has every month, and make it a goal to save profit to ensure that you can run your business for a solid six-month period despite low sales and any challenges on income. Through this, you’ll be able to pay all company expenses, especially employee salaries, even during non-peak seasons.
Isn't it great when you can spend your hard-earned profit back at yourself and the people you worked with to achieve success? You can expand your business for more sales and, hopefully, more profit too. When the company is good, the cycle of giving back and expanding goes on.
Make sure to always rely on data with each of your business moves and often check your profit and loss statement. Doing so will ensure you do not overspend or put your business's financial capability at risk. If you need professional services accounting to get reports and manage your taxes to get accurate after-tax income, we at Unloop, are just a phone call away at 877-421-7270. We'd love to assist your business in Ontario, anywhere in Canada, and in the US!
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.
Whether it's a huge corporation or a humble startup, all business owners have one thing in common to accomplish— taxes! In the same way, when tax season comes, all business owners like you are concerned with tracking all your business transactions, computing your income, and ensuring what you will declare are accurate. Despite the same tasks and time to accomplish taxes, there may be one thing you and your fellow CEOs do not have in common: accounting and bookkeeping before tax season.
Most successful businesses do not only think of their company expenses during tax season— they have their accounting and bookkeeping updated throughout the year. If you want to acquire this best practice, we have just the solutions for you. Keep on reading to learn more!
What exactly do you need to file before the tax deadline and as a business owner? What are the income tax rates of federal income tax? Taxation is a complicated and technical topic, but here are some basics you need to know.
You and your employees should be paying personal income tax, which is computed based on your income tax bracket and the tax rates mandated by your government. For example, check out the income tax rates, Canada version. You will see in the tax table the specific income brackets that have corresponding federal tax rates. The rates are applied to your taxable income determined by the law and applied by your bookkeeper and accountant. This standard deduction is applied monthly. Filing also makes you eligible for an individual income tax return.
Corporate income tax, on the other hand, is the taxes you pay for your company income. The advantage of having a bookkeeper that updates your books regularly is that they will update you on your taxable income and how much taxes you'll be paying regularly. Tax computation works similarly to how individual taxes are computed— rates increase as income increases.
A taxpayer should pay because it serves as the government's way of acquiring funds to provide necessary social services for its constituents. Since the law requires it, individuals and corporations should abide by paying income tax and different tax types.
The process of tracking your business finances all year, computing the income tax rate, and filing before the deadline are just a few steps to accomplish your taxes. Still, to a busy owner like you, these tasks are better delegated to professionals. Doing so will give you time to focus on your operations management tasks. Here are the people and tools you can rely on.
A bookkeeper is responsible for entering all the data about your income and expenses into the proper categories. They also check your bank transactions to monitor the money coming in and out of your account. Your bank transactions should match the data in the books.
Your payments are received, and you give out the amount you owe to your suppliers because the bookkeeper monitors every transaction— even the dates on when payments are sent and received. Hence, they are also the people to count on to document all invoices and store receipts. With all data and transactions stored, a bookkeeper ensures you do not need to cram on acquiring data when tax season comes.
Now, after all the data is stored, categorized, and updated by a bookkeeper, the accountant uses all this data. The accountant ensures that all the information you have about your business will make sense by creating essential reports, such as an income statement, balance sheet, and statement of cash flows. You may also personalize these reports based on your company's key performance indicators and what you prioritize. Through an accountant, you'll have a clear picture of your business's financial health.
Aside from reports, you can also have consultation sessions with your accountant about the financial impact of your business decisions. Accountants can create simulated financial statements about your plans so that by the end of the day, you will choose the game plan that has the most gains and least losses. For taxes, a Certified Public Accountant (CPA) will handle the filing of your taxes.
Aside from human assistance, several accounting software will make your business bookkeeping and accounting safe, protected, and automated. Some of the most reliable tools you can check are Quickbooks, Hubdoc, and A2X.
Quickbooks: Quickbooks is one of the most popular accounting tools today because it offers live bookkeeping, accounting, payroll management, payments, inventory management for eCommerce sellers, time and project tracking, and invoicing.
Hubdoc: Hubdoc, on the other hand, is the tool you need in converting receipts to data. You can integrate Hubdoc to Quickbooks.
A2X: If you are an eCommerce seller on Amazon, eBay, Shopify, Etsy, or Walmart, your accounting is made easier as this tool accounts for all marketplace transactions. You can also integrate this tool to Quickbooks, so you'll have a single software to look at for business finance updates.
When tax season comes, you or your accountant must acquire the data from these tools for seamless tax computation and filing.
Now that you know what income taxes are and the assistance you can get, you must think that getting help from experts and acquiring accounting tools is the way to go for your business. Here are more reasons to urge you to make this wise decision.
As you begin your business, transactions will be few, but you can still use cash accounting and manage it independently. Cash accounting is taking note of transactions as they happen. However, as you grow your business, you'll witness how your receipts grow as much as the number of invoices you need to make. With this, it is better to monitor your cash through accrual accounting when transactions happen, even when there is no payment yet.
A bookkeeper ensures that transactions are categorized into assets, liabilities, expenses, equity, and revenue and further classified. These data are up-to-date and checked regularly for accuracy, so there is no need to backtrack on a whole year of transactions when tax season comes.
Not all transactions in your business are taxable, and having a bookkeeper ensures that taxable and non-taxable income is categorized right away. If you are doing bookkeeping on your own without experience and in-depth knowledge of taxation, this area may be a bit challenging. So, it is better to delegate it to experts. Nonetheless, here are some taxable and non-taxable income you should know.
The classification may change depending on your country's tax laws, but for sure, not all of your income will be taxed. A bookkeeper can help you pinpoint which income will be and will not be taxed.
Messing with taxation laws is a serious mistake as you can be penalized and fined for non-compliance and even inaccuracies. CPAs are well-versed with the rules, and part of their expertise includes income tax rates/federal taxable income. If you have employees, your accountant will determine and compute tax deductions per employee.
An accountant will also pull data from the books maintained by the bookkeeper to check how much corporate tax you need to pay and pay it before the deadline. As a result, you do not need to worry about getting fines and penalties from your tax department if you fail to pay or pay the wrong rate.
The work of accountants does not end in helping you compute and file your taxes, but they also help in proactively ensuring that you minimize the taxes you need to pay as you expand your business. This process is called tax planning.
Here, the accountant will help you decide when and where to make purchases and how much you will buy at specified times. Gone are the days when you decide day by day. With an accountant, every step you make in your business will have an equivalent monetary value, so you can always see which plans are most profitable and which will cost you more. With this, you can always go for the winning option.
Excel is free and available on most computers, but there are many disadvantages in using it— such as data inaccuracy, susceptibility to crashing and being corrupted, and public access. You cannot risk essential financial information about your business to be under such threat, so it is best to consider using cloud accounting software.
