The Ultimate VAT Guide for Amazon Sellers in UK and Europe

Here is the clean transcript with the timestamps removed and the text formatting smoothed out for easier reading:

Chapter 1: By the Books: Step-by-step accounting guide for Amazon Sales & VAT with Xero and A2X

GEOFF: Thanks so much everyone for joining us for today's webinar: Step-by-step accounting guide for Amazon Sales and VAT with Xero and A2X. Big thank you to our expert hosts today, Oliver and Steve Blackmore from Elver E-Commerce, who are one of the UK's premier ecommerce accounting practices, as well as Elspeth Cordray who is the head of Customer Success in the UK, leading a team of eleven UK support team members. So from that point, I'm just going to pass the mic over to Steve who's going to talk a little bit about Elver E-Commerce and why they're so well suited to talk to today's topic, which is Amazon Sales and VAT Accounting. So Steve, over to you.

STEVE: Okay. Thank you, Geoff. We are the go-to financial partners for UK...

Chapter 2: Meet Elver E-Commerce Accountants

...e-commerce businesses. Each e-commerce business is unique as determined by its size, the owner's aspirations, the product it sells, the channels and territories it sells in, and we tailor our services to each client to meet its unique needs. Our expertise will help free you up to focus on innovating, selling and growing your business. We specialise in ecommerce because it is genuinely different to other types of businesses and faces a unique set of challenges in terms of its finances, whether that's the daily bookkeeping, routine tax compliance forecasting, or performance tracking. And our vision is for every ecommerce business in the UK to be armed with precise financials and insights empowering them to run successful growth orientated operations.

Chapter 3: Agenda

ELSPETH: Well, hi everyone. Thank you again for attending our Amazon and VAT Accounting webinar. We hope that you'll have some takeaways from this that will be really useful going forward. We're going to cover three areas and then we're going to have a question and answer session.

Our first area is why accurate Amazon and VAT Accounting is key to profitability as ecommerce sellers or accountants and bookkeepers who support ecommerce sellers. I think our main goal is always to have profitable, healthy businesses and having accurate financial information helps you to make good decisions going forward and also make sure that you're taking care of all your responsibilities in terms of VAT and other tax requirements.

The second area we're going to cover is how to accurately automate Amazon and VAT Accounting. We're going to give you a quick overview of some of what A2X can help you with in that area.

And then we're going to have a third section on what to consider when using Amazon plus A2X Accounting plus Xero. We've got some checklists that I hope you're going to find really useful for your month end processes and also some discussion on reporting. So using this financial information to have good insights to make good business decisions.

We're going to follow that up with a question and answer session. So, as Geoff already mentioned, if you have some questions already, please feel free to start putting them in chat. But at the end we'll open the floor and be able to talk to Steve and Oliver at some of the other questions that you may have as you go through the webinar. So, top level overview. As we spoke about profitability and healthy businesses, we do...

Chapter 4: Why does accurate Amazon accounting matter?

...know that unfortunately, 32% of ecommerce businesses fail because they run out of cash. We also know that 29% fail because of cost and pricing imbalances. That's a really big one for ecommerce and we're going to cover some of the ways that you can check and keep track of your cost accounting later on in this webinar. Another trend that's noticed is that many businesses fail because they do try to scale too quickly and all of these areas can be helped by having really accurate financial information.

Now, as we know, we're so excited to have Elver here today. Oliver and Steve are on the front line of supporting ecommerce businesses as they grow and to have accurate accounting information. And so I'm just going to give Steve the floor just now to share a couple of stories from their experiences so far.

STEVE: There's actually quite a few examples of how things have gone wrong and how things have gone very well for some of our existing clients. But of course, all the bad stuff happened before they were clients. Two in particular spring to mind. The common thing with all of these is they did actually engage with accountants, but of course they were not ecommerce specialists. And in two instances they had underrecorded sales and underreported their VAT liabilities to the extent of over 100,000 pounds. In one instance, this was discovered because the owner just happened to read something online and realised that the way it was being done was wrong, despite all the assurances he had to the contrary. In the other case, unfortunately, HMRC had initiated an inquiry, but we were able to step in and do all the calculations and smooth that whole process.

