Amazon FBA, or Fulfilled by Amazon is a great way to run a business on Amazon. With any business though, you need to be able to keep track of the money you invest, the turnover you take and the profits you make. Accountancy is an important part of the business world and booking for your Amazon business is integral. But how do you do it? How do you implement bookkeeping for a business like this? Let's take a look at how best to do bookkeeping for Amazon FBA.
Why Sell On Amazon With FBA?
We should probably clarify exactly what Fulfilled by Amazon is. FBA is a solution, run by Amazon, that helps you reach more of their customers through benefits such as Prime delivery. You choose the products you want to sell on Amazon, send them to Amazon. They then take care of the storage. The delivery to the customers too. As well as potential returns and the customer service side of things. One of the huge benefits is being able to sell items quickly through one of the largest fulfilment networks in the entire world. Think about how many people visit the website and shop via Amazon every day.
The costs of the FBA platform are all set out in simple black and white for you to understand. It's a pay-per-use service and there are no minimum inventory requirements. Your first transport of products to Amazon's fulfilment centres are free of charge. Combine this with no fixed subscription and it's a great way to see if FBA will work for you. FBA fees can be a little as £0.61, meaning you can have the hassle taken away from organising parcels, whilst earning a great income.
With all of that said, you need to be able to keep track of what you're paying out to run your business, such as buying your products and paying those fees. You also need to know how much cash you're making with every sale. Over 100,000 new Amazon businesses start every year but not all of those survive. This is in part due to poor accounting. There are a couple of ways of doing your bookkeeping for Amazon FBA.
The DIY Bookkeeping Version
With every business, managing your important financial statistics such as expenses, cash flow and income is so important to staying afloat. You can do some basic and DIY bookkeeping which will help you know your payroll from your inventory. There is nothing stopping you from doing your bookkeeping for Amazon FBA yourself. One of the key tips is to stay on top of your numbers so you are doing it in a little and often way. If you end up putting it off, you'll find yourself with extra stress and struggling to figure out what is what.
You need to know the difference between your accounts receivable and accounts payable. Receivable is a summary of the money due from customers. This helps you to see a steady income flowing into the business which in turn let's you plan and prepare. Your accounts payable is the money that you owe to suppliers for products and other areas of the business. Bills need paying and whilst it's disheartening to see money going out from the business, it pays to keep on top of this as you might even get discounts for paying early!
Your inventory is the backbone of your business. If you have no products, you have no products to sell. Knowing how many of all your items are in stock helps you prepare for different times of the year when you perhaps your products are in higher demand. Being able to see trends of when items sell through a typical calendar year will also help you plan for the future.
Alongside this, your sales figures need to be looked at regularly to see how much money you're actually making. If you have employees working for you, you'll need a payroll. This will need to be kept up to date so you can actually pay your workers. You might also owe money for a start up loan or if there are more than one of you running the business, you need to understand the owner’s equity. This is a record of what everyone put into the business. Investors might want to reclaim their money without a certain number of months so these numbers are important to understand too. Then there's the fees you'll be paying Amazon.
Lots of this is basic bookkeeping but many of us struggle with this side of business. So even if you are typically good with numbers, keeping on top of your bookkeeping for Amazon FBA might be tricky. There's an easier and less time consuming way!
Get A Little Bit Of Help With Your Accounts
Getting a little bit of help with your bookkeeping for Amazon FBA is ideal. Implementing an automated system will help you be able to see reports quicker and easier and have the correct figures in front of your straight away should you need hem. Less time, less faffing about, less stress! An automated solution such as Xero or Quickbooks will gather, analyse and manage your data for you. A third party automated tool like this will help you stay on top of everything.
This means your time is freed up to concentrate on other areas of the business. Perhaps actually enjoy a weekend off now and again! You'll be assured of accuracy and speed and that helping hand to understand the monetary side of the business. In a couple of clicks you'll be able to see the status of the business and how it's actually performing. Automation is your best friend when doing bookkeeping for Amazon FBA businesses.
Go, Go, Go
So what are you waiting for? Find the automated solution that works for you. You'll be able to grow your FBA business, taking it from strength to strength. You should still keep an eye on your business finances though. This way you'll learn about the money side of the business and be able to figure out what is working and where you should invest. Good luck.