Cloud accounting is the safest way to store your data because it is stored in a computer while the information is kept in the cloud. As the owner of the company, you determine who has access to the cloud, and because it is stored there, you do not need to start a computer where the excel document is saved. You can access cloud accounting data anywhere there is the internet. Accounting tools are excellent for data storage and tracking.
Bookkeepers, accountants, and reliable accounting tools have already got you through the tax payment season, but their assistance does not stop there. The profit will be finalized after paying your taxes, but even as your bookkeeper updates your accounts, they can compute the income after tax right away. With this, you'll know how much profit you will have, and you can plan what you will do with your profit.
Some business owners choose to invest their profit in expanding their business, while some save it until it is enough for financing their growth plans. Some owners pay debts or keep their money for emergency needs. No matter what your plans are, you have visibility of your profit in numbers.
No matter how complicated income tax is, with the trained people handling the task, it can be done and can be accomplished excellently. So, whether you have a startup or a full-grown company, never forget the essence of having a bookkeeper, accountant, and accounting tools on your side. Just a tip, look only for the best accounting service provider.
If you agree and are looking for a team you can partner with, Unloop welcomes you! Bookkeeping, income tax, and sales tax are our expertise. We can assist you in making tax year bearable as we'll keep your books updated and your business finances tracked. If you'd like to know more details of these services, we are just a call away at 877-421-7270. Hope to talk to you soon!
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.
One of the struggles of small business owners is handling a mountain of never-ending tasks by themselves or with a few pairs of hands. Some of the signs that you need a bookkeeper are when you no longer have time to make invoices, set budgets, and categorize your expenses. It’s tempting to forgo these tasks when you’re just starting out, but it could lead to problems in the long run.
Very few people make a successful business grow by doing everything by themselves. So, as with any other field, having a team to keep you on track and motivated makes a company last. Include in your group a professional bookkeeper to keep track of your finances for you! Find the right team for your brand that offers professional bookkeeping Ottawa services to help your small business grow. Here is a short guide on how a bookkeeper can help you and your commerce journey.
It takes beyond human focus and energy to keep things in order and follow your plans exactly as you imagined them. It may work for a few weeks or months but working too hard alone is not sustainable for you and your business. When you start experiencing signs of burnout and demotivation, your business will be affected. And once your brand starts to slow in growth, you might not be lucky enough to get it running as it used to.
One of the top reasons why businesses fail is having poor money management and having disorganized finances. Small Business Administration or SBDC consultants shared tips for small business owners to avoid failure. One of those tips is making and building a strong team which includes a CPA or someone to handle the financial side, like a bookkeeper. Ottawa bookkeeping services or remote accounting can help your business stay afloat and grow.
A successful brand is, of course, the goal, but if it causes health issues and a lack of time for family, will it still be worth it? Work-life balance is important for a healthy body and mind.
The bookkeeper will be handling many financial aspects of your business, so you don't have to. They will dedicate hours to sort out the mountains of data, so your company's finances are sorted and organized, while you enjoy more time for other things that matter too!
Don't make a mistake hiring a CPA when you need a bookkeeper. They are both in the accounting field but have different roles. So how will you know if a bookkeeping service is what you're looking for? Here are some of the bookkeeping tasks you need to know:
These are the common tasks a bookkeeper will be in charge of. However, it's still best to discuss with Ottawa bookkeeping solutions what services you expect and what they can offer.
Being a business owner can be a daunting position, especially if you handle most work for your brand or firm, and it’s growing every day. In addition, there are not many hours in a day for you to possibly take on every financial task, something that requires the most critical eye. So for you to give your full focus and energy to the things that can build your business, why not look into bookkeeping firms in Ottawa or remote solutions to get your finances down.
With the help of professional accounting services like Unloop, you'll have an expert by your side who will work tirelessly to make sure all your accounts are in order and that you stay compliant with any necessary regulations. So keep your online business on the right financial track with Unloop!
Starting up or scaling a business is a high-risk, high-reward situation. You need to manage your finances to get your business off the ground. But thanks to accounting software, accounting tasks are now made easier. We know you want the best for your financial needs, so you’re most likely contemplating Sage 50 vs. QuickBooks.
These two accounting software solutions are better for your business’s bookkeeping and accounting needs. But which one suits your needs best? Explore the features, prices, and benefits of having Sage 50 and QuickBooks to see how the two fare against each other.
Both developed during the 1980’s, Sage 50 and QuickBooks have been proven to provide solid accounting and financial software. Unfortunately, business owners find it hard to choose between the two.
Before exploring the advantages and significant differences between Sage 50 and QuickBooks, here are a few helpful tips to help you select the right one for your business.
Check the prices of different packages. Doing this will help determine if the software package or bookkeeping program fits your business needs.
You should also know how much you are willing to invest in the software. For example, small business owners might be fine with introductory accounting solutions that can deliver basic accounting needs and inventory management at an affordable price.
Meanwhile, established businesses may be looking for accounting software that is inherently cloud-based and offers robust inventory management, even if it is expensive.
Most software comes with accounting features small businesses need, like basic inventory management, invoicing, expense tracking, and an easy-to-use balance sheet where you can see your accounts payable and other financial records.
Some accounting software solutions may also offer expense management and money management. They even have drag-and-drop functionality, allowing accountants to finish their accounting tasks more efficiently.
On the other hand, big companies may need advanced software packages that can manage more than just creating financial reports. They need accounting software that handles overall business and cloud-based project management.
Convenience plays a critical role in accounting. Financial transactions require keen attention to data, analysis, and recording. So, if your accounting department has many accountants and bookkeepers, you should assess the usability of the accounting software package you will use.
Usability is a key term in software testing that refers to how easy and user-friendly a software is. An intuitive interface not only enhances user convenience but also streamlines financial processes. This improves productivity within the business, which is why it’s important.
Aside from usability, check if the software offers remote access. This feature protects your business better against hackers and corruption, especially if the files are saved on a computer or printed on paper.
Check how secure your accounting software is. Research its accounting functions, financial reporting processes, and how it stores and retrieves financial information. The overall safety of your business relies on the software you want to purchase. So, choose a provider you can trust.
|💡Once you understand the nature of your business and its accounting needs, you can choose the most suitable accounting software.|
Now that you know how to find the best accounting software, let’s see which accounting solution is right for your business. Below are the two most used accounting software by pioneering and modern business owners.
As one of the largest accounting software companies, Sage accounting software simplifies business transactions through its innovative financial management system. From there, any enterprise can accomplish various accounting tasks:
Sage 50 has proven itself to be an outstanding accounting tool over the years. In fact, there’s now Sage 50 cloud, bringing in more advanced features and cloud connectivity no matter the size of your business.
QuickBooks is a leading accounting solution worldwide, providing tools and functionality, from financial statements to payroll management.
For over 20 years, QuickBooks has been the prominent accounting platform, dominating the business management software market. The QuickBooks user interface is easy to use, study, and navigate.