In another example, the issue wasn't a case of underrecording. Well, it was a case of underrecording. It wasn't a case of simply recording their net supplements as income. In this case, it was done manually. And Amazon changed the reports that they were using. And it took them about a year and a half to realise that their numbers were all wrong as a consequence, of using a report that they thought was based on different numbers.

On a more positive note, in fact, that very same client that I just mentioned, they were not getting any management accounts on a monthly basis. They're now getting those. And we've done additional analysis since and that has highlighted to them the fact that their Amazon sales, which is about 50% of their business, is—well, they've actually been quite shocked at how unprofitable that Amazon sales are. So they're now about to make some very crucial strategic decisions as to how they take that forward.

OLIVER: Hello, everyone. So I'm going to be talking a bit today about why it's so important to get your Amazon accounting right. But before I do, I think I ought to solve the mystery of why there are hundreds of balloons behind us in the office. We are in the midst of tax season here and actually each balloon represents a tax return that we need to file. So we've got a bit of a challenge going on with the team and each time we file a return, we're popping a balloon and there are prizes to be won, so it's keeping us all excited throughout tax season.

So anyway, so why is Amazon accounting so important and why do we need to get it right? So, first point to make is with regards to how your settlements get paid out. So typically for most Amazon sellers, you're going to be getting one settlement every fortnight, so nearly every payout you're going to receive is going to be overlapping on your month end. So in order to get an accurate monthly P&L, those settlements need to be split out to put each month's relevant part of a settlement into the right month. If you're not doing that, you're going to end up with margins that are essentially all over the place month to month. To take an extreme example, you could have one month where you've got potentially six weeks worth of sales and think, woahoo, I've had a fantastic month and then the next month comes around and then you've only got a couple of weeks worth of sales because of how those settlement periods have fallen. So it's really important to be getting those split out.

There are also lots of different transaction types within a settlement, the ones you can see on the screen there. So sales adjustments, commission reimbursement fees, taxes are just a couple of examples that there are literally hundreds of different transaction types and subtypes within those transaction types as well. So to get an accurate idea of what's going on in the business, you really need to be analysing those out much further than just looking at your net payouts.

And the other key point to make really, is that if you're not doing that analysis and exploding your payouts, you're almost certainly going to be making mistakes in filing your VAT returns. It could be that you're overpaying, could be that you're underpaid. More likely than not, if you're not exploding your payouts, you're going to end up in a position where you're underpaying your VAT and then you're sort of treading down the path of ending up in a position where you might get penalties from HMRC further down the line.

Chapter 5: Amazon deposits aren't just sales!

So this is an example of what a fortnightly Amazon settlement looks like. So here we've got 60K, or just over 60K coming into the bank. And that left hand side there, if you've got Xero set up and you've got your bank feed connected, that's all the information you're going to get. If we look on the right hand side, this is the kind of analysis that you're going to be wanting to get with a tool like A2X Accounting and it's really important to analyse out between those different categories. So, taking a couple of examples we've got on the screen here.

So Amazon FBA fees, for example, are subject to what's known as the reverse charge mechanism. So essentially what that means is that they are services that Amazon bill your UK company for from the EU, and there is no VAT to reclaim on those fees. However, the advertising fees are billed from the UK and therefore there is VAT to reclaim. So you can start to see how if you're not analysing those payouts out, you're likely to end up in a position where you're making VAT mistakes.

Chapter 6: Don't record net deposits as income

So this is one of the really common errors that we see and kind of ties back in with the horror stories that Steve was mentioning. So it's quite common to see that Amazon sellers will just be treating their net deposit as their income and in every case that is going to be wrong and result in some VAT mistakes. So let's have a look at what problems that causes.

So, if you're not analysing out between the different constituents of a payout, you're almost certainly going to end up in a position where you're understating or overstating, but more likely understating your tax liabilities, you're going to have skewed profits, so not going to give you the insight you need to make decisions. You also won't have any information with regards to fees within your accounting data. And as I mentioned earlier, you're going to have a lumpy month to month P&L because of those timing issues with the fortnightly settlements.

