Accounting and bookkeeping can be a daunting task for Amazon sellers, especially if you have lots of orders to process. That said, it doesn’t have to be that confusing if you do it right. By following these accounting tips for Amazon sellers, you can get your tasks done more efficiently.
This guide will cover the following topics to help you optimise your accounting:
- Main accounting and bookkeeping tasks for Amazon sellers
- Accounting tips for Amazon sellers
- The benefits of accounting software
The main accounting and bookkeeping tasks for Amazon sellers
Before we get into our tips, let’s take a quick look at the main bookkeeping tasks you’ll need to understand as an Amazon seller:
Income and expenses
A key part of business accounting is to monitor your income and expenses, or your cash flow (money flowing in and out of your business). It’s important to keep track of how much your business spends and makes each month. This way, you can determine how well your business is doing financially.
A healthy cash flow ratio basically means you’ll have enough money to pay your expenses –– and have some left over.
Accounts payable and receivable
In business, accounts receivable refers to the money customers or other parties owe you. On the flip side, accounts payable is money you owe to suppliers and other vendors.
Staying on top of accounts payable and receivable is essential to maintaining a healthy cash flow.
As an Amazon seller, inventory is essentially the lifeblood of your business. That’s why it’s crucial to stay on top of how many products you have in stock and how quickly items sell. Keeping track of inventory levels and movement allows you to determine when to order more materials or make more products to meet current demand.
Now, let’s look into a few methods you can use to make it easier to manage your accounting tasks.
Accounting tips for Amazon sellers
Separate your business and personal finances
Limited companies are legally required to open a separate account for their business finances. While sole traders don’t have to, opening a dedicated business account will make your bookkeeping much more efficient.
A separate business account allows you to keep track of which purchases were made specifically for your Amazon business. This saves you from having to sift through piles of bank statements to figure out which transactions to include in your business records.
Stay on top of taxes
One of our top accounting tips for Amazon sellers is to check what the current tax brackets and deadlines are regularly. Doing this will help you ensure that you have enough money set aside to pay your taxes.
In addition, you’ll also be able to plan ahead and give yourself plenty of time to prepare and file your Self Assessment tax return. Failure to submit your return in time can lead to hefty penalties, so it’s good to regularly check the government site, so you don’t miss any updates.
Break down large tasks into smaller ones
While it’s tempting to leave your accounting to the end of the year and focus on growing your business instead, doing this is like shooting yourself in the foot. Instead, you’ll be much better off working your bookkeeping and accounting tasks into your everyday routine.
Regularly updating and monitoring your records means you’ll have less paperwork to get done during tax season. So set aside some time at least every week to go through your receipts, sales, inventory, cash flow, etc. Alternatively, accounting software like Countingup will record and sort this data for you, allowing you to stay organised with minimal effort.
Consider hiring a professional to help
Should you decide it’s too much to deal with your business accounting yourself, you could hire an accountant to manage it for you if your budget allows it.
If you work with an accountant, you’ll benefit from a system that makes it easy for you to share data and collaborate with them easily. A system like Countingup could be the perfect solution for you.
Use the right accounting software
Our final accounting tip for Amazon sellers is to invest in accounting software and to select the right solution to suit your business needs. After all, your goal is to optimise your accounting and give yourself more time to focus on what you do best.
That’s why you need accounting software that manages time-consuming bookkeeping tasks without draining your bank account.
Countingup accounting software is tailored to the needs of one-person businesses. This system gives you a business current account and accounting software rolled into one app so you can manage your finances in one place. Designed with the smallest businesses in mind, Countingup has all the features you need to run your Amazon shop effectively.
Key Countingup features include:
- Invoicing on the go: create and send unlimited customised invoices to clients straight from your phone.
- Receipt capture tool: simply photograph the receipts with your phone to scan them into the system.
- Automatic expense categorisation: Countingup automatically sorts your expenses into HMRC-approved categories, making it easy to stay organised.
- Tax estimates: the app generates monthly tax estimates, so you know exactly how much to set aside.
- Business insights: you can access accurate, and up to date cash flow reports, so you know exactly how much money you have at any time.
- Accountant access: if you work with an accountant, you can give them instant access to your financial data by emailing them an invite. Simple, seamless and safe!
Save yourself hours of accounting admin so you can focus on growing your business.
Start your three-month free trial today.