Many rely on the functionality of QuickBooks for small, mid-sized, and large businesses. They offer distinct features and benefits along with QuickBooks essentials, such as:
Whichever you choose, QuickBooks has cost-effective, reliable, and time-saving perks for your business.
Even if Sage 50 and Intuit QuickBooks are two of the leading accounting software in the industry, one will always be more suitable for your business than the other. So, how do you identify which software meets your business needs? Sage 50 or Quickbooks?
Here’s a comparison to help you decide:
There are definitely upsides and downsides to investing in Sage or QuickBooks. It is all about choosing what advantages work best for you and what disadvantages are manageable.
✅Affordability: A great option for businesses on a tight budget, given that a Sage plan has unlimited user accounts and cash flow forecasting.
✅Customer Support: Sage comes with self-service resources and support via phone, email, and live chat, which is useful if you don’t have an accounting background.
✅Scalability: Though it lacks accounting features for small businesses, the Sage system has amazing inventory management and collaboration tools that many large-scale business owners appreciate.
❌User-Friendly: Easy to navigate, that’s for sure. However, using it would be stressful if not properly set up.
✅Third-Party Integration: We will be straight to the point—QuickBooks provides more third-party integration than Sage. QuickBooks can be integrated with over 700 apps, while Sage only offers up to 40.
✅Advanced Features: QuickBooks offers more premium features than Sage. For instance, QuickBooks offers on-demand online training, automated revenue recognition, and richer CRM and ERP features that Sage doesn't offer.
✅User-Friendly: QuickBooks users can attest that using the software is so easy that even a 12-year-old can do basic accounting. That’s how simple its interface is.
❌Affordability: Given that it has high-end features at low-tier plans, it is only reasonable that QuickBooks plans would cost you a bit monthly.
Now, let’s talk about the pricing. Both QuickBooks and Sage software offer multiple monthly or annual subscription plans.
|Accounting Start||$10 /month||Self-employed and micro-businesses||1|
|Sage Accounting||$25 7.50 /month (70% off for 6 months)||Small businesses||Unlimited users|
|Simple Start||$18||Self-employed and micro-businesses||1|
|Essentials||$27||Small growing businesses||3|
|Plus||$38||Small to mid-sized businesses||5|
If you are still coming up with the right reasons to buy one of these accounting software, both QuickBooks and Sage 50 have unique functionality that can benefit your business.
QuickBooks is the best accounting software if you own a start-up, small business, or small to mid-sized business (SMB). It focuses more on bookkeeping and accounting.
But if you own a large business, like ecommerce, manufacturing, or real estate, Sage 50 is more suitable for you, especially when you need industry-specific features and functionality.
Need more help settling your small business’s finances? Unloop can help you take control of your books. Book a call with us and let our excellent team of financial experts save you from bookkeeping-related headaches.
Canada collects one of the highest tax rates, and its tax system can be confusing for new business owners. How much do you know about how income tax in Canada works? Do you know how to compute your income tax manually? If you do not understand how the tax system works, you will never know your rights or the requirements for income tax returns.
That is why you have to educate yourself and become a responsible citizen and business owner. It is essential to equip yourself with information about the tax system, its brackets, and how to file and compute your income tax.
Cheer up because this article is what you need! Keep scrolling and be informed about the things you need to know about the Canadian tax system.
After World War I in 1918, Canada needed funds to rebuild the nation, pay debts, and secure pensions for war veterans. Thus, it replaced the temporary Income Tax War Act of 1917 with the Income Tax Act in 1948, mandating all Canadian citizens to pay taxes.
Today, Canada has a marginal or progressive tax system that increases your tax rate as your income grows. Canadians need to pay two forms of taxes. One is the federal tax, and the other is the provincial tax. Each of them has different tax rates.
The Canada Revenue Agency (CRA) collects taxes and sets Canada’s income tax brackets. As of 2021, the federal income tax brackets are as follows:
Meanwhile, the provincial tax rates may vary between the different Canadian provinces. For example, Ontario has the following provincial tax rates:
If you want to learn more about Canada's income tax rate for each province, you may visit the government website to explore each province’s income tax rates.
A common misconception is that if you are earning $80,000, you need to pay a federal tax with a 20.5% rate, thus leaving you with a $16,400 tax. However, the tax brackets are designed to lower your total tax.
Here are the correct steps to follow in computing your income tax.
Income tax filing involves filling an income tax return form to determine if you owe the government federal or provincial income taxes.
No one can fill out your income tax return for you, so even if you have an accountant, you must still fill out everything correctly from your side. That said, accountants can help you determine your income tax return.
The main reason why most people don't do their own income tax returns is that they can't find the information they need to fill out the tax forms correctly. You can do your income tax return yourself if you can get your hands on the following:
You are still the one who needs to file your income tax return, and you can do it several ways. You can send your files by mail or online with the help of NETFILE, EFILE, or Auto-fill My Return. Non-residents can only file tax returns by mail.
Income tax returns in Canada are filed every 30th of April. The deadline for settling outstanding income tax is also on the same day. However, CRA collects taxes monthly, and they appear in your payslip.
Here are the steps you need to do in order to file your income tax returns.
If you need help with your tax preparation, you can always rely on and consult with an accountant or tax preparation services who have the expertise when it comes to all your tax concerns.
These agencies can help you compute your tax and apply the deductions so that you can be eligible for tax returns. They can also help you file your tax returns properly. Remember: you have to hire someone you can trust and will offer you confidentiality. Allowing other experts to work on your tax means that you will provide sensitive information about yourself.
Aside from accountants and tax preparation firms, many free applications are available on the Internet to help you do both basic and complex tax computations. Just provide the accurate numbers required by these apps, and you can know how much taxes to pay without spending a single cent.
You can still validate the result you get from free online tax calculators by showing it to accountants. If it is accurate, you can use that online app for the next tax collection.
Income tax brackets indeed help to lower your tax, especially if you’re not yet earning a lot of money. In case you can't find all your receipts and get a lower tax accumulation (even if it's just by a few percentage points), then hiring an accountant can be beneficial.
Do you have an online business, but you are afraid to file your tax? If you need professionals, you can contact us at Unloop and let our team help you with your taxes. We partner with certified accountants for online businesses.
Give us a call at 877-421-7270 as soon as you can to learn more about our tax and accounting services.
What an easy life it would be if everyone were as smart as computers. All the computations and processes are just within our heads, answers derived in an instant. Yet, even human beings have limitations. Despite these constraints, we’ve developed some of the greatest inventions that complement our capabilities in various fields.
One prime example is accounting software—an elevated and more accurate version of the traditional manually inputted books and spreadsheets.
You must have heard of Quickbooks for small business (desktop) and how it makes accounting so much easier. We’ll discuss here why it is a must-have and how you can utilize it for your business.
