Bookkeeping for self-employed Amazon sellers

Bookkeeping, or the process of recording financial transactions, is at the heart of any small business. It’s safe to say that a business can’t run smoothly without strong bookkeeping practices. So, if you sell products on Amazon, you’ll need to stay on top of your spending and earnings to understand your performance and prepare for taxes. 

But it’s fair to find bookkeeping intimidating if you’re not a natural numbers person. Luckily, you can simplify your bookkeeping for Amazon sellers with a few tips.

This guide covers simple bookkeeping for Amazon sellers, including: 

• Recording your Amazon transaction 
• Tracking your inventory 
• Sending invoices 
• Understanding your cash flow 
• Preparing for taxes 
• Finding accounting software 

The most crucial part of bookkeeping for Amazon sellers is keeping a record of your financial transactions. These updated books will list all of your earnings or Amazon sales and business expenses, such as inventory costs. The records are essential to creating accurate financial statements. 

For smoother bookkeeping, first, separate your business finances from your personal ones by opening a business current account. This account will help you manage the money coming in and out of your business. Then, use digital tools like Google Spreadsheets or Microsoft Excel to maintain organised records. Be sure to set time aside each day to update your spreadsheet. Also, keep proof of all transactions, such as invoices and receipts. 

The key to simplifying your record-keeping is to use your Amazon seller account. Amazon keeps records of your sales, which takes this data maintenance off your hands. As you update your books, take advantage of the information on your profile to improve accuracy. Then, add this information to your spreadsheet along with your expenses. 

Another part of bookkeeping for Amazon sellers is tracking inventory. Your earnings depend on how many products you sell, so it’s important to maintain your inventory records. Being aware of this will help you understand how quickly you go through stock. Plus, understanding how much product you have available will tell you when you need to order more. 

Knowing when to restock can help avoid running out of inventory so you remain professional. You can use your Amazon seller account to fill out how much inventory you have on each listing to simplify this. This feature shows potential buyers when a product is in high demand and how much you have left. 

If you track inventory, you can also understand how much you spend on your Amazon stock. Compare these expenses to your earnings to see your profit margin. If your inventory is popular, you may want to increase your prices a bit to earn more profit. 

Another way to simplify your bookkeeping is to streamline your invoice process. As a seller, invoices are the key to earning money from your sales. While a receipt is proof of a transaction, an invoice requests payment for a service or product. Invoices are particularly important for Amazon sellers because your sales are entirely online, and customers may often pay with credit. It’s your responsibility to turn those sales into cash. 

To create a simple invoice process, consider putting together invoice templates. Keep updated files on what invoices you send to whom and when you receive the payments. Using your Amazon seller account can help you organise your own records. 

A business’s cash flow is crucial to paying short term financial obligations. Cash flow is the cash that flows in and out of your business during a given time. For example, if you sell enough on Amazon, but customers have 30 days to fulfil an invoice, you may not see the cash from those sales right away. But you need good cash flow to buy more inventory. 

Tracking your cash flow and creating cash flow statements will help you understand why you may struggle to cover short term expenses. Understanding your cash flow will show you when to be more diligent with invoices or reduce your expenses to improve your business financially.

To get a better idea of your cash flow, consider using an accounting tool like Countingup. Trusted by 40,000 business owners, Countingup is the business account with built-in accounting software. It helps you manage your business finances in one app, and generates ongoing cash flow insights to easily get an idea of what you spend and earn.

Your bookkeeping is essential to creating financial statements for your business taxes. As a self-employed person, you’re responsible for your own tax reporting. If you keep your taxes as you maintain your books, you can prepare for them ahead of time and avoid surprises. Then, use that information to put together your income statement, which outlines how much profit you made by subtracting your expenses from your revenue. 

For example, you can add sales tax to your product prices. Also, use this information to set money aside, so you don’t struggle to cover these future expenses. Plus, organised records will help you share data with an accountant if you use them to file taxes.  

With the Countingup, the app generates ongoing tax estimates so you can avoid surprises and get an idea of what you’ll owe. This can help you plan ahead so you can claim expenses that reduce your taxable income. Plus, you can set money aside so you don’t struggle to meet these costs.

Streamlining and simplifying your bookkeeping for Amazon calls for the right accounting software. The truth is, financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier and efficient. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. It’s many features can simplify your Amazon bookkeeping while enabling you to better comprehend and analyse your finances. 

With the automatic expense categorisation feature, you’re able to track and record your business transactions with HMRC approved categories. This way, you can find proof of expenses when you need them. Plus, the receipt capture tool lets you quickly store proof of your expenses. 

The Countingup app also lets you create, send, and duplicate unlimited invoices on the go if you ever transition from Amazon to open a physical shop or supplement Amazon sales with by selling at markets. It also notifies you when you receive invoices and automatically matches them to payments. 

On top of tools that facilitate your bookkeeping, the tax estimates and cash flow insights show you when to alter your budget or set excess cash aside for growth. With these features, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 

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