And the main issue that all those points really feed into is that when you come to sell, a potential acquirer is going to want to see the last few years worth of books. And if they haven't got the detailed analysis within them that shows the full breakdown of revenue and fees, that they're not going to be able to make an informed decision on whether to move forward with acquiring your business. And then at the best case scenario, you're looking at needing to go away and redo your books to help facilitate that sale. But in a lot of cases, if you came to a potential acquirer and your accounting data was all just based on net deposits, the reality is you're going to have a potential acquirer that's walking away from the deal and then you go and redo your books, but then you're still needing to find a new acquirer.

Chapter 7: Don't record VAT as income

So another really common issue we see is treating the VAT received on your payouts as additional revenue. So it's really important that that gets split out and mapped into your balance sheet and recorded as a liability, otherwise your P&L is going to be significantly wrong. So that leads to quite a few different issues.

So one being that if you recognise that as revenue in your accounts, you're going to be painting a much prettier picture to yourself than the reality and be spending money that is essentially yours, not yours, it's money that is owed to HMRC as part of your VAT returns. So that of course, in turn leads to compliance issues with HMRC in that you're not paying the VAT that you need to be.

And if you're accounting for VAT as revenue in your PNL and all your sales are standard rated, then you're going to be overstating your revenue by 20%. For a typical Amazon seller, a 20% gross margin would be pretty healthy. And if that's the picture you're painting to yourself by including that in your income, then the reality could be that you're just breaking even.

And another really important point to make for UK sellers looking to expand out into the EU is that when you do so, you'll need to be separately tracking your EU VAT liabilities. And it gets even more complicated when it becomes to EU VAT because depending on the circumstances of the sale, it may be that Amazon is responsible for collecting and remitting the VAT under the marketplace rules, or it may be that you need to pay that VAT on your VAT return separately. So it's important to then be able to split out between marketplace and non-marketplace rule sales to get your EU VAT correct.

So, to summarise all that, why essentially, if you're not accounting accurately, you have limited insight into profitability and business performance and could be over or underpaying tax, and in reality, most cases you will be underpaying tax.

Chapter 8: Introducing A2X for accurate and automated ecommerce accounting

So, back over to Elsperth now to talk more about how A2X can help.

ELSPETH: Thank you, Oliver. So, Oliver's done a great job of explaining some of the challenges when it comes to dealing with ecommerce deposits. And we're just going to do a quick overview of A2X Accounting and how that can help. A2X pulls all the uncategorized data that we get from those ecommerce platform for sales, fees, refunds, taxes, disputes, advertising fees from all of your channels and will consolidate it all into neat payouts for you.

If you've ever done that manually, you'll know how time saving it is to be able to automate that part of the process. A2X Accounting auto categorises the data into accurate summaries that span the right time periods. We spoke about that with Oliver. It's important that fees and sales are accounted for in the correct accounting period and A2X will automatically split them for you. And then we match back to Xero with one click reconciliation back to the bank account. So we're always looking for that magic green match on the Xero bank feed for Amazon deposits.

In the last few years, we've introduced a number of new automation features such as auto-approved Invoices, which can give you that really fast Xero bank reconciliation that everyone's looking for. The brilliant thing about this is that having all that data transferred quickly into Xero gives you the ability to then view it in Xero in various different ways. It'll let you see your profitability accurately when you run your profit and loss report. If you look at this one over on the right, you'll see that we've actually been able to—this is a seller selling on eBay, Shopify and Amazon—we've been able to split those transactions, also split some of the costs out. You can even refine it more than this if you've got particular customizations. We have people doing very clever things for tracking categories, so if you've got particular reports you want to be able to run. Xero tracking categories are very profitable. So if you've got very useful, for example, if you want to see how profitable am I on one ecommerce platform compared to another. So always chat with us in Chat if you want to do some more customization, so you've got an idea for something you want to do with your Xero reports and we'll try and help as much as we can.

A2X has been delivering accurate accounting for Amazon sellers in the UK since 2013. It's really hard to believe it's been that long, but it has. We were very excited – in 2022 we were Xero App Partner of the Year and we do have thousands of five star reviews from sellers and their accountants. We try and provide really good support. We understand it's complex and we want to support you as much as we can to be successful using A2X and Xero. So now we're going to move on to the third part of our webinar, which is just examining...

