When you start your e-commerce business as an Amazon seller you should be confident enough with the way you will do it's accounting. Staying on top of your accounting record means that you are less likely to miss your accounting and tax deadlines and therefore less likely to incur any penalties.
If you have an amazon seller account, amazon will prepare the summary of your income and expenses, you need to get used to all the terms so you can calculate the profits accurately and also understand how you are doing in your business.
To make your annual accounts and calculate your profits you can do your amazon accounting on the excel sheets or you can choose an accounting software as well.
If you chose to do the accounting yourself or you chose to hire an accountant in either case you should know exactly how your profits will be calculated.
The key to accounting is understanding and recording the following:
- The money coming in
- The money going out
Make sure you keep the evidence for all your expenses as well as the income from the sales.
The money coming in:
The money coming in is the income from the sale proceeds. When selling on amazon through FBA you might have income in different currencies. Although you can get a summary of the incomes from different countries separately you will have to combine all the incomes to calculate your taxable profits.
The money going out- Your costs:
The money going out will include the startup costs which will be one off costs and also the ongoing costs,
Startup costs will include the costs of samples, photography and everything else elated to the launch of your product.
Ongoing costs: product cost, shipping, fba fees
Choose an accounting software
It is important that you choose the right accounting software for all the book keeping of your Amazon business. There are certain accounting softwares which will allow you to download the summary of your sales and expenses in your excel sheets. This is going to save you a lot of your time and this minimizes the chances of error as well. On the other hand you can make your own template to record the data, make your accounts and calculate profits by simply downloading the sales and expenses data from amazon.
How to Download the reports :
Look at the following steps which will help you download your annual sales report
You just have to
- sign in to the Amazon seller central
- Go to reports
- Click onto payments
- Select Date range reports
- Click onto generate reports
- Select summary
- Select the range this can be monthly or annually
- You can click onto generate report and it will be downloaded for you in the PDF form
The report will show the summary of your income and your expenses which will also include your Amazon fees, shipping costs etc
There will be a transfers section which will show how much money Amazon transferred to you annually or monthly depending on what period the summary is for.
You can extract your income and calculate the net sales value by subtracting the reimbursements , expenses , operating expenses which includes amazon referral fees, put them in your template and calculate your taxable profits.
If you want to consult an accountant for your ecommerce business contact Taxaccolega e commerce accountants and our team of accountants will be happy to help you.