It seems as if not a single day goes by without the financial news media issuing new reports on e-commerce giant Amazon, a company that seems to grow by leaps and bounds constantly. When you look at the annual net revenue data of Amazon since the year 2004, the numbers can be put on a line chart with a slope that has been dramatically rising over the last few years. In 2019, more than 150 million shoppers used the Amazon mobile app to browse for products, make purchases, and check on the status of their orders, which are very likely to have originated on the Amazon Third-Party Marketplace (3P). For an Amazon seller, your accounting can get very complicated. We will explore how an outsourced Amazon accountant can stabilize your business.
The Benefits of Working with an Amazon Accountant
As of 2021, third-party sellers accounted for 56% of the vast Amazon online shopping catalog. E-commerce analysts believe that the 3P Amazon marketplace stands to carve a 60% share of the company’s business over the next few years. The business opportunities of the 3P marketplace are too enticing to ignore; even though competition can be fierce on this platform, quite a few resellers, product manufacturers, brands, inventors, and liquidators have managed to make their 3P experiences very profitable.
There are various ways to participate in Amazon 3P; one of the most popular among third-party merchants is Fulfillment by Amazon (FBA). It essentially involves sending products to fulfillment centers managed by the e-commerce giant. Taking advantage of FBA stores means relying on one of the world’s most advanced and dependable logistics networks. Once your logistics are taken care of, you will have more time to focus on other operational aspects that can set your FBA store apart from competitors. Some of these involve talking about search engine optimization, customer service, marketing, and accounting.
With the right Amazon accounting services and Amazon accountant in place, you will have a clear picture of how your e-commerce venture is progressing, and this will give you greater confidence when you need to make strategic decisions. You have to know your numbers to understand how your business is running; this knowledge can let you spot trends that can be capitalized on, and you may also be able to identify growth opportunities.
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The Basics of Amazon Accounting Services
As with any other retail operation, FBA stores run on a series of cash inflows and outflows. At the very least, you want to achieve some balance between the two, but you will always find yourself searching for opportunities to maximize your inflows. Tracking the flow of cash through your FBA store can be accomplished using bookkeeping, which can encompass the following:
- Cash-based accounting
- Accrual accounting
- Accounts payable
- Accounts receivable
Multi-State Operators are Especially Vulnerable to Tax Penalties
Suppose your FBA store carries a single product sold in a single jurisdiction. In that case, you may only need to retain an accountant experienced in Amazon to set up an automated bookkeeping method to take care of cash-based accounting and taxation. Once you start expanding with multiple products sold across various jurisdictions, an Amazon accountant will help you stay compliant with the various sales and value-added taxes assessed in the areas where your products are being purchased. Tax compliance is a crucial aspect of expansion; if you fail to file and remit taxes, you will not be allowed to operate in some markets.
Learn More About Amazon Accounting Services
Retaining the services of an Amazon accountant can make a significant difference in terms of operating a successful FBA store. When you start racking up Amazon sales, the last thing you want to do is neglect your bookkeeping, tax planning, or financial management. Your ability to generate sales forecasts will largely depend on how your accounting is done. When you are ready to take your Amazon reselling business to the next level, Fusion CPA will be here to help you. Contact our office today to learn more about all the professional services we offer.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.