Amazon Accounting

Amazon Accountant - Cyndi Thomason

Your previous bookkeeper just gave you the numbers and didn’t help you understand them. Your product costs show you should be making money but you can’t tell if you really are. When you try to have conversations about growth, your accountant asks you things you don’t know how to answer. Does any of this sound familiar? After working with hundreds of Amazon clients, we get all the confusion and frustration that comes with keeping up the books. This is why we work to be your partner, allowing you to gain accurate numbers and a better understanding of them as well.

If you’re overwhelmed with the numbers, or your books are a stressful mess, an ecommerce accountant can help! Let’s go over some questions you might have about Amazon bookkeepers.

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Why Is Amazon Accounting Vital to a Business?

Amazon accounting or bookkeeping is vital to your business’s financial health. You know your sales numbers, but that’s not enough.  Do you have confidence in your Inventory and COGS numbers? How much do you owe in Sales Tax? What is the trend with your Amazon Fees and what percentage of your revenue do they take? When the numbers are right there in front of you, keeping up with revenue and expenses is much easier.

You also have quick and easy access to your Gross Profit, a key metric to help you stay on top of inventory and cost information. Take your total sales revenue and subtract out any costs and fees, and you will have a better idea of where your business stands. While this only provides a general direction the business is headed in, you’re more prepared when you need to make quick decisions.

Bookkeeping also helps with cash flow management. If your books aren’t in order or you don’t understand the numbers, it can be hard to see where you’re spending too much and receiving too little. With accurate numbers, you’ll know where to cut out expenses that may be too costly or invest more in areas where you have the opportunity for greater return.

cyndi thomason bookskeep Cyndi Thomason

Founder of bookskeep, Author of Profit First for Ecommerce Sellers

Having an Amazon accountant help you monitor the return you are actually receiving on ad spend, based on sales increases instead of other marketing metrics will keep the proper focus on profitability, not just increased sales revenue.

What’s So Different About Amazon Bookkeeping?

Accounting Methods. For ecommerce and Amazon businesses, using the Modified Cash or Modified Accrual Accounting method is best for your books. This method gives you the benefits of accrual accounting where it matters—matching revenue and cost of goods sold expenses in the period where the sale occurs. And it comes without all the headaches and extra expense of accruing operating expenses such as your insurance or payroll. Of course, we can do that if it’s necessary for your business, but most Amazon businesses don’t require that until they get to be very large.

Tracking COGS. Keeping up with Cost of Goods Sold (COGS) is one of the most important parts of Amazon accounting and often one of the biggest expenses in an ecommerce business. By including your product cost and any other expenses it took to send your product to Amazon, you’ll get the most accurate cost of your products. This will make working on your profit a lot easier and you’ll be able to tell which products may not be worth the expense.

Sales Channels. Breaking out expenses and income by sales channel is the best way to keep your books and your data organized so your decision points are clear. In the same way that tracking COGS will let you know which products make you the most money, keeping your channel transactions separated will let you know which channels are worth your while.

Operating Expenses. Another good practice is ensuring your Chart of Accounts gives you the right level of information.  You want to enough aggregation to see the big trends and yet enough detail to know where to focus your attention.  Financial reports should tell a story and with the right level of detail you can quickly understand how Operating Expenses are trending and take action if they are getting out of hand.

International Sales. International sales can come with different ramifications than sells in the U.S. There may be fees, currency exchange rates, and other extra hoops to jump through. Of course, you’ll also want to keep income and costs from international sales channels separate from their respective U.S. channels.

Sales Tax.  While Amazon is collecting and remitting sales tax on your behalf, you have to consider sales tax if you decide to sell on other platforms such as Shopify.  When you sell on other platforms, keeping up with your bookkeeping will help you account for all your separate sales tax collections, understand where you have Nexus and register and remit accordingly.

What Does an Amazon Bookkeeper Do Differently?

Understand the Importance of Inventory. We know that inventory is your lifeline, but it’s also your cash flow nightmare. To fully understand your profitability, you must manage your inventory and account for it with as much precision as possible. Even though you may just be starting out, you can’t afford to take your eye off the inventory ball.

Perfect Your Chart of Accounts. Your chart of accounts should give you the proper level of detail for each of your settlements, and an Amazon accountant can ensure that is happening. Our clients have thousands of orders a month that they monitor in Seller Central. We import that information into your accounting system in a summary entry based on your settlement payouts. We use a software system called A2X to integrate with your QuickBooks or Xero account to ensure that we capture the correct detail in the month it occurred. This helps keep books clean, allowing you to have a better understanding of what is going on in your Amazon business.