Chapter 9: Checklist: What you need for a monthly Amazon bookkeeping process

...some month end processes that you can use, that you can implement when using A2X and Xero together to get the best outcome and the best reporting.

So for this month end process, you're going to want to gather a few pieces of information. It's always useful to have your monthly bank and/or credit card statements. Obviously you'll have your Xero bank feeds, but it's always good to be able to refer back to the originals. We always recommend having access to the Amazon tax document library and Amazon Seller Central. You can find that by going to Reports and Tax document Library. The important part about that is that's where you can access all of your fee invoices from Amazon. And as Steve mentioned earlier on, those can vary depending on the type of invoice there is in that Document Library. And so it's always good to be able to go and check and see the actual tax rates. So, for example, UK advertising we often see does have 20% VAT applied.

The third thing that it's good to have to hand is your Amazon loan statement. If you are repaying a loan via settlements in Amazon, A2X will pick that up. But it's good to have that documentation to refer to as well as you wrap up the month. And then the last thing that you're going to want is your invoices for purchases of stock. So where you've purchased items to sell on Amazon, you're going to want to have those ready to enter into Xero and make sure you can match those back to your bank as well.

Chapter 10: Checklist: Step-by-step guide to monthly Amazon bookkeeping using A2X and Xero

So step one is to review your transactions. You would first start by going to A2X and updating any mappings that might be required. So anywhere where you need to assign a tax or a tax rate or an account, and then you can send your invoices through to Xero.

One thing we always like to flag up is that when you're on Amazon EU, we do have a waiting period for finalised Amazon VAT data. It usually finalises on the fourth of the following month. So, for example, for a period March 25 to April 5, this would be on hold until May the fourth. Until that date, settlements will be marked on hold in A2X. And we do recommend waiting until that date to post those periods as then you'll have the full country data. For VAT purposes, especially important if you have multiple tax jurisdictions. We do have a workaround if you need to close a month earlier. So talk to Support if you need help, and you do need to close your month earlier than that.

The next step is to raise any purchase invoices in Xero for any stock that you've purchased during the period and then match those off to your bank feed. And then to finish your bank reconciliation, you'll most likely after you've matched all the Amazon deposits to A2X data and you've raised your purchase invoices, you'll most likely have some other transactions to reconcile. So once that's finished, you can then move on to the next step.

And for our step four, we've said that a good process is to check for any duplicate invoices or bills after reconciliation. One thing we do see sometimes is if you were seeing a missing settlement in A2X, then it's often that Amazon has just archived it. It's a relatively simple process. To release it, you can go to Amazon Seller Central reports, payments, and all statements and confirm that they're available for direct download. If they're not, you can normally click a button and they'll be ready in a few seconds, and then you'll be able to fetch them into A2X. If you have any troubles with that, just let us know and we'll help you work around it.

OLIVER: Just one point to mention on the duplicated invoices or duplicated bills. A common issue we come across is that it's often a bit too easy to get things reconciled on the bank feed. And you'll create a spend money or receive money transaction to get something off the bank feed. And that's what's actually then duplicating the invoice or bill, which comes through further down the line. So that's another thing to watch out for as part of step four.

ELSPETH: That's a really good point, Oliver. Yeah. Okay, so the next step – we're getting down into fine tuning at this point – is to review the Amazon pending balances account. I know, Steve, you must see this all the time, so I was going to ask you to jump in at this point and explain your processes for this part.

STEVE: It's the same with, to a large extent, pending, reserved, and carried. They're all very similar in that any balance on that account should represent the pending, reserved, or carried balance at the end of the month, and they should reverse at some stage during the following month. In the case of carried balances, it should normally reverse on the first of the following month. So you really need to just be checking that your pending, reserved, or carried balances in your balance sheet do represent the last settlement of the month. If there's any other balances in there, then possibly that you've missed a settlement or something like that. But your pending balances in your balance sheet should reconcile to the final settlement of the month.