The history of Quickbooks dates back to 1983 in the foundation of Intuit by Scott Cook and Tom Proulx, but it was only in 1998 that Quickbooks developed from the accounting software called Quicken.
It became a famous tool favored by business owners without accounting experience. Nonetheless, because of professional accountants’ demands for software with double-entry, can be audited, and follows accounting standards, Quickbooks has been developing more reliable software versions.
Today, it is one of the most popular software for small to medium businesses and freelancers worldwide, especially in the US.
Quickbooks small business desktop was used by 4.5 million customers worldwide in 2019, and with the continuous growth of eCommerce because of the pandemic, more and more are needing accounting assistance. If you are among the population looking for an accounting solution, here are the reasons why Quickbooks online will be helpful for your business.
The only way for accountants to create accurate reports about your business is to have all the data about your business finances tracked and monitored by bookkeepers. When you sign up for a Quickbooks plan, the first thing you will be offered is up-to-date books, so it would help to provide all the receipts and documents for the past months to complete a whole year of tracking. Once your books are up-to-date, it would be easier to categorize and store the latest and incoming transactions—income and expenses. Then, when you run reports, all details are accurate and complete.
Many individuals these days begin as freelancers, managing their businesses on their own and wearing different hats to save costs. While there are areas in your sprouting business that you can do independently, it is better to rely on experts or software for accounting, as you will thank yourself later, especially when tax season comes. Besides, the first area you need to accomplish is accounting to track the money coming in and out.
Even though you are still a one-person team, you’ll be relieved that your finances are organized, and once you expand your team and have your accountant, you’ll have data that you can readily interpret for decision-making.
As a small business, you must have had transactions with several suppliers and developed regular customers over time. Entering into agreements on payment terms is now a common thing as well. Through Quickbooks desktop software, you’ll experience the following comforts:
All these transactions are recorded and categorized in the system, so you’ll see your finances in real-time.
You have been using Quickbooks since the days you didn’t have to worry about payroll because only you and a few members were there. Now that you already have several employees for payroll, know that Quickbooks is still a reliable tool.
How it works:
Does your business involve selling on different eCommerce platforms like Amazon, Shopify, Etsy, Woocommerce, and Squarespace? To get a full view of your performance using only the Quickbooks desktop for small business software, integrate the inventory management functions offered by the different sites. Directly see how your inventory goes and input data from sales and when you replenish your supplies.
In your busy schedule, skipping the hassle of opening too many accounts and just looking at Quickbooks saves a lot of time. When weekly, monthly, quarterly, and annual reports come, you do not need to extract data from the eCommerce sites as they are already on Quickbooks.
Tax season is coming, or you want to see how your projects and your business as a whole are sailing. Whether you do it on your own or you have a Quickbooks accountant who does these, having all the data you need in one place makes reporting and auditing way faster and accurate too. Because you could categorize all transactions as they come, there is no need to cram, causing more mistakes.
Quickbooks even has a tax penalty protection worth $25,000 to ensure you will be compensated for any mistakes for accuracy on paying taxes.
Do not compare software per dime if you are trying to decide which one to have. Check the offers in every plan as compared with another accounting software instead. By comparing the programs and their offers, you’ll see if the investment is worth it.
Quickbooks has four plans:
Some software does not offer expense tracking for their basic plan, but you’ll get this as well as unlimited invoices in all Quickbooks plans. In a basic plan, you can manage up to 1099 contractors. Your taxes are cared for, cash flow and reporting are all covered.
To utilize the amount you will invest for the software, make sure to pick the right plan. While the Advanced Plan has the most offers, check the needs of your enterprise. A Simple Start Plan function may already be enough for your needs.
Check out all the offers in each plan. The Simple Start may be best for freelancers, but you may continue to sign up for the more expensive plans with more coverage as you grow your business.
If your main goal is to track your inventory from your main eCommerce business and oversee different projects, it would be best to have the Plus Plan because of the inventory and project management.
The ability to access your financial data increases with the plan and the capability for more complicated reporting levels up.
There is no need for hiring in-house or getting a freelancer and enjoying assistance from professional bookkeepers with Quickbooks. It is the first thing you can utilize when you sign up for Quickbooks and continuously use it because of the live bookkeeping.
How it works:
The more your business grows, the more reports you’ll need to check not only about your business finances but everything like the following:
Marketing and advertising:
More business reports:
The best capability of Quickbooks, from the basic plan to the advanced ones, is its reporting capability. In addition, it offers basic analytics that will assist you in decision-making. Make sure to remember this as you scale your business.
Quickbooks can integrate more than 650 applications in its system, so if you use different applications for your business, chances are, they are compatible with Quickbooks integrations. You can put all your system is one software, which gives you the following benefits:
When you compare one software to another, you will notice that they may all offer invoices, but other software has a limited number of invoices you can generate. However, this is not the case with Quickbooks, as the brand offers unlimited invoices from the basic to the most expensive plan. Make sure to create invoices for all transactions to make the most of the offer and ensure all transactions are accounted for. Using these invoices also ensures that you get the payment your clients owe you, especially if invoices are scheduled and automatically sent. There is no room for you and your customer to forget.
Looking at all the offers of Quickbooks, can you imagine how you can run your business more effectively as a small business owner? You can easily track your money and manage your cash flow. Integrations will help you keep all essential information in one software, and you can generate reports quickly too! You can do all these whether you are on the Quickbooks desktop version or through the mobile app.
If you are unsure how to use Quickbooks or delegate the task to experts because your plate is already full, you can always count on us here at Unloop. We have a team of accountants and bookkeepers who are well-versed in using Quickbooks for accounting. So delegate the task to us by giving us a call. We’d be happy to assist you!
Tax: a mandatory contribution levied by the government to support public works and benefits.
Most of the time, taxes can be an irritating subject because a portion of your earnings will be deducted from your payslip or financial statement. Tax is even more of a burden when you don't have a clue where it is being used.
Suppose your accountant or sales tax preparer is deducting taxes from your salary or profit. In that case, you are contributing to several government projects for the public—this includes better transportation, road construction, and improved healthcare facilities. This contribution also pays the salaries of individuals working in the government.
The amount of tax one pays is not the same for all. You have to understand income tax brackets to know how much money is legally subtracted from your earnings. So dig deeper into this article, and let us talk about the value of income tax brackets.
Tax is a mandatory contribution imposed only by public authorities. In fact, it is a law that can be dated back to ancient times. If you still don't know how important taxes are, this article will give you a detailed explanation. Taxes are essentially utilized to promote the well-being of a nation, its government and all its subjects. Because of the tax you are paying, you enjoy public safety, national defense, health care, and free education.
Taxes are also spent to protect the environment and help a country implement fiscal and monetary policies essential for economic growth. Thus, the money you give to the government in the form of tax does many things.
Let’s get one thing out of the way—not everyone needs to pay tax. The tax you pay is determined by your ability to pay. So if you are unemployed or your income is below the taxable amount, you may not pay any tax. However, once you reach an income that meets one of the brackets, own a house or business, you need to pay tax. Business owners pay taxes based on the income they’ve accumulated.
