Amazon fulfillment program is a hit among online sellers. Fulfillment by Amazon (FBA) offers a lot of benefits allowing sellers to enjoy a nice margin. What makes FBA different from other marketplaces is that items listed here are eligible for shipping promotions offered by Amazon. At best, Amazon’s fulfillment program can be described as a triple win for sellers.
- Higher margins and payouts,
- Less work, and
- Happier customers.
That is what makes the program incredibly popular. Introduction of FBA trumped competitive advantage held by large sellers. A new seller with small capital can make millions by selling goods on Amazon. The online platform allows sellers to earn revenues with little or no overhead. This results in above average profits for the sellers.
The popularity of FBA can be realized from the fact that almost 100,000 new sellers are added every day. That being said not everyone who opens a store on the Amazon marketplace tends to be successful. One of the main reasons that the sellers fail to make a mark is poor management of financial resources.
FBA sellers need to effectively monitor income and outlays. They need to keep an eye on the cash flow and other metrics that determine the health of the business. This is why the services of an Amazon FBA sellers’ accountant prove invaluable. You don’t need to go through the ordeal of crunching numbers to find your company’s financial health. Instead, you should leave the task to the accounting experts.
Here are some of the key ways you can benefit from hiring Amazon FBA sellers’ accountant.
Help with Taxation Related Matters
Amazon sellers are liable for collecting sales tax in the states having a nexus or a physical presence. A nexus is in the state where the products are stored or shipped by the Amazon Fulfillment Center. The nexus can be found out by looking at the Inventory Event Detail report. You need to register for a sales tax permit for the nexus and collect taxes from the customers.
The US taxation laws were primarily designed for physical or brick-and-mortar stores. They have not been modified to cater to e-commerce stores. That’s why there is a lot of confusion regarding online store tax laws. The foremost issue with online sales is that buyers and sellers are not located in the same state or even country. This creates difficulty in determining whether to collect taxes from the customers.
The problem is compounded by the fact that every state has separate rules regarding taxes. Some states charge taxes while others exempt sellers from paying them. Some states have provisions such as excluding third party fulfillment providers from the tax nexus. Others have different tax rates at county levels. This creates a lot of confusion in determining the right rate to charge the customers.
Another problem for Amazon sellers is that the inventory can be held anywhere. They don’t have any control over the location of the inventory. Some sellers can have products stored in 10 or 15 states.
An Amazon FBA sellers’ accountant will help simplify taxation matters. Taxes are often confusing. This is particularly the case with online stores. Not many sellers know the correct way to report online income. An Amazon FBA sellers’ accountant will prove indispensable in this case. The accountant will help you to decode taxation laws relating to online sales. With the help of the financial professional, you will be able to prepare accurate tax returns and file them before the deadline. In this way, you won’t likely be slapped with hefty fines from the IRS.
But that’s not all. An Amazon FBA sellers’ accountant will also help you save money through effective tax planning. The accountant will inform you about techniques that will allow you to fully avail tax breaks and credits. You will know about under-the-wrap secrets on how to benefit the most from the tax breaks and incentives offered by the IRS.
Serve as a Digital Financial Strategist
Today’s accountants are not just number crunchers. An experienced accountant can also serve as a financial strategist. You can get invaluable advice regarding charting financial path for your business. The Amazon FBA sellers’ accountant will provide you with estate planning, investment advice, and financial consultation. You can count on the financial professional to provide you with qualified financial advice that can help in achieving business financial goals.
Help in Keeping Personal and Business Expenses Separate
An Amazon FBA sellers’ accountant will make sure that your personal and business expenses are not commingled. This will help in determining income derived from the business. The accountant will also inform you about allocating expenses between personal and business use. For instance, if you use your cell phone and car for business purposes, an Amazon FBA sellers’ accountant will inform the right way to allocate the expenses. What’s more the accountant will tell you about evidence that you need to show to IRS to claim tax dedications.
Use of Automated Accounting Application
An Amazon FBA sellers’ accountant is experienced in using automated accounting software. The accountant will help you in making the transition to an accounting application that will greatly streamline financial management process. You will know about the best accounting application for maintaining your financial resources.
The accountant will recommend to you an accounting application based on the size of your business. Since most FBA sellers are small business owners, the best software that is recommended to them is QuickBooks. Intuit that owns QuickBooks has designed the software particularly to meet the needs of small business owners.
Using QuickBooks offer various advantages to online sellers. The accounting software can save time, cost, and effort in recording and organizing financial related data. You can manage inventory, customer accounts, bills, taxes, and much more using this accounting software. An FBA accountant will tell you about how to properly use the software to manage your financial affairs. The accountant will also tell you about the best third-party tools that you can use to extend the functionality of the software.
Save Time and Effort in Tracking Financial Obligations
Accountants can help save you time and money in tracking financial obligations. You won’t have to worry about missed payments when you hire the services of a professional accountant. There is no risk of paying hefty penalties for late payments. In this way, you will be able to maintain a good financial standing with your vendors and creditors. Reduced cost of financial obligations will allow you to allocate more money on growing and expanding your business that will bring your greater profits.
Between running the business, traveling, and dealing with unexpected situations, it’s difficult to keep track of all the bills. Often the unpaid bills tend to stack up without the knowledge of the business owner. In most cases, they also incur high fees for nonpayment of the financial obligations. This not only results in increased cost for the company but also damages the credit score. Keeping an experienced accountant in charge of your financial matters will ensure that timely payment of all bills. It will avoid the prospect of missed payments damaging your financial position and business reputation.
