If you want to avoid confusion, come tax time, and ensure your online business is successful, you need to have an accounting system in place. Bookkeeping for Amazon sellers is a topic that most don’t talk about enough but believe me, it’s essential!
Why Bookkeeping for Amazon Sellers is Important
There are several reasons why Amazon sellers should make bookkeeping a priority, but it all comes down to business growth.
It becomes a lot easier to identify what needs to change to scale your Amazon business by tracking your financial activities. It’s one thing to know how much revenue you’ve generated but what was your profit?
Bookkeeping helps you understand how your expenses affect your bottom line, allowing you to make adjustments promptly.
With regular bookkeeping, you can create a clear financial overview of your business. We use cash flow forecasts and regular management account meetings to set the strategic direction every month!
Related: Do you need an Amazon mentor?
How Do You Do Bookkeeping on Amazon?
If you have the additional budget, you can hire a professional to assist you with your bookkeeping. This certainly frees up a lot of your time and eliminates unnecessary hassle. However, it’s not impossible to manage your bookkeeping yourself, especially because there are so many useful tools available.
We use software called Xero to manage all of our bookkeeping and accounting information for all three businesses.
Choosing to manage your Amazon bookkeeping yourself means you will need to generate three different reports every month.
- Income Statement. Also known as a profit and loss statement, your income statement summarizes all your revenue and expenses for a specific period. This way, you can keep an eye on expenses and identify trends.
- Balance Sheet. A balance sheet outlines all of your assets and liabilities.
- Cash Flow Forecast. Lastly, there’s a cash flow forecast, which can be used to model and plan best, moderate, and worst-case scenarios for your business.
I’ve mentioned Xero as an option, but there is another alternative I want to mention.
Is QuickBooks Good for Amazon?
QuickBooks is a brand that regularly springs to mind when business owners start searching for accounting software but Is QuickBooks good for Amazon sellers?
Many sellers say QuickBooks to be a good option for managing the finances of an Amazon business. It has powerful features, and the interface is easy to use. As mentioned earlier, we actually use another software solution, but more on that later.
The reason why a large percentage of Amazon sellers choose to use QuickBooks is that it handles international currencies, automates accounting processes, and tracks your store’s performance. You can even use QuickBooks to manage your inventory if you don’t already use a tool for that.
The only real downside of using QuickBooks is that it doesn’t integrate directly with Amazon – you need to use a third-party app for that. Two of the most popular apps include A2X for Amazon and Amazon Connex.
Overall, QuickBooks is definitely one of the more feature-rich options, and most say it’s worth the cost.
What is the Best Accounting Software for Amazon Sellers?
If you don’t think QuickBooks is the right fit for you, there are other bookkeeping services for amazon sellers.
If you don’t require any inventory management functionality and are just interested in accounting, Fetcher is an excellent alternative.
The cloud-based software connects directly to your Seller Central account, providing you with accurate, real-time data. This software solution is another tool that Jungle Scout owns!
The interface is ideal for new sellers with little to no bookkeeping experience. You can read my full review on Fetcher here.
This is the web-based platform that we use within all of our businesses. Xero helps you handle your billing, banking, and you can easily generate cash flow analysis spreadsheets. Again, if you don’t have much of an accounting background, you will find Xero easy to understand and navigate. Xero integrates directly with your Seller Central account.
FreshBooks was designed for small to medium-sized businesses, including Amazon sellers. This particular platform is well known for its impressive invoicing and business expense tracking functionality. Both beginner and advanced users will find it easy to use, and it’s affordable too, which is a bonus.
Do I Really Need Accounting Software for My Amazon Business?
You could easily take care of all your bookkeeping manually, but I only recommend this if you have the know-how and the time. We started doing it ourselves, and as things scaled up, we moved to outsource this to the experts.
Using accounting software makes it much easier to understand bookkeeping, and it takes a lot of the hassle out of the process.
I highly recommend you invest in some form of accounting software if you plan to scale your Amazon business.