Taxation is also an effective way to redistribute wealth in society from individuals who have more to individuals who have less. Income tax brackets see to it that those who are earning more pay a higher tax than those who earn less.
Taxes are also applied on luxury items, cigarettes, liquors, and even gasoline. Governments around the globe have seen the need to increase taxes on unhealthy products to reduce consumption. Raising the taxes on gasoline, for example, is a prompt for people to drive less in an effort to protect the environment and lessen traffic.
Direct and indirect taxes are the two types that you usually pay. Taxes taken from your income and business profits are a perfect example of a direct tax collection. On the other hand, Indirect taxes like value-added taxes (VAT) are applied to goods and services. Scan your grocery or restaurant receipt, and you can see VAT added to your bill.
If all people in a specific country are willing to give according to what they earn, the government can build what is needed for the betterment of its citizens. If you allow yourself to get involved in nation-building and support others, you will get something positive out of it.
Before Canada became an independent country, England and France collected taxes which were custom duties. Following the confederation in 1867, the two layers of the government, federal and provincial, wanted to collect money for their own use. The federal government looked forward to creating buildings, roads, railways, harbors, and bridges, while the provincial government aimed for education, health, and welfare.
Canada joined World War I in 1914, and the government needed more money to continue its operation. And the solution for this need was to increase the taxes. At first, the federal government mandated that only the big corporations share a portion of their earnings as tax. Then, in 1917, the Canadian government needed more money and introduced the Income Tax War Act, wherein everyone who makes an income must give a portion of their earnings. The government said that it would be temporary.
The war ended in 1918, and the Canadian government still needed to cover the war-related expenses such as the nation's rehabilitation, veteran's pensions, and debt interest. By 1948, the income tax was no longer considered temporary. The Income Tax Act subsequently replaced the Income War Tax Act.
As you can observe, the government has the sole power to change the tax-related bills.
Canadians need to pay two kinds of taxes, and they are federal and provincial. Canada has a progressive or marginal tax system which means, as your income grows, your tax rate grows too. For this instance, tax brackets are vital to derive the tax you need to pay correctly.
As your income gets higher, you'll face more provincial and federal taxation of income-tested benefits such as GST credit, OAS, and family benefits like the Canada Child Benefit.
Canada Revenue Agency (CRA) has issued the following income tax brackets in Canada for 2021:
In addition to federal tax are provincial tax rates. Let's focus on the income tax brackets Ontario has:
Assuming that you are from Ontario and you'll earn $65,000 at the end of 2021—you might think that you will fall on the 20.5% bracket right away, making you owe the Canadian government a total of $13,325 on federal income tax only. However, that is not how it works because the marginal tax brackets are designed to lower your tax charges. It is a common misconception that you are part of only one tax bracket.
Here is the real deal: By consulting the federal tax bracket of 2021, your first taxable amount is $49,020 at 15%, and you have a tax of $7,353. You still have a remaining taxable amount of $15,980 ($65,000 - $49,020), which will be taxed at 20.5%, giving a tax value of $3,276. Therefore, you have a total of $10,629 in federal income tax.
To give you an easier view of how to get your federal tax, here is the formula:
|$13,809 to $49,020||Taxable Amount ✕ 0.15 = TAX|
|$49,021 to $216,512||Latest Taxable Amount = Net Income − First Taxable AmountTAX (2...) = Latest Taxable Amount ✕ RateTotal Accumulated Tax = TAX (1) + TAX (2) + ...|
Now, time to get your provincial tax. You are from Ontario, and $45,142 is eligible for 5.05% tax that is $2,280. You still have a remaining $19,858 ($65,0000 - $45,142), which is taxable for a rate of 9.15%, giving you $1,817. Therefore, you have a total of $4,097 in provincial tax.
For an easier view on how to get the Ontario tax, here is the formula:
|$45,142||Taxable Amount ✕ .0505 = TAX (1)|
|$45,143 to $220,000||Latest Taxable Amount = Net Income − First Taxable AmountTAX (2...) = Latest Taxable Amount ✕ RateTotal Accumulated Tax = TAX (1) + TAX (2) + ...|
Summing it all up, you have a total combined federal and provincial tax of $14,726.
There are ways to lower your taxes legally, and this is what we call tax deductions. This works by reducing your total or gross income to get to your taxable income. The tax code has a way of incentivizing, and you can possibly get tax breaks in the form of deductions and tax credits, depending on your financial situation. Remember that your gross income is your accumulated earnings from all sources before you make deductions. Determine your gross income first, and you can deduct all eligible deductions. Such legal deductions may include:
Let us have another example: If you earned $100,000 at the end of the year and paid for your insurance and other personal contributions with a grand total of $10,000, you can deduct the $10,000 from your total earnings. Thus, leaving you with a taxable net income of $90,000. All in all, you owe the government a total of $22,139 in tax.
Tax credits reduce tax payable while the tax deductions reduce taxable income. The tax credits have two types, which are refundable and non-refundable. When you have refundable tax credits, you will get an amount from the government because you overpaid your tax. Non-refundable credits can only turn your tax into zero. Tax credits can be either static or income-tested, meaning credits can go down as your income increases.
As of 2021, the basic federal personal amount is $13,808 under the lowest marginal tax rate of 15%, and it leaves you a total tax credit of $2,071.20. An important note you should remember about the basic personal amount is it gets smaller the moment your income exceeds $15,978. It is also the same with the provincial tax credits. Ontario has a provincial personal amount of $19,369 with a tax rate of 5.05%, leaving you a provincial tax credit of $978.13. Tax credits are deducted from your overall government taxes.
Tax filing happens every April 30 of each year. CRA doesn't like to wait and deduct taxes before they are paid. Usually, CRA takes taxes out of every paycheck, which is reflected in your payslip. You will see your gross income, and then you have a withholding amount which is the tax that you have pre-paid to CRA. Such withholding also includes Canada Pension Plan (CPP) and employment insurance (EI).
When you file your taxes at the end of the year, CRA will compare the withholding amounts against the tax you should pay. If your employer withheld more than the total tax payable, you are eligible for a tax refund. Conversely, you will have a tax owing in case your employer did not withhold enough from you. A refund works like an overpayment, and you still have change. It is like lending the government money without interest.
You also have to remind yourself to update your personal information using TD1 in case there are changes. Outdated information about you can lead to a tax refund or owing to the government more. The TD1 helps your employer estimate the withholding taxes they need to take out of your paycheck, which is a common issue with people with multiple jobs.
Take note, a refund is not a financial goal, and using RRSP to force a refund is not very substantial. You have to save for your retirement while paying your appropriate taxes.
Taxes are vital to keeping the balance and safety in every nation. Canadian citizens enjoy the fruits of their taxes through education, public services, environmental conservation, and quality health care.