OLIVER: Yeah, I think another point to mention on that is a good check to do is to run an account transaction report for the pending reserve or carried balances. And then on that account transaction report, you can nice and easily see the pending reserve or carried balance getting created. And then you can see it mid month getting reversed back out and therefore clearing back down to zero. That gives you confidence that that's working nicely. It's one of the most common errors we come across when we've worked with clients that have previously worked with a non-ecommerce specialist accountant that is using A2X. They're often unaware of that nuance, and then there's a bit of a backdated work to tidy up those carried balances.

ELSPETH: Yeah, that's really helpful. And we do note as well, sometimes when there's a marketplace where transactions volumes are low, the net value of the settlement may be negative, but they still need to be posted, especially to make sure that pending balances and their reserve balances account are married up correctly. All right, so we might need the slide before just on the inventory reconciliation. Yeah. So this is the part where we account for costs.

A2X has a Cost of Goods Sold feature which works well, and it allows you to give a very balanced P&L and show what your actual cost of goods sold for the period were. So the process for that in A2X is usually to update any missing costs in A2X. That will happen if you've added a new SKU in the last month. You may need to add a cost in the cost table. And we also have a live Google sheet you can update now if you prefer that method. And then you'll record the COGS in A2X by sending those periods through to Xero. They're sent separately from the main settlements. After that, you can review your month end inventory balance. One thing we always like to flag up with A2X COGS is that it just adjusts for sales. And so a manual adjustment is still required at month end to adjust for sellable returns, removals, adjustments, and reimbursements. And a lot of that information you can access in Seller Central.

OK, so digging deeper, I'd be interested to get Oliver and Steve's input on the first point, which is just reviewing the Amazon pending reserve carried balances for foreign exchange differences, which does happen if you have different EU marketplaces with different currencies.

OLIVER: Yeah, so this relates to what we were just talking about in terms of seeing that those pending and reserve balances are cleared down. However, when you've got the foreign currency marketplaces, the invoices will come through in the foreign currency that marketplace operates in. So then, because there's a timing delay between the pending balance coming in and going back out, during that time, the foreign currency rates move, and therefore, each time those balances are released, there is a foreign currency gain or loss that will end up sitting on your pending or reserve balance account. And therefore, you need to identify those and write them off manually to the P&L in order to keep those accounts tidy.

ELSPETH: So the next step in the process is to review our transactions report. Obviously, part of this information that you've sent through from A2X will be used for your VAT return. And when you're a UK seller and or selling in the EU, you will have different VAT rates. So you may have some zero-rated products, you may have standard rated products, you may have transactions that actually fall into a different jurisdiction as per the Amazon VAT transactions report, and it's possible to slice and dice all of those accurately using A2X. We also filter out, as we mentioned earlier, marketplace facilitator tax. That's where marketplace rules have been triggered. We've got a great article on this we're going to follow up with which Steve has written, which gives some more detail on marketplace rules, which are super useful if you're selling in the EU. And so when you're reviewing your transactions report, those are the things you're going to be keeping an eye out for. And again, I'm just going to ask Oliver and Steve to speak about this because I think they have a lot of experience with submitting some of these VAT returns.

OLIVER: Yeah. So certainly when it comes to filing your UK VAT return, you want to be reviewing that transaction report to identify any anomalies in the mapping. It's a good sort of final sense cheque on the work you've done to spot any potential opportunities to save VAT. Perhaps you've got a MFT transaction and you've accounted for that on it and you don't need to. Reviewing that transaction report does help you to pick those up. And then a find and recode and an update of mapping for the next quarter or a month is the way to keep on top of that. That's right.

ELSPETH: And I'm guessing, Steve, you do have sellers where they have both VAT and GST and other tax requirements, so you'll be splitting out and checking those accounts as well, is that right?

STEVE: Absolutely, yes.

ELSPETH: Okay, so after you've completed all those things, you're happy with the VAT transactions that go through to the VAT report, you can then review your inventory balance and valuation. Okay. So based on all of this data that's been pushed through categorised correctly for VAT and all the other types of transactions that we see, you should now be able to run in Xero your Profit and Loss report on your balance sheet and see your accurate up to date figures for that month. One of the benefits of automating this process speeding up, spending less time on the manual bookkeeping side is that it frees you up to be able to add value to your customers or to your own understanding of your own business by being able to look at these numbers quickly and easily without hours of prep work to get there. And I know that, Elver, you guys provide a management reporting pack to your customers and maybe you can tell us a bit more about that and how you use some of this information to help them.

