CPA Solutions for Amazon Sellers

Outside view of an Amazon pick up and return center.

When it comes to sheer exposure for your business, it’s hard to beat Amazon. If you’ve been using an Amazon FBA (Fulfilled by Amazon) account, then you might already be familiar with the administrative fees associated with warehousing, packing, shipping, and customer service. But there’s another need you’ll have to consider: accounting and bookkeeping.

Every business can benefit from the services of a Certified Public Accountant (CPA). But Amazon sellers can especially benefit from online CPA services that specialize in the world of eCommerce. 

In this article, we’ll cover the benefits and considerations of partnering with an online CPA when your business is conducted through Amazon.

Why Having an Experienced eCommerce Accountant is Important

Even though online businesses have become quite common, eCommerce bookkeeping remains a niche area for financial professionals. This is partly due to the specialized considerations that go into accounting for online sales.

Finding the right CPA for Amazon sellers means finding an accountant that is intimately familiar with the needs of online merchants.

When you partner with an online accounting firm, you’ll gain access to an array of financial professionals. What kinds of benefits can you hope to gain from these partnerships?

They Understand the Industry

Amazon sellers have unique considerations compared to their brick-and-mortar-based counterparts. It’s likely that your business is located in one state but has buyers in another state or even overseas. It’s also possible that your inventory is stored in another location altogether, if not distributed across a network of warehouses across the country.

These unique circumstances require tailored accounting strategies. With the right CPA for Amazon sellers, you can navigate issues such as:

  • Inventory management
  • Amazon’s fees
  • Returns
  • Data analytics and reporting

eCommerce accountants may be able to provide advice tailored not only to Amazon’s framework but also to the unique needs of your business.

They Understand the Technology

Online merchants rely on software and mobile apps to manage their inventory, handle transactions, and manage cash flow. An accountant who specializes in eCommerce will be familiar with these tools and technologies and can provide financial guidance that takes these features into consideration.

In fact, partnering with a CPA for Amazon sellers can often streamline the entire process of online sales. A knowledgeable accountant can point out areas in which automation can save you time, while also providing insight into how to manage your data and hone your business strategy.

This can also be helpful as technology shifts and changes. Modern accounting firms can help you to adopt new systems to improve your business, all while maintaining high standards of privacy and data security.

They Understand Tax Code

One of the greatest challenges facing Amazon sellers is sales tax. While Amazon’s digital infrastructure can assist you in calculating sales tax, there are some special considerations that may apply to your business. 

For example, if you use Amazon’s warehouses to ship goods, you may be required to pay Amazon sales tax in the states in which those warehouses are located. However, these regulations vary by state, which is why it’s important to understand local laws when you seek out accounting for Amazon businesses.

Partnering with a specialized CPA for Amazon sellers can ensure that you navigate these financial complexities without finding yourself in violation of federal or state tax regulations. 

The most experienced online accountants will understand the rules and regulations that impact Amazon sellers, so they can help you remit sales tax appropriately and remain in full compliance with the law.

Staying up-to-date with your books can also ensure you have enough money in your account when it’s time to file your annual business tax return. Online accountants can help you catch up on your books when you fall behind and come alongside you to ensure that you always have an accurate picture of your company’s cash flow.

They Can Help You Grow Your Business

An experienced CPA for Amazon sellers can help you grow your business. A financial professional can sift through the moving parts and pieces that make up your business and give you a comprehensive picture of your company’s financial health.

Amazon will provide some basic default reports, but these reports won’t dig into your financial data the way a trained accountant can. 

An online accountant can provide you with resources that include:

  • Cash flow statements
  • Profit/loss statements
  • Cash flow forecasts

The reports and analyses generated by an online accountant can be used to hone your business strategy so that you can effectively plan for the future.

They Can Save You Money

Perhaps most importantly, an accountant with experience in eCommerce can save you money. The services of an online accountant cost less than hiring a full-time staff member. These professionals can even add value to your company through the services they provide.

When you work with a CPA for Amazon sellers, you’ll likely discover ways that you can increase your overall efficiency. 

With more time to focus on the revenue-generating activities of your business, you’ll not only save money; you also just might find new ways of expanding your business!

Specific Considerations for Amazon Accounting

We’ve already touched on some of the features that make an Amazon FBA business unique. But being an Amazon seller will also mean you’ll need to consider a few unique factors when it comes to your accounting.

Choosing the Right Accounting Method

Modern businesses often rely on two types of accounting methods: cash-based accounting or accrual accounting. 

In cash-based accounting, transactions are documented once the transaction is complete and cash changes hands. 

In accrual accounting, revenue and expenses are recorded as they occur, which means that you’ll record these entries twice and reconcile these figures on a routine basis.

Which is the right method for your Amazon business? While cash-based accounting is simplest, many businesses find that accrual accounting works best as they grow. 

A trained CPA for Amazon sellers can help to evaluate your business and help you choose the right method for your company based on anticipated revenue and inventory.

Consolidated Deposits

One of the unique accounting features associated with Amazon sellers is the receipt of consolidated deposits. 

Amazon sellers receive payment in the form of a single deposit, which is made once every two weeks. As the name suggests, your consolidated deposit includes more than just sales. It will also reflect:

  • Chargebacks and returns
  • Administrative fees
  • Sales tax

 Having an experienced professional on your side can make quick work of sorting through this information, so you have a more precise record of your financial activities and a better grasp on your company’s cash flow.

Inventory Management

Managing your inventory can be a bit more challenging when it’s spread out through a series of Amazon-owned warehouses. And as your business expands, so do the challenges of maintaining your inventory. 

Amazon sellers find themselves faced with challenges and questions like:

  • How much inventory do I need?
  • When should I order additional inventory?
  • How long should I let excess inventory sit in the warehouse?
  • Should I eliminate excess inventory by offering a discount?
  • How do I account for shrinkage due to damage or loss?

Keeping your inventory organized into clear categories and recorded on an up-to-date balance sheet can help you make better decisions regarding your products. 

Working with a CPA for Amazon sellers can help you to integrate your inventory data into your financial reporting, which can help you better understand your overhead costs and profitability moving forward. 

If you decide that you need to restock particular items or otherwise increase your inventory, you may need a small business loan. Again, this is where an online accountant can be particularly useful, as they can help to prepare your financial records and determine the size of the loan your company can support.

Create Additional Revenue Streams

While Amazon is an industry giant, it’s never wise to put all of your eggs in one basket. What would become of your business if your Amazon account were to be frozen or suspended? Can you always rely on Amazon to prioritize your shipments? What if a competitor should emerge in the near future, knocking Amazon off its coveted eCommerce pedestal?

Tying your fortunes to the success of Amazon could ultimately limit your business and even bring it to a grinding halt if you’re not careful. 

An accountant can help you strategize new revenue streams so that you can continue conducting online business without relying exclusively on Amazon’s warehouses or digital infrastructure to support your business.

Naturally, juggling multiple revenue streams can make managing your finances all the more complex, which only underscores the need for assistance when it comes to eCommerce. 

An online CPA can help you make sense of the financial data so that you can effectively manage your income and expenses across multiple digital platforms.

Xendoo, Providing Prime Business Solutions

When you sign up for Xendoo, it’s like having a professional accountant delivered right to your door. You’ll gain access to our online bookkeeping features at a fraction of the cost of an in-house employee. 

A CPA for Amazon sellers can dramatically improve the way you do business online, helping your business to grow and scale over time. If you’re ready to take advantage of everything a CPA for Amazon-based businesses can do for you, sign up for a free trial today.

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