Income tax brackets were formulated to lower your tax so you can enjoy your earnings. Keep in mind as well that there are legal ways you can take to lessen the amount of tax you need to pay the Canadian government.
Now that you already know how to compute your annual taxes manually, you can still consult accounting bookkeeping services and tax services. They will help you lower your taxes legally, and you can have a good conversation with them with the knowledge you gain in this article.
If you are self-employed or the boss of your own business, a sales tax preparer is a good match. Do not be afraid or be half-hearted to pay your taxes and be a good taxpayer. It is proof of your sense of responsibility and commitment to your country and fellowmen.
Ontario is an ideal province in which to start a business since it has the largest economy in Canada. Aside from that, the local government of Ontario offers several grant programs and tax incentives for businesses to encourage job openings and further economic growth.
If you are going to start a small business or take jobs in Ontario, you have to learn its income tax system. Tax laws are ever-changing, which makes understanding them even more difficult for small business owners and employees who are often too busy to keep up with tax updates.
Let us take a deeper look at Ontario’s income tax and how you can correctly compute your taxes.
If you are a citizen in Canada who earns $49,020 or more, you are economically productive and thus mandated to pay federal tax income. If you live in Ontario in particular and earn $45,142 and more, you are also eligible to pay the provincial tax.
In that example, you can see that you need to pay two kinds of taxes to the Canadian government: federal and provincial. These two come hand in hand to promote the welfare of the country and its provinces. Compared to other countries, Canada has one of the highest income tax rates, with a reported highest income tax rate of 54%.
Canada has a progressive or marginal tax system. In this system, individuals pay higher taxes as their income grows. Canada also follows tax brackets for accurate tax derivation and to lessen the tax you need to pay.
As of 2021, the Canada Revenue Agency (CRA) implements the following federal income tax brackets:
If you are earning $50,000, it is a common misconception that you have to pay 20.5%, equivalent to $10,250, in federal income tax.
Income tax preparation and computation do not work that way. The goal of the tax brackets is to lessen your total payable tax. Again, let us say you earn an annual net income of $50,000. You have a taxable amount of $49,020 on the first bracket, and you need to pay a 15% federal tax for that one, which is equal to $7,353.
We are not yet done because you are also eligible for the second bracket. Since we taxed the first $49,020 with 15%, you still need to pay a 20.5% tax on the remaining $980 ($50,000 − $49,020). The 20.5% payable federal tax of $980 is $200.90, which yields a total of $7,553.90 federal tax.
Now we need to compute your provincial tax. CRA applies the following Ontario income tax percentage:
Since you earn $50,000, you are eligible for the first and second brackets. After getting 5.05% of $45,142 ($2,279.67), you still have a remaining taxable income of $4,858 ($50,000 − $45,142), 9.15% of which is $444.51. Thus, your overall provincial tax is $2,724.18.
To accurately compute your provincial tax, you can use any Ontario income tax calculator available on the Internet.
Adding your federal and provincial taxes, you owe the Canadian government a total of $10,278.08. It leaves you with a $39,721.92 take-home income.
You must always file your income tax every April 30 of each year. However, CRA collects tax ahead of time, and you can see the tax deduction on your payslip.
According to the Ontario Income Tax Act, you are entitled to tax refunds if your employer withholds more than the amount of tax you need to pay. Also, you can use your Registered Retirement Savings Plan or pension contributions and tax credits, including dividends, donations, and small business capital credits, to lower your tax legally.
Calculating your federal and provincial taxes is very easy as long as you follow the proper computation. Tax calculators online can also help you compute the correct amount of taxes you need to pay.
Keep in mind that the taxes you pay the government help your business to grow as well. You need public utilities like roads and lights for your business needs. Also, you can benefit from other tax breaks, such as the depreciated value of a company vehicle, retirement contributions, and employee pay. Paying the correct business tax gives you a good credit rating, which attracts lenders and financial agencies.
We at Unloop work with partner accounting auditing and bookkeeping services to help you file your income tax hassle-free. Call us today at 877-421-7270 to learn more about our tax and accounting services.
A balance has to be set between your income and expenses, especially when starting out an e-commerce business. This allows you to stay afloat as you grit it out for profit. Often, the scales tip unevenly when government expenses, particularly taxes, are involved. Unfortunately, this is something you almost have no control over— you have to pay, or you break the law.
Good thing the government also finds a way to help out upcoming e-commerce entrepreneurs like you. The Working Income Tax Benefit is one form of help you can take advantage of if you're bootstrapping.
The Working Income Tax Benefit (WITB) is an amount refunded to qualified individuals and families in the form of a tax refund.
In 2019, WITB was renamed Canada Workers Benefit (CWB) and included many other low-income worker groups that weren't previously covered by the program. The CWB now covers more than three million Canadians that qualify for the benefit.
By increasing disposable earned income (in the form of a refundable tax credit), the CWB aims to incentivize people in low-wage sectors to spend more and the unemployed sector to rejoin the workforce. This stimulates economic activity and growth through spending.
The CWB has two components: the basic amount and the disability supplement.
If your income level reaches $3,000, you'll get an amount of $0.26 for every dollar you make past that income level. You will continue to receive this benefit up to a certain extent. If you reach the benefit threshold, the amount you get is reduced. The higher your threshold gets, the lower the benefit goes until you no longer receive an amount for every dollar.
What's good about the CWB is that you receive an additional income. That means if you're going to make a personal or business loan, the benefit you receive from the WITB / CWB will be treated as such and will boost your chance of getting a loan.
You may receive the benefit as an entire amount, or you can have it on a staggered basis. If you need to request advance payments, you have to complete Form RC201 and submit it by August 31st. If you don't submit on the date stated, it will not be processed.
The catch of the CWB is you have to properly pay your taxes electronically or otherwise for you to receive this benefit. The government takes any excess you paid in the form of tax and returns it to you in the form of an income. Should the amount you're eligible to receive exceeds the tax you paid, the Canadian government will shoulder it. Another catch of the CWB is that only one eligible member of the household can apply.
The CWB has tweaked some of its processes and rates to expand its reach and serve more Canadian citizens. Here's what changed in the new program.
Higher basic rates - The CWB rate is now 1% higher than the previous WITB. You will now get 26% of every income you make over $3,000 compared to 25% when the WITB was still operating back in 2018.
Higher reduction threshold - the limit for single individuals without children is increased by 6% in the new CWB, while the limit for families increased by 2%. This gives both individuals and families more wiggle room for excess income while still reaping the benefit amount fully.
Lower reduction rates - the rate at which your benefits are reduced when you reach the income threshold is reduced from 15% to 12%. That means you still get more from your government even if your income increases to a point where your benefit is reduced.
Expanded accessibility - Even if you don't claim your benefit, Canada Revenue Agency (CRA) makes it a point to calculate the amount of worker's benefit you will receive so long as you're filing your taxes. Aside from this, you will also be assessed based on the information you give when filing taxes if you're eligible (or no longer eligible) for CWB. This effectively expands access, not only to those who need it, but it proactively includes those who can have it.
