Accounting Best Practices for the Amazon Seller

Accounting Best Practices for the Amazon Seller

Agenda Business Fundamentals Accounting Goals, Issues, Responsibilities Accounting Process Best Practices Q&A

Business & Accounting Fundamentals The basics

Accounting Goals Able to make decisions based on accurate financials Manage cash flow effectively Secure funding Review Financials Monthly Knowing if you are profitable Trusting your financials Share with partners, investors (spouses) Quarterly Tax Planning Annual Tax Returns

You have accurate books, now what? Here are the questions that you should ask of your books and business monthly. Financial Review expenses reduce any expenses that aren t aligned with your goals Business Profitability Where are you profitable, why? Cash Flow How much do you have, for how long? What are your priorities for spending any available cash? Ecommerce What are your most profitable channels? Most/least profitable products drop the least profitable, focus on higher margin/velocity products

Accounting Issues Reconciling all accounts monthly Posting net income as gross income Leaving off credit cards and merchant accounts Commingling business & personal expenses Everything isn t a valid business expense* Not recording Amazon or Merchant fees No inventory on the balance sheet Not following the accrual rules No Sales Tax on the Balance Sheet

Ecommerce Cloud Accounting Example Cloud Inventory Sales Tax

Accounting Options Xero vs. QBO vs. QBD/QBE NetSuite vs. Oracle / SAP Other BrightPearl, Spreadsheets

Cloud Inventory / ERP vs. Cloud Accounting Core product for any multi-channel seller Purchase Orders Cost Management Inventory Management All Orders Analytics

Accounting Process

Accounting Process Expenses Income Bills / Purchase Orders COGS Inventory Sales Tax Filing / Document Management Payroll

Fundamentals Automation / Bank Feeds Clearing Accounts Merchant Accounts Expenses Store / Attach documents Timing Daily Weekly Monthly Quarterly Annually

Income Ecommerce businesses are about generating income (and hopefully profit)

Income Post useful financial information Posting individual transactions vs. summary data All channels Amazon Shopping Cart Point of Sale Manual / Direct Sales Post income per channel using Tracking/Classes

Posting Amazon Income Amazon Settlement Statements Amazon Fees www.a2xaccounting.com Timing When Amazon closes the settlement statements, transfers funds Amazon.com, Amazon.ca, Amazon.co.uk Multi-Currency International Payment Services WorldFirst, Payoneer, OFX, etc.

Purchase Orders, Costs, Cost of Goods Sold & Inventory Inventory Another form of cash What is COGS anyway?

Purchase Orders Purchase Orders are critical Every purchase Track the PO status, receive status, payment status, and invoice status

Costs Costs are critical Stored in a cloud inventory / ERP solution Costs Buy vs. landed vs. loaded Landed Buy + Customs + Shipping + Pick/Pack Loaded Landed + Economic Unit (all expenses/orders) + marketing Timing Challenges

Inventory Inventory is important items = Cash Capture the inventory quantities per sku per warehouse at midnight on the last day of the month Calculate the cost of the inventory sku*qty*(trusted cost) What is your FBA inventory? How do you get an accurate count? www.a2xaccounting.com, www.inventorylab.com Do NOT trust your cloud inventory platform (unless validated recently)

Cost of Goods Sold (COGS) Cost of Goods Sold is a key to knowing if you are profitable What is in COGS Purchases for Resale / COGS sku*qty*costs for the units sold Merchant Fees Inbound Shipping Post COGS per channel

Sales Tax Do you have Nexus in Texas?

Sales Tax Management Critical for ecommerce businesses Amazon FBA businesses can have Nexus in 20+ states Integrates with your online channels (Amazon.com, Shopify, etc.) Collects all the data Filing - Automatic or manual filing

Sales Tax Tips Risk Management Decision Know where you have Nexus and when established www.wherestock.com historical Amazon FBA nexus established date Register, collect, file, & PAY Import data - beginning of the month Big mistakes Not configuring tax collection properly - all channels Not reporting all taxes collected & paying

Accounting Tools www.xero.com www.a2xaccounting.com www.wherestock.com www.hubdoc.com Document Management www.gusto.com Payroll www.tsheets.com Time Tracking www.pandadoc.com Electronic signatures, contracts www.futrli.com (and other financial dashboards)

Best Practices Accounting Group Email Accounting@company.com, po/ap/ar/invoicing/acct aliases Route all accounting emails, bills, invoices, expenses to one place Copy / forward all info to the right parties Keep a copy of every accounting related email Password Vault LastPass, etc. Unique passwords for every login Share passwords / sites when sub-logins aren t an option Save a copy of every business document, be organized Keep track of all business deadlines Annual filings, Domains, Quarterly Tax, Insurance Renewals, Sales Tax filing, etc.

Q&A

Links A2X http://www.catchingclouds.net/blog/2016/11/26/useful-tools-a2x http://blog.a2xaccounting.com/a2x-setup-and-mapping-a-real-world-guidefrom-catching-clouds/ www.ecommercefuel.com www.catchingclouds.net/blog/