Improve Cash Flow
An Amazon FBA sellers’ accountant will help you to efficiently manage your precious financial resources. The accounting professional will provide you advice on how you can boost your business cash flow. You will know how to best allocate resources to operating, investing, and financing activities that result in optimum benefit for your business.
The accountant will review the cash flow report to find out ways to boost the cash flow. You will know what actions you can take to improve the company cash position. Some of the actions include making early payments to the vendors to avail discounts, diligently following up with the credit customers to make payments, and negotiating with the creditor to reduce fees associated with loans.
Improved cash flow will allow you to fulfill your financial obligations, reduce reliance on costly debts, and fund investing activities. This will keep our online business humming along without any problem. Good cash flow management will help keep the business finances in the green. This will help ensure that the company doesn’t face financial problems that can jeopardize the existence of the company.
Provide Advice on the Best Pricing Structure
An accountant can also help business owners to set the best pricing structure for the business. The qualified financial professional can inform how to calculate costs related to the business, and set an acceptable profit margin. You will also know how to make your operations cost efficient to set competitive pricing structure. The less the costs, the less price you can charge to the customers. With the online marketplace being stuffed with similar products, setting a minimum price can help in capturing market share and boosting your profits.
Avoid Tedious Aspects of Running a Business
Most people find crunching numbers to be a boring and tedious task. Not everyone is excited by the prospect of spending hours trying to determine total expenses, income, taxes, and business profit. With a professional accountant by your side, you won’t have to go through the boring aspect of your business. You should hand the task to someone who can perform the task well — and someone who is passionate about the work.
Obtain Expert Insight into Financial Position of the Company
Accountants can provide you a detailed insight about the financial position of the company. They will inform you about the financial health of the company using different financial ratios. The financial professionals will use metrics such as assets turnover, accounts receivable turnover, day sales outstanding, cash flow cycle, leverage, liquidity, inventory turnover, and much more to determine whether your company is operating in the green. The financial metrics will help uncover issues that if not addressed can result in deep financial problems
If the financial issues go undetected and unresolved they can turn out to be a big sinkhole through which the company will have trouble getting out. The insights of the accountant will ensure that you have enough funds in the account to meet all business obligations.
Leverage from Years of Accounting Education and Experience
Many online business owners don’t have a financial background. They do not know how to properly record and organize financial resources. Hiring an accounting professional allows business owners to leverage from accounting knowledge accumulated through years of education and experience. In this way, they can effectively manage their finances and operate in the green. This also allows business owners to focus on more important aspects of the business such as charting long-term success plan for the company.
Most often entrepreneurs get so engrossed in managing day-to-day activities that they don’t find time to pay attention to improving the product or services. They find it difficult to devote time to growing the business. Leaving the accounting task to the professionals allows business owners to make strategic financial, marketing, and other key aspects of the business.
Detailed and Objective Analysis of the Business
Accountants are removed from the business. They are in a better position to provide a more detailed objective analysis of the businesses. Their financial insights will help you to take a step back and get a bigger picture regarding business opportunities and threats. You will know what actions you can take to ensure that your business continues to remain afloat without any problem.
Offer Advice on How to pack up your Business
If later down the road, you decide that you need to close the business, the accountant will provide you advice on the best way to proceed. Their input will prove invaluable in handling issues during the tense moment of closing down the business. This kind of information especially proves helpful in case it is your first foray into business ownership.
Get Industry Insights
By hiring a professional and experienced accountant, you will not only gain financial insights about your own company but other companies engaged in similar activities as yours. Experienced accountants get to know with a number of large and small companies. You will be able to know how the financial performance of your company matches with the industry standards. This information will prove invaluable in improving the internal business process.
Create a Work-Life Balance
By delegating the tasks of accounting for Amazon sales, business owners will be able to create a work-life balance. They will be able to dedicate time equally between the business and the loved ones. Even if you do not have a family, you will get to enjoy more quality time doing things that you love. This is only possible through creating a work-life balance.
Find Growth and Profitability Opportunities
Another important benefit of hiring an accountant to look over the financial aspects of the Amazon store is that you will be able to detect growth and profitability opportunities. The accountant will analyze the company’s financial data and point out opportunities that you may be missing out. In this way, you will be able to better steer your business towards profitability and growth.
Final Remarks about Amazon FBA Sellers Accountant
Hiring an accountant for your Amazon online is a smart move. You should consider hiring an accountant even before you have set up a business. The accountant will provide valuable insights about cost and profitability about different types of businesses. The financial professionals have experience of working in different types of industries. They can offer qualified advice regarding the best business that you can set up on Amazon.
Even if you have been running your business for years, you can benefit from hiring an accountant. You will receive valuable insight regarding your business. The information can be used to greatly improve the financial health of the business. The professional accountant will guide your valuable advice to streamline the accounting function. You will also know about the opportunities to cut costs and improve the profitability of the company.
The accountant will provide taxation related advice. You will be able to decipher the tax laws that relate to Amazon sellers. If you are a foreign resident who sells goods on Amazon, you will know how to apply for a tax number to sell on the online marketplace. Every online seller who wants to sell goods on third-party sites such as Amazon will have to apply for a tax number. The accountant will guide you about the tax number you should apply, and the procedure for applying for the same.
Keep in mind that not all accountants are experienced and expert at Amazon FBA accounting. Before hiring you should make sure that the accountant has the expertise in handling financial related matters of online businesses. This will ensure that you get the best-qualified accounting advice relating to the online store.