07 Oct What You Need to Know About Fulfillment By Amazon
Using Amazon’s fulfillment service to fill, pack, and ship your orders can be a solid idea. It can streamline your business operations, getting more products to more customers. It also requires you to be on top of your game regarding inventory and accounting. Here is what you need to know about fulfillment by Amazon.
Keep Your Accounting Records Up-To-Date
Fulfillment by Amazon (also known as FBA) acts as an in-house warehousing and distribution service provider for third party Amazon sellers. It boosts your orders placed, and streamline their delivery. The more orders that are being filled using FBA require a bit more in-depth, and up-to-date accounting records.
Make sure that you are using an accounting software that you can trust. QuickBooks is the preferred service amongst most Amazon sellers. You can connect your business accounts to your QuickBooks account. From there you can set automation rules that will tell QuickBooks which recurring transactions are income, and which are expenses. This will allow QuickBooks to do the brunt of transaction accounting for you. Every time an order is placed, and every time Amazon fulfills an order, QuickBooks will record both a credit and a debit transaction. Make sure to keep close tabs on your QuickBooks account to make sure all transactions are showing up, and being properly sorted.
Reconcile Financial Charges
You will want to reconcile any charges and pending transactions each month with your bank, credit card companies, PayPal and Amazon. This is one the most important bookkeeping tasks you can do. Do your best to keep all financial records in monthly order. This means shoring up any outstanding or pending transactions before heading into the next month.
Categorize and Track all Tax Deductions
Find out from your accountant everything that is tax deductible for your Amazon business. Keep track of these purchases and expenses, including the amount spent, and organize receipts for each transaction. This will make it easier for your accountant come tax time.
It is absolutely critical that you record all income as 1099K income. You do not want your tax return to shower a lower income than your 1099K. This will spark unwanted questions, and possibly even an Audit from the IRS.
Minimize Bank Accounts
It is best to keep all revenue and expenses for your Amazon business flowing in and out of just one checking account. This includes revenue made from Amazon orders, payroll expenses, overhead like rent and internet, business software like QuickBooks, and all fees paid for FBA.
If you have a business credit card, then pay it off monthly using your one business checking account.
Update Inventory Monthly
It is important that you know exactly how much inventory you have on hand, how much on order, and how much has been sold. This is the second most important record keeping. Second only to your financial records. If you think that you have more inventory than you do, then you run the risk of orders not being fulfilled by Amazon. This will hurt your business, and you could lose potential customers.
Schedule a consultation with Empire Tax
Get a bookkeeping quote from Empire Tax Professionals today. Our knowledgeable staff of financial experts can ensure that your Amazon business is set up for success. We are licensed in all 50 states and we offer both tax and bookkeeping services.