Master Amazon Expense Tracking | Taxomate Bookkeeping Guide

As an Amazon seller, managing your expenses is an essential part of running a successful business. Keeping track of every dollar you spend and earn can help you make better financial decisions, adjust your pricing models, and maximize your profits. In this blog post, we'll walk through some valuable tips to monitor your finances more effectively. So let's get started!

Understand the Fees Associated With Selling on Amazon

First things first, you need to understand the fees associated with using this platform. These fees vary based on the item being sold, its category, and the type of selling account.

For individual sellers, Amazon charges a per-item fee of $0.99 for each transaction made. For professional sellers, there is a monthly subscription charge of $39.99. Additionally, Amazon charges a referral fee for each item sold, which is a percentage of the item's sale price. Most referral fees are usually between 8% and 15%.

Another important fee to consider is the fulfillment fee. This fee is charged for using Amazon's Fulfillment by Amazon (FBA) service, which allows you to store your products in their centers and have Amazon handle the shipping and customer service. This fee varies based on the size and weight of the item, as well as the time it spends in storage.

If you're considering using the FBA platform, there are a few Amazon FBA accounting tips that can help you keep track of these fees. First, keep detailed records of all expenses related to your Amazon business, including listing, referral, and fulfillment fees. You may also want to consider using accounting software specifically designed for Amazon sellers to help you keep track of everything.

Another tip is to monitor your inventory levels to avoid incurring unnecessary fees for storing products in Amazon's warehouses for too long. You can use Amazon's inventory management tools to help you monitor this. This way, you will ensure your business is profitable and successful on the platform.

Set Up a Budget to Determine How Much You're Willing to Spend on Various Costs

Setting up your budget will allow you to decide how much money you'll need to make for your business to be profitable. Here are some steps to help you:

1. First, determine your overall income. You need to know how much money you're earning to create a budget. Look at your sales reports on Amazon and calculate your average monthly payment.
   
2. List all your expenses, including Amazon fees, shipping, inventory, and other business-related costs.
   
3. Group your expenses into categories, such as fixed and variable expenses, and prioritize them based on their importance.
   
4. Assign a limit to each category based on your income and prioritize them according to their importance. This will help you stay within your budget and avoid overspending.
   
5. Review your budget regularly to ensure that you're on track and adjust it accordingly based on your changing needs and income.

By following these simple steps, you can better control your finances and make informed decisions. So, take the time to do it right – it could make a big difference for your business in the long run.

Create an Excel Spreadsheet to Track All Your Expenses

The good news is that creating an Excel spreadsheet to track all your expenses is simple.

To get started:

1. Open Excel and create a new spreadsheet.
   
2. In the first row, create column headings for each expense category like "Amazon Fees," "Cost of Goods," "Shipping," and "Marketing."
   
3. Under each category, list each expense you've incurred during a specific time period.

It's important to be organized with your expenses, so include the date, amount, and a brief description of each expense. This will help you easily identify what each cost was for later on.

To keep track of your expenses in real time, you can also link your Amazon account to your spreadsheet. This automatically updates your spreadsheet with new fees or sales, saving you time and ensuring accuracy.

Keep Detailed Records of All Your Sales and Income

To start, record all your sales and income in a spreadsheet or financial software program. Include information like the date of the sale, the product sold, the price, and any associated fees.

Why is this so important? For one, detailed records help you keep track of your profitability and cash flow. You'll see which products sell well and where your money comes from. This information can help you make informed business decisions about what to sell, how to price your products, and how to allocate your resources.

Another important reason to keep detailed records is tax compliance. As a business owner, you're required to report your income and expenses accurately on your tax return. By keeping detailed records throughout the year, you can easily and accurately prepare your taxes come tax season. Plus, if you're ever audited, you'll have the documentation to back up your business expenses and income.

Remember, organizing and keeping detailed records may seem time-consuming, but it's an essential part of running a successful business on Amazon. By doing so, you'll stay compliant with tax laws and avoid any potential headaches down the line.

Use Accounting Software to Automate Financial Tasks

With the help of accounting software, you can automate your financial tasks, such as invoicing, bookkeeping, and payment processing. This means less manual work and more time to focus on growing your business.

Many great accounting software options are available today, from free to paid versions with different functionalities, features, and pricing plans. Some popular options are Zoho Books, Xero, and FreshBooks.

Zoho Books has a wide range of features supporting accounting and financial management. This includes automated bank feeds, invoicing, expense tracking, inventory management, etc. The software's reporting capabilities also provide accurate, real-time insights into your business's financial health, allowing for better decision-making.

Xero is cloud-based, making it accessible from anywhere, and offers features such as bank reconciliation, project management, and expense claims. FreshBooks is known for its invoicing features and time tracking, making it an ideal choice for freelancers and small business owners.

Overall, using accounting software can save you time and help you make better business decisions. So, research the options available to you and choose the one that fits your needs best.

Utilize Amazon's Reporting Tools

Amazon offers a range of reporting tools to help you keep track of your expenses. Here's what they are and how to utilize them effectively.

First up is the Sales and Traffic Business Report. This report gives you a detailed breakdown of your sales figures, including the number of orders, items sold, and revenue generated. You can also see how many visitors your listings are receiving and your conversion rates.

The Business Reports section includes a range of useful tools. An Amazon ASIN (Amazon Standard Identification Number) shows you the sales figures for each product you sell. At the same time, the Buy Box Percentage report gives insights into how often you win the buy box – and if not, who is. You can also use the Referral Fee Preview report to calculate your expected referral fees for each item you sell.

Another highly valuable tool is the Fulfillment by Amazon (FBA) Revenue Calculator. If you use FBA, this tool allows you to estimate your profit margin, considering the cost of goods sold and fees charged by Amazon.

In short, Amazon's reporting tools can be a game-changer for any business owner selling on the platform. Using them effectively lets you gain valuable insights into your sales figures and further optimize your ad strategy.

We hope you now understand better how to keep track of your expenses as an Amazon seller. With careful planning and attention to detail, you will surely take your Amazon business to the next level. We wish you the best of luck!