STEVE: I think actually the example that I was talking about at the beginning is a really good one in that, well, those management reporting packs include, obviously the basics in terms of profit and loss accounts and balance sheets and cash flows, graph analysis of trends and KPIs. But you can do more detailed analysis whether that's channel analysis, which in the example I gave before, was quite revealing for that particular client, but they're really kind of tailor made for each individual business and can sometimes go into a great deal of detail, especially if they're multichannel selling internationally.

OLIVER: And they're also really useful for when you get to the point where you want to start thinking about exiting the business. Those management reporting facts are exactly what a potential acquirer are going to want to see to get more understanding of your financial performance.

ELSPETH: So one thing we do like to flag up, you may be an accountant and bookkeeper and you may be supporting ecommerce clients, in which case a lot of these processes will be helpful.

Chapter 11: Use the A2X Directory to find an ecommerce accountant

We do recommend that if you're a seller, that you do engage an experienced ecommerce accountant and bookkeeper. It can make all the difference in the world having someone who understands ecommerce working on your books. And we do have a directory. You can filter it by country and by software. Elver – You can see them there in quite a place at the top of our UK page. So, yes, we do recommend that. We can automate all the processes, but it's really important to have someone looking over it all who knows what they're doing and understands ecommerce. You can also try A2X for free if you go to www.a2xaccounting.com. And the UK team are online and ready to chat with you as well if you have any further questions after the webinar.

Chapter 12: Q&A

GEOFF: Awesome. Well, great job everyone. Thanks so much for taking us through this incredibly meaty topic. So appreciate your expertise and your time. This is now the impasse in which we start to get through everyone's questions. So we have a few that have rolled in and I'm going to start with the first one: [Audience Question] I'm planning to expand in other countries. Are there any VAT considerations I should be aware of? Who's going? You go?

STEVE: Absolutely. Obviously it's going to depend on the territory, but it's also going to depend on the channels that you're using. We are primarily talking about Amazon here. So in the EU, for instance, they do have Marketplace Facilitator rules, which makes that Amazon is responsible for paying the VAT on your sales. So if you can compare that to a UK sell, if for instance, you're selling something for 120 pounds, Amazon obviously, after they've deducted fees, would remit to you 120 pounds. In the case of the EU, they would take off the VAT, pay that to the relevant tax authority, and pay you 100 depending on the territory. Because VAT rates throughout the EU do vary. So although you're only receiving 100, you don't then have to pay anything to the tax authorities. But if you're using Amazon FBA, for instance, and therefore storing inventory in any country, that's going to require a VAT registration in that country. And additionally, if you have any sales to other businesses. So B2B sales, they are not subject to the Marketplace Facilitator rules and therefore you would have to account for the VAT on those sales.

If you take the States, they also have Marketplace Facilitator rules in every state. Now, that's something that's been changing over the years. If you go back a couple of years, probably less than half the states had Marketplace Facilitator rules. So you'd be accounting for that GST in some states and not in others. But fortunately, we're now in a position where that's throughout all the States. And other places, other territories do have marketplace rules as well. But that varies. So in some instances you would need to register for GST, which is the VAT equivalent outside the EU, and in other cases you wouldn't. You just need to speak to us about which territories you're intending to sell in.

GEOFF: Awesome.

OLIVER: The other point to mention with those sort of other territories outside the EU as well, is that some will have thresholds, so you can make X amount of sales before you need to register, whereas others you might have to register before you make your first sale.

GEOFF: Okay, great. I guess that's a really good segway around registration. [Audience Question] Do I need to register for UK VAT number if I'm based outside of the UK, but selling to UK customers?

OLIVER: Yes. So the UK VAT registration threshold is 85,000 pounds, but that doesn't apply if you are a business based outside the UK or if you are a UK based business selling fulfilling from outside the UK. In both instances there the VAT registration threshold wouldn't apply and you'd want to register for VAT in the UK before you start selling.