Here's a table showing the detailed amounts and rates of the WITB and the new CWB.
|Single without children||$1,059||$1,335|
|Income threshold for reduction - Single w/o children||$12,016||$12,820|
|Income threshold for reduction - Families||$16,593||$17,025|
|Income rate||25% over $3,000||26% over $3,000|
|Phase-out threshold - Single w/o children||$19,073||$24,111|
|Phase-out threshold - Families`||$29,410||$36,483|
|Reduction rate - one spouse||15%||12%|
|Reduction rate - both spouse||6%||7.5%|
To be eligible for CWB, you will have to meet the following:
Eligibility for disability supplement means you have an approved T2201 Disability Tax Credit Certificate. In addition, your income must be over $1,150.
If you own a legitimate e-commerce business that's just starting out, it’s most likely your income would be in the lower bracket. Taking advantage of every business or personal tax and income benefit at this stage will give you and your business a financial wiggle room. You can use the CWB benefits you're going to get and infuse your business with it, or you can use the benefit to cushion your personal expenses so you don't have to take from your business. This sounds like a good deal.On the other hand, if your hands are tied, you can consult with Unloop regarding Income Tax Benefit accounting on whether your income level meets your eligibility. The team at Unloop can help you arrange and report your business financial standing so you can take advantage of tax benefits such as the CWB. So give them a ring today.
As an Amazon seller, you must accomplish many steps to ensure your business will grow and prosper. Some of the tasks that will be on your plate are product brainstorming, target audience research, competitor analysis, search engine optimization, fulfillment method, and data analysis.
While all these are in play, you might overlook another duty that is essential if you want to succeed—accounting.
Many businesses only do their accounting before tax season for the sake of tax law compliance. What sellers like you must understand is that there is more to accounting than paying taxes.
Let’s talk about the many reasons why accounting is a must for your business and everything else you need to know about Amazon accounting.
Check out this content summary.
The first step for you to reap the benefits of accounting services for Amazon sellers is to eliminate misleading accounting beliefs. They are the reasons why you might still be discouraged or swayed not to begin accounting early. Check these out, and remember them: these myths should be busted right away.
You need to do a lot of work to manage your Amazon business. Even if you are a certified public accountant, it is still better to delegate all of your bookkeeping and accounting needs to an Amazon FBA CPA. Professionals handling your business’s finances will ensure the accuracy of data and reports. You, on the other hand, can focus on the other areas of business operations.
“Procrastination is evil.” You may have heard this quote, especially back when you still went to school. It still applies in preparing Amazon financial statements and paying taxes.
Every year, your country's tax department sets a payment deadline, and it is a mistake to cram bookkeeping and accounting mere weeks or days before this deadline. You may prepare the wrong income statement, pay the wrong taxes, or file late, which can get you penalized or fined.
Working as a one-person team or having only a few members in your team is common among newly launched Amazon stores. With all the tasks you need to accomplish, you may abandon bookkeeping and accounting tasks.
Sellers like you should prioritize accounting, as it will give you an insight into whether your game plan and business decisions are working or not.
Startups and small entrepreneurs think they do not need to pay taxes, which is another myth. Some sellers are surprised when they get a notice from the tax department about their taxes, penalties, and fines.
You can skip all these hassles by familiarizing yourself with your local tax laws and always complying. The general rule is that you need to file both personal and corporate taxes.
Excel is free—that is its only advantage over automated accounting software.
Automated accounting software ensures data accuracy, automatic categorization of all transactions, integration to other applications, instant reports, and data safety. The investment you will allot for data automation is worth all the benefits you will get. In contrast, mistakes are common in Excel files, and they can easily be corrupted and compromised.
The final myth you should bust is that you have no need for Amazon accountants or a CPA for Amazon sellers. Many sellers either rely on their skills or hire seasonal, project-based virtual assistants (VAs).
While VAs have the skills, the challenge comes in giving them a bulk of transactions and data to categorize in a short period. Having a partner or in-house accountant who monitors your books and creates reports in real time is always much better.
Now that you’re rid of these misconceptions and myths, here is the correct information about the benefits of Amazon accounting.
You invest both money and energy in developing a brand and product that will sell on Amazon. You ensure your listings and campaigns are optimized to reach your target audience, and your competitors’ game plans are always on your radar.
Make your effort pay off by ensuring your finances are always in check. Through accounting, you will not only have the greatest chances of a healthy cash flow and a thriving business, but you can also reap the benefits discussed below.
Imagine a business where you sell your products, replenish your stock, and sell again without knowing if you are making a profit, breaking even, or about to go bankrupt.
Do not run your business blindly, and start accounting the moment you launch it. That way, you’ll have all the data about the inflow and outflow of your money, and you can record all transactions from suppliers and customers.
If you use reliable cloud-based accounting software, you can be sure that important business data is secured and protected. You can lower the risk of hacking or accidentally deleting data. Through cloud-based accounting, you can also limit who can access business intelligence, minimizing fraud and stolen private information.
When you do Amazon seller accounting, you’ll have visibility on production costs, sales, customer data, and supplier information.
For instance, if you see that your production costs are higher than your sales, you can decide to do the following to lower your production costs:
Some of the data monitored in accounting are the following:
You’ll have visibility in all these and more. When you use accounting software, invoices and payments are all automated. You can pay and get paid automatically and on time.
Integrate your Amazon seller account to the accounting software you are using so that you can manage your inventory easily. Check your stock, make orders to replenish your supply, create invoices, and pay using one software only. All the transactions you make will be tracked and categorized in your books accordingly.
When you start selling on Amazon, tax-paying will be like celebrating your birthday; it is the one day in the year you will never forget. If you do forget and fail to pay taxes, you will be reminded, eventually, in the form of fines and penalties.
Through proper accounting, you’ll minimize late and inaccurate tax payments because you will have tracked your income all year.
Now that you’ve seen both the benefits of and the misconceptions about accounting for your Amazon business, you can confidently decide to start tracking all finances from now on.
If you have chosen accounting software and an Amazon FBA tax accountant to handle it, here are the best practices you, your accountant, and your bookkeeper should know and apply.
On Seller Central, Amazon provides many tools to check data about your store’s SEO and ad performance. Aside from these, you can acquire accounting for sales through Amazon. Amazon web services’ financial statements include FBA business reports where you’ll get essential information about sales, payments, inventory, product removals, and fulfillment.
If you are still learning the ropes on data tracking and analytics, this can be a great start to monitor how your business is faring financially. It will also be best to integrate these data and reports into your cloud-based accounting tool so that you’ll only have to look at a single software to check your business finances.
Aside from having a single software to look at for your business finances, there are more benefits to integrating the accounting services you get from Amazon into your cloud-based software.
