One of the things that you don’t often hear about from retail giant Amazon is how to best go about creating a system for accounting for Amazon sellers. While there are tons of articles about becoming an Amazon seller, you’re expected to know or learn everything that comes after for yourself. That can lead to some very confusing paperwork come tax time unless you’ve been working with a great accounting system from the start. Here are some of our best tips for choosing the right system for bookkeeping for Amazon sellers.
Choose a System That Separates Personal and Business Accounts
One problem with accounting for Amazon sellers is that many people start off just cleaning out their closet and selling a few things here and there, connecting their seller account to their personal banking system. But when you reach the level of becoming a professional Amazon seller, you need to keep your business profits separate from your personal accounts to avoid having personal assets risked at tax time. Be sure you set up a business account for your Amazon sales profits to be deposited into.
Use All the Automatic Tools You Can
Amazon offers a tool for bookkeeping for Amazon sellers called A2X that automatically takes information from invoices and puts it in your bookkeeping software. Use this tool to save you time and prevent mistakes.
Choose an Accounting System with Automatic Backups
Having backups of all your invoices and receipts is extremely important in case you ever get audited. Don’t leave this important task to your memory – choose software that does it for you automatically.
LLCs or S-Corps Need a Full Accounting System
As an individual seller on Amazon, you likely started out using a basic bookkeeping software like Quickbooks or FreshBooks. One thing that you need to do once you reach the point of becoming a registered business is invest in a full accounting system for Amazon sellers. Something like Xero accounting software offers you many more tools for what you need to do as a business entity.
Choose a System that Gives You Real-Time Updates on Your Finances
One of the keys to success is understanding your financial health at all times. This allows you to make quick decisions about how you’ll handle opportunities that arise. Using the proper accounting software makes it easy to get an instant picture of how healthy your business accounts are.
Don’t Choose the Cheapest Bookkeeping Software
Our last tip for choosing the right system for bookkeeping for Amazon sellers is to invest your dollars in this system. When tax time rolls around, you’ll be thankful that you have a system that provides all the important pieces of data and backups that you need to meet every law and requirement.
To learn more about Xero or to find out how Bottom Line CPA can help you create your own plan for profit as an Amazon seller, contact us online.