How to Track Your Income and Expenses as an Amazon Seller?
Are you an Amazon seller looking to stay on top of your finances? Tracking your income and expenses is crucial for running a successful business. In this easy-to-follow guide, we’ll walk you through the steps to help you keep a clear record of your Amazon earnings and spending.
Step 1: Open a Separate Business Bank Account
Before diving into tracking your income and expenses, it’s essential to separate your personal and business finances. Open a dedicated business bank account. This will make it easier to monitor your Amazon-related transactions.
Step 2: Set Up an Accounting System
You don’t have to be a financial expert to handle your Amazon seller finances well. You can use accounting software like QuickBooks or Xero, or simple spreadsheets in Microsoft Excel or Google Sheets. These tools help you keep your financial information organized.
But it’s also a smart idea to think about getting help from a professional. A financial expert can make your life easier. They can guide you, make sure you follow tax rules, and give you good advice to make your Amazon business even better. So, hiring a professional business bookkeeping service for your business is a good idea!
Step 3: Categorize Your Income
When you sell products on Amazon, you’ll receive payments for your sales. Ensure that you categorize these payments accurately. Your income includes not only the product sale prices but also other sources like shipping fees, gift wrap charges, and sales tax collected.
Also check out our new blog — How Do You Simplify Amazon Seller Accounting?
Step 4: Record Your Expenses
Amazon sellers incur various expenses, including:
Product Costs: The price you pay to acquire the products you sell.
Amazon Fees: These can include referral fees, subscription fees (if you have a Pro Seller account), and FBA (Fulfillment by Amazon) fees.
Shipping Costs: Expenses related to sending your products to Amazon’s fulfillment centers.
Advertising Expenses: If you run Amazon PPC (Pay-Per-Click) campaigns, track your advertising costs.
Office Supplies: Costs for packaging materials, labels, and any other supplies needed for your business.
Be diligent about recording all your expenses. This will help you understand your cost structure and profitability.
Step 5: Keep Receipts and Invoices
Save all receipts, invoices, and transaction records related to your Amazon business. This documentation is vital for tax purposes and may be required in case of audits.
Step 6: Monitor Your Cash Flow
Cash flow management is crucial for any business. Ensure that you have enough funds to cover your expenses, purchase inventory, and handle unexpected costs. Keep an eye on your bank balance and projected income and expenses.
Step 7: Reconcile Your Accounts Regularly
Reconciliation is the process of matching your recorded transactions with your bank statements. It helps you spot errors and discrepancies. Many accounting software solutions make reconciliation easy.
Step 8: Calculate Your Profit
Regularly calculate your profit by subtracting your total expenses from your total income. This will give you a clear picture of how your Amazon business is performing.
Step 9: Prepare for Taxes
Amazon sellers are responsible for paying taxes on their earnings. Keep accurate records throughout the year to make tax season less stressful. Consult with a tax professional or use tax software to determine your tax liability.
Step 10: Review and Adjust
Periodically review your financial statements and analyze your business’s financial health. Use this information to make informed decisions and adjust your business strategies as needed.
Conclusion
Tracking your income and expenses as an Amazon seller may seem daunting at first, but with the right guidance, it becomes manageable. Remember, good financial management is essential for the long-term success of your Amazon business. By following these steps and staying organized, you’ll be well-equipped to make informed decisions and thrive as a seller on the world’s largest online marketplace.