After pinpointing all the income and expenses, you need to track and configure their categories in the software you use. Make sure that you also make sense of all data by running regular reports.
If your business is still new, the more frequent the report, the better. This way, you can immediately adjust your game plan if you are experiencing slow sales and not hitting your profit goals. You should also generate weekly, monthly, quarterly, and annual reports to see if your plans are working, duplicate success, or adjust plans for any financial bumps.
There are two types of accounting: cash-based accounting and accrual accounting. Cash-based accounting is when you record transactions when payment occurs. On the other hand, accrual accounting records transactions when they happen, even though payments aren’t made yet.
The first accounting type works if you only get into a few transactions. However, if you are selling on Amazon, accrual accounting is better, especially as your business scales and more sales come in.
When your in-demand product is about to go out of stock, you need to make an order with your supplier. Make the process easier by integrating your Amazon inventory into your cloud-based accounting tool.
After seeing the products that need replenishment, you can make an invoice, send it to your client, and process the payment in your bank account with just a few clicks. The accounting tool you are using will automatically record and categorize all these transactions.
Last but not least among the best practices on Amazon accounting is paying your taxes and paying them on time. April 15 is the date to remember as it is the deadline for personal and corporate income tax returns in the United States.
If your accounting and bookkeeping are in place the whole year, you will not have a problem backtracking all transactions to determine your income. With an accounting tool, you can do the calculation in a few clicks!
Switching from Excel and traditional manual accounting to cloud-based accounting indeed plays a huge role in keeping track of your business finances conveniently. However, the benefits of accounting software come at a price as you need to invest and sign up to enjoy its services. Nonetheless, your money will be worth it with all the features you can enjoy.
QuickBooks is one of the most trusted accounting software you can use. This software was launched in 1998 and was developed from the feedback of professional accountants in those days. QuickBooks is now secured and has a reliable data tracking system that you can readily audit.
Some of the features you can enjoy with QuickBooks are the following:
You can enjoy these features depending on the plan you choose: Simple Start, Essentials, and Plus. You can also try it for free. The best part about QuickBooks is that every plan has additional offers that will be of great use to your growing business.
Technology is amazing, and Hubdoc is proof. This tool cuts down the time you work on data entry.
Before, a bookkeeper had to input tons of papers and receipts into Excel one by one. Now, Hubdoc cuts this work out. Just take a picture of your receipt, and the tool will turn the details into readable text ready to be categorized by your accounting software.
You can also link Hubdoc to other files and data storage you have, particularly your chosen accounting tool. As a result, you have a single tool that can store your documents.
The best part is that all this information, especially sensitive and confidential ones, will be stored in the cloud. As the head of the company, you will have control over who can access the information. With that, you will be sure that your financial details are protected.
This accounting tool is specifically designed to assist your data storage and tracking needs as an e-commerce seller. Whether you sell on Amazon, Etsy, eBay, Shopify, or Walmart, you can enjoy the offers of this tool.
Here are some of the advantages of using A2X.
After acquiring all the data from your store, A2X will categorize and send them to your chosen accounting software—QuickBooks, for instance. Then, you can begin monitoring your finances and generating reports from the raw data you get from A2X. This tool is especially helpful if you are selling on different e-commerce platforms, which most sellers do.
You now have an idea of the different tools you can use to track income, expenses, and all other transactions occurring in your business. Now, it is time to make sense of all the numbers and establish an Amazon financial report flow and system.
Sit down with your bookkeeper and accountant, and take a look at the following reports to get a view of your business's financial health.
Begin by knowing the following details about your inventory:
By knowing these details, you’ll know which products to get suppliers to produce more. You’ll also understand why some products are slow-moving and come up with solutions. Using Amazon FBA, you can pull out slow-moving stock and invest more in best sellers.
Sales are simply the products you have sold, but you need to subtract different production costs to know how much you earned from a sale. As the Profit First framework goes: SALES − EXPENSES = PROFIT.
Through the sales report, you can pinpoint the best sellers and gain more profit. You can also create a game plan on how you can decrease production costs while maintaining high sales.
You should have visibility in both your payment to suppliers and your clients’ payments to you. Some of the details you need to see in the report are the following:
You can add more details depending on what your company deems important. You can also configure your accounting tool to sort data according to a particular payment detail to get the data faster.
Amazon acknowledges a wide variety of valid reasons for customer returns and refunds, so don’t be surprised if you get returns often. However, keep in mind that returns entail cost as if you are using FBA because Amazon charges for returns processing and repackaging on top of the sale you already lost.
Keep track of the return reasons, sellable items, broken items, and charges for returns processing to know the exact costs. With number visibility, you can decide how to address the problem.
Check your company’s revenue, expenses, and costs through a profit and loss report. In this report, you will see a summary of all revenue streams, gross profit, fees, earnings before interest and taxes, and your net earnings month on month.
You can interpret the data to check whether your company is profitable or not. Whatever the result will be, you can use the data for planning and decision-making to make your Amazon business a profitable venture.
The three important details you will see in a balance sheet report are assets, liabilities, and equity.
Through this report, you will know what your company owns and owes. Seeing these details can give you an idea of your net worth.
Let’s say you have collected data for the whole year. Surely, you will notice monthly and quarterly trends. Through this data, you can foresee how another year will go, and you can enact specific plans to better your performance.
It is also the report you want to get if you plan to launch new projects or products or expand your Amazon business. Take a look at your historical data first, simulate different scenarios, and choose the most profitable game plan.
Ready to integrate helpful accounting tools into your Amazon store? Here are step-by-step guides on how to do it!
Hubdoc is a tool you can integrate into your Amazon store to organize all the data and transactions you have. Then, you can integrate Hubdoc into an Amazon accounting tool like QuickBooks.
You can do the integrations yourself or delegate the task to your accountant. Another option is to get into a partnership with an Amazon accounting agency. Doing this will allow you to enjoy all these benefits.
An agency has several bookkeepers, and a team that does accounting for Amazon sellers will manage your account. You can skip the hassle of screening and hiring professionals on your own by working with an agency.
The CPAs and trained bookkeepers will ensure that your books are always up-to-date and that all transactions are neatly categorized. When you run reports, you’ll be sure that the data you get is recent and up-to-date.
If you are too busy managing your Amazon business, you can delegate the task of report generation to the accounting agency. You can set up regular meetings and consult their in-house experts on any of your business decisions.
Now that you have all the right information, Amazon accounting will be easier for your business. Ensure that you have reliable people and tools so that your business finances are tracked, stored, analyzed, and used to assist you in scaling and making your business succeed.
Alternatively, if you think partnering with an agency is the way to go, look no further and work with us! We at Unloop are professional accountants and bookkeepers who have experienced firsthand the struggles of growing a startup Amazon business. We also offer our services remotely!
We’d love to answer any inquiries or further discuss our offers, so do not hesitate to contact us. We’re just a call away at 877-421-7270.
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.