Bookkeeping for Amazon Sellers – Guide & Tips

As an Amazon seller, it’s essential to stay on top of your bookkeeping to ensure that your business is running efficiently and to make sure you’re keeping accurate records for tax purposes. Whether you’re selling products on Amazon as a side hustle or running a full-fledged ecommerce business, it’s crucial to have a solid bookkeeping system in place. 

In this article, we’ll explore the basics of bookkeeping for Amazon sellers, including how to set up your books, track your expenses, and stay organized. By the end of this guide, you’ll have the tools you need to manage your finances like a pro. So, let’s get started!

Understanding Bookkeeping Basics for Amazon Sellers

Bookkeeping is a critical aspect of running an Amazon business. As an Amazon seller, it’s crucial to keep your books in order to make informed decisions, comply with tax regulations, and track your business’s financial performance.

Effective bookkeeping involves keeping track of your income and expenses, categorizing transactions correctly, and maintaining accurate financial records. By doing so, you can have a clear picture of your business’s profitability and make informed decisions on how to grow your Amazon business.

In this section, we’ll cover the bookkeeping basics every Amazon seller should know. From tracking your income and expenses to choosing the right accounting software, we’ll give you the information you need to effectively manage your finances.

Amazon-Specific Bookkeeping Issues

If you’re an Amazon seller, you know that bookkeeping for your business is not an easy task. The platform’s unique nature can create some specific challenges for bookkeeping. Here are some of the issues that Amazon sellers face and how to manage them:

1. Sales Tax: Amazon collects and remits sales tax on behalf of sellers in many states. However, the tax laws for each state vary, and you need to keep track of which states Amazon is collecting tax for and how much. You also need to report and remit sales tax for the states where Amazon doesn’t collect tax on your behalf.
2. Amazon Fees: Amazon charges various fees for using its platform, such as referral fees, fulfillment fees, and storage fees. These fees can add up quickly and can affect your overall profitability. You need to keep track of these fees and make sure they’re recorded accurately in your bookkeeping records.
3. Inventory Management: Amazon’s inventory management system is complex, and it’s crucial to keep track of your inventory levels to avoid overstocking or running out of stock. Accurate inventory management is essential for your bookkeeping records because it affects your cost of goods sold and overall profitability.
4. Payment Processing: Amazon pays sellers every two weeks, and the payment includes the sale price minus Amazon’s fees. You need to reconcile your Amazon payments with your sales and fees to make sure everything is recorded correctly in your bookkeeping records.

Managing these Amazon-specific bookkeeping issues can be challenging, but with the right tools and processes, it’s possible to stay on top of your bookkeeping and keep your business running smoothly.

Next, we’ll discuss some best practices for bookkeeping for Amazon sellers.

Choosing the Right Bookkeeping Software for Amazon Sellers

As an Amazon seller, choosing the right bookkeeping software is essential to manage your finances efficiently. 

It is important to have a system in place that can keep track of your transactions, expenses, and profits. With good bookkeeping software, you can save time, reduce errors, and have access to accurate financial reports.

Here are some factors to consider when choosing the right bookkeeping software for Amazon sellers:

1. Integration with Amazon: Choose software that can easily integrate with Amazon’s platform. This will allow for seamless transfer of data, reducing the risk of errors and the need for manual data entry.
2. User-friendly: Choose software that is easy to use and understand, with a user-friendly interface. This will help you save time and minimize errors, as you can quickly and easily input your financial data.
3. Cost-effective: Choose software that is cost-effective and fits within your budget. Some bookkeeping software offers different pricing plans, so make sure to choose the one that suits your business needs.
4. Automation: Choose a software that offers automation features, such as automatically categorizing transactions or importing data from bank accounts. This will save you time and reduce the risk of errors.
5. Customer support: Choose software that offers reliable customer support. This will ensure that any issues or questions you have can be quickly addressed, reducing any potential downtime or lost data.

Some popular bookkeeping software options for Amazon sellers include QuickBooks, Xero, and FreshBooks. This software offers a range of features and pricing plans, so it’s important to research and compares them to determine which one is the best fit for your business.

Outsourcing Bookkeeping for Amazon Sellers

Outsourcing bookkeeping is an option that many Amazon sellers choose to save time and money. However, it is important to choose the right professional to ensure accurate and reliable financial records.

There are many benefits to outsourcing bookkeeping, including:

1. Expertise: Professional bookkeepers have the knowledge and expertise to handle complex financial transactions. They can provide valuable insights and advice to help you make informed decisions for your Amazon business.
2. Time-saving: Bookkeeping can be time-consuming, especially for sellers who are just starting out. Outsourcing allows you to focus on growing your business, while the bookkeeper handles the financial tasks.
3. Cost-effective: Hiring a full-time bookkeeper can be expensive, especially for small businesses. Outsourcing allows you to pay for only the services you need, without the added expense of salaries and benefits.

When choosing a bookkeeping service provider, there are a few key factors to consider:

1. Experience: Look for a provider with experience working with Amazon sellers, as they will be familiar with the unique challenges of this industry.
2. Expertise: Choose a provider with the knowledge and expertise to handle all aspects of bookkeeping, including tax compliance, financial reporting, and audit preparation.
3. Communication: Effective communication is key to a successful outsourcing relationship. Look for a provider that is responsive and easy to work with.

Overall, outsourcing bookkeeping can be a smart decision for Amazon sellers looking to save time and money while ensuring accurate financial records. Just be sure to choose the right provider for your business.

Here is our ultimate guide about bookkeeping services or DIY bookkeeping.

Conclusion

In conclusion, bookkeeping is an essential aspect of running any successful business, and Amazon sellers are no exception. By understanding the basics of bookkeeping, taking into account Amazon-specific bookkeeping issues, and following best practices, Amazon sellers can ensure accurate financial records and maintain a healthy business.

Make sure that you are well known with the most common bookkeeping mistakes. 

Choosing the right bookkeeping software and considering outsourcing bookkeeping can also greatly benefit Amazon sellers in managing their finances. By keeping accurate records and utilizing the right tools, Amazon sellers can focus on growing their businesses and achieving their goals.

Google it to research the growth potential of selling properly on Amazon.

Remember, proper bookkeeping is not just about keeping track of expenses and income, but also understanding the financial health of your business and making informed decisions based on your financial data. So take the time to learn and implement good bookkeeping practices, and your Amazon business will thrive.

Here is a bonus tip from our team, to be one of the successful sellers on Amazon.