Navigate Reports with Ease. In addition, our Amazon bookkeepers are comfortable navigating the reports needed from Amazon Seller Central and will help you understand them. You will need to give them access to the settlement and payout reports and the inventory reports. If you sell in multiple countries, your bookkeeper will also need access to those accounts. You may also use Amazon Pay. If so, your Amazon bookkeeper should know how to get the data out of those reports.

It can be overwhelming and easy to miss steps as you set up all of these accounts. An Amazon accountant can help ensure the accounts are correct and can help you if something is not working correctly. Recently, one of our accountants found that a client had not set up their banking integration to Amazon Pay. As a result, $97,000 was being held at Amazon waiting to be disbursed. This is why having a knowledgeable accounting partner is so important for your business.

Make Sure Your Inventory is Accurate. There are many applications available in the ecommerce space that will track your inventory. Most of our clients use everything from excel spreadsheets, Inventory Lab, Restock Pro, Dear Inventory, Seller Legends, to much more expensive and customized solutions. An Amazon accountant will want access to these systems in order to pull the reports needed for properly syncing or “truing up” inventory between your physical counts on hand at Amazon, your other warehouse, items that are prepaid and in transit, and your financial records. You should be able to either share access to these systems to minimize your role in the process, or at a minimum, provide the reporting so your Amazon bookkeeper can pull the information and make the proper entries in your book.

Help You Grow Your Ecommerce Business. You need sound, accurate data to run your business, and at bookskeep, we take our knowledge gained from clients along with their inventory and cash flow challenges and we add our Profit First expertise to give you exactly that. In fact, our founder, Cyndi Thomason wrote the book on ecommerce profitability, Profit First for Ecommerce Sellers. We also help you understand this data so you can make the best decisions to ensure your business is profitable. Isn’t that the point, after all? Profitability must be examined at the big picture level by monitoring your gross margin for the business, but also at the product level. Which products are the most profitable? Which products are selling below our target margin and how can we improve them or change up our portfolio mix of products?

Ecommerce businesses are typically big advertisers. Are you spending a ton of money on advertising without seeing the results? Amazon Pay Per Click can eat up all your profits. Having an Amazon accountant help you monitor the return you are actually receiving on ad spend, based on sales increases instead of other marketing metrics will keep the proper focus on profitability, not just increased sales revenue.

One of the benefits you will receive from working with an Amazon accountant is they should be able to help you if something is not working correctly. Your accountant must know how to navigate these platforms in order to be your partner in the business.

Let’s see if The SmartBooks Program is right for you

Your business is performing and you need good numbers, yet you can’t do it all. Our SmartBooks Program is a bookkeeping service designed to free up your time.

When Do You Need Amazon Accounting?

The day you make a sale is the day you should start monitoring your numbers. While I understand this can be a big undertaking at the beginning of your business when your time and money are in short supply, I also know that you must keep score to know if you’re winning. If you’re spending money and it is generating no return, then you need to take a step back. If you want to get off on the right foot but “do it yourself” we have a 1-on-1 training program called SmartStart that can help! In this program, we will teach you how to do your books and how to review and understand your reports so you can understand your numbers. Once your business has grown and your sales generate enough profits, then it is time to have someone else perform the work for you, our SmartBooks program might be a better fit. With our SmartBooks program, you will have a dedicated Amazon bookkeeper handling your back-office accounting for you so you can focus on other aspects of the business.

Amazon Bookkeeping FAQs

Why Choose bookskeep?

There are a lot of Amazon bookkeepers out there, so why should you go with bookskeep? While there are plenty of people you could find to keep up with your books, you won’t find many who take the time to develop a relationship and help their clients with their dreams as a business owner as well as their books. Your goal is to find someone who doesn’t just “do the work,” but also helps you understand the numbers and what they mean for the business, and our goal is to be that person for you.

You need an expert partner that will help you grow your business based on their insights. You don’t need to become an expert yourself so that you can train your accountant. You need a partner, not another project.

Let’s see if The SmartBooks Program is right for you

While you concentrate on all the other details in your business, we take care of the accounting and provide financials you can trust.

Where Can I Find an Amazon Accountant?

The beauty of ecommerce is that you get to work from anywhere and so does your team! At bookskeep, our clients reside or travel as digital nomads all over the world and they sell on Amazon platforms in multiple countries. These businesses and their owners are truly multinational, small businesses.  To work with us, we do require that your books be prepared in U.S. Dollars and the banking for the business be based on U.S. banks. We have Profit First Ecommerce Guild members that we partner with in multiple countries such as Canada, UK, Australia, and New Zealand, etc. If we cannot serve you, we have great contacts that can help you outside of the United States.

Start making data-driven decisions and become more profitable today.

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