Hiring an accountant for your Amazon business can be expensive. And if you’re a startup or small business selling through the Amazon marketplace, doing it yourself can seem like a smart way to save money.
But as you grow, your accounts get more complicated. You may need to switch from cash accounting to accrual accounting, and you’ll probably find it harder and harder to handle the information coming in from Amazon – their settlement data is notoriously difficult to reconcile. You might feel that you’re coping, but that doesn’t necessarily mean you won’t benefit from some professional help.
Marilyn Parham, who founded e-commerce accounting firm The Bottom Line, explains:
“What we’ve seen with some of our clients is that they start out and set up their business in a way they think is correct – but the reality is, they’d be better off another way. That delays things and complicates things.”
Scott Scharf, CEO of Catching Clouds – another specialist e-commerce accounting firm – says:
“You need to hire an accountant when you’ve grown up and you’re really a business – when you reach the point when you need accuracy. You need to know every day how your business is doing, look at it and think about what’s going on. It’s not just doing taxes at the end of the year, it’s so you can make decisions.”
Here’s how to tell whether you need specialist Amazon accounting support:
As your business grows, your accounting naturally becomes harder to manage. If you are struggling to reconcile your income from Amazon with your settlement statements, and frequently feeling like you’re getting it wrong, it’s probably time to get some help.
Taking your time
Similarly, if your DIY accounting is taking up huge chunks of your time, hiring an accountant is probably worth your while. Hours or days spent on the books could be better spent elsewhere, while an expert does the tricky parts.
Marilyn Parham puts it like this: “We always say the best work is done when the books are done. They used to take 80% of your time, it should take 20% of it, which gives you more time to be strategic and talk about things like profitability, saving on taxes, growing your inventory.”
Multiple Amazon marketplaces
Selling in multiple international markets is another reason to use an accountant. If you’re using Amazon to sell in your own country only, things may be simple enough to do yourself. But as soon as you step into other markets, taxes, fees, and currency exchange become very complex, which means you may need help sorting out your compliance and making everything square.
Figuring out Amazon FBA
Fulfillment by Amazon (FBA) is a great program for smaller businesses. This service lets you store your products in Amazon’s fulfillment centers prior to delivery.
However, using FBA in the USA means you likely need to register and submit tax returns in up to 22 states, on top of federal tax filings. These rules apply to any merchants selling in the US with FBA – not just US-based businesses. Similarly, in Canada, Japan and Europe there are value-added tax (VAT) implications when using Amazon FBA.
For a DIY seller, this creates an almost impossible level of complexity – this is when you definitely need to enlist the help of a professional.
Choosing the right support
Once you’ve decided to seek support with your accounting, the next step is choosing the right person. Unfortunately, it’s not as simple as Googling local accountants. Many traditional accountants don’t have much knowledge about the complexities of e-commerce, let alone the specifics of Amazon marketplace selling, and may not be up to date with the latest online accounting software.
A specialist e-commerce accountant, on the other hand, will be able to point you towards the best accounting software for your business – for example, many accountants in the e-commerce space are using a combination of Xero and A2X to make things easier for their Amazon merchant clients. A good accountant can also be a financial mentor for your business, offering broader advice and support as you grow.
“There’s no reason to wait – getting an accountant immediately will help you grow stronger. We say, start the conversation sooner rather than later – if you wait, a lot of time you’re being reactive and trying to grow. Tapping the financial mentor early is crucial.”
Marilyn Parham, The Bottom Line