GEOFF: Got it. Awesome. The other question, this one's for Elsbeth. [Audience Question] How does A2X handle VAT from cross border sales within the EU?

ELSPETH: Yeah, good question. So with Amazon, we have something that's really useful, which is the Amazon VAT transactions data that we get. So we always recommend that if you're selling in the EU and the UK that you enable the VAT calculation service in Seller Central. It's really easy to enable it, and it gives you a much higher level of information on your VAT transactions. And what it allows us to do is split out your transactions depending on a number of different criteria and your own particular VAT requirements. So we can split out GB sales, we can split Xero rated sales, we can split sales where Amazon has collected and remitted the VAT for you, which is super useful and avoids you remitting that twice on the same sale, which we've seen. And we split out B2B sales and various other kind of nuances we can catch in the data that allows you to get a really tight number for your VAT. So you're not just a blanket applying 20% to all your UK sales or other sales where you actually could be saving a little bit there. And that set of information we get from Amazon is really reliable. And yeah, that's what we use mostly.

GEOFF: Fantastic. So that's what we mean when we say accuracy. So the last question I have here, unless anyone has any more that they want to add. [Audience Question] Is A2X Making Tax Digital compliant?

ELSPETH: Good question. Yes, we have an article about that we can provide afterwards if anyone's interested wants to read with some HMRC notices. So, yes, we believe so. We're compliant in different ways depending on the e commerce platform. So with Amazon, they give you that one consolidated settlement period and we match back to that which, according to HMRC's most updated regulation seems to be acceptable. With Shopify, we'll do something slightly different. We actually give you daily summaries where you're using third party payment methods, as HMRC seems to have a different approach for that type of payment method. But yes, if anybody wants to take a deep dive into making tax digital, we do have an article on that we can share.

GEOFF: Awesome. We should share that in the follow up. So I will add my list of to-dos.

OLIVER: One more point to mention on that question as well is that when the A2X assessments are pushed through into Xero, the attachment includes all the raw data. So it's very easy if you do have any kind of HMRC inspection for them to see how the invoices A2X is creating tie back to the raw data from the marketplace.

ELSPETH: Yeah, that's super useful.

GEOFF: Cool. So that looks to be it in terms of our questions. So before we hop off, I just wanted to say a big thank you again to Oliver, Steve and Elspeth for sharing your expertise during today's webinar. We will be sending a follow up email with all of this information and more, and if you have any questions, as Elsbeth mentioned, we do have quite a large UK support team, primarily comprised of actual accountants and bookkeepers who also have worked with ecommerce in the past. So incredibly well-suited to help you on your journey to using A2X. And then for more accounting insights, finance insights and just kind of the expertise to help you make sense of the numbers file VAT returns, we obviously have the Elver team here who's just incredible and have been doing this for quite a long time and have, as you can see, tremendous amount of expertise in this area. So thanks again!

Selling on Amazon isn't as easy as it once was. We have navigated through increased competition, ongoing logistical complications, and advertising challenges to make it to the other side. The days of growing at all costs are behind you. You're now focused on profitable growth. But to grow profitably, you need to understand how your business is actually performing. From how much you're making, or paying in fees and shipping to what you owe in taxes, your accounting needs to be accurate, or otherwise you're flying blind.

The problem is, accurate Amazon accounting is challenging. You have settlements that span two weeks, often crossing over a month end. There are hundreds of different transaction types, including the ever-growing list of different fees. And then there's tax, which is further complicated by both where you're selling and where you're registered. Although Amazon may collect your tax under the marketplace facilitator legislation, you are still responsible for tracking and reporting your tax and correcting any differences.

Now, it might seem obvious to get all of this information from Amazon directly, but even that's not straightforward, as it's difficult to line up what you're paid with what you see in Seller Central, unless you're prepared to go through thousands of lines of data in a spreadsheet. And even then, you'd have to manually enter the transactions into your QuickBooks or Xero account. This is very manual and time-consuming, and it leaves a lot of room for error.

With all these complications and no accurate source of truth, it's no wonder why many Amazon businesses put off their accounting or just do it incorrectly. But this comes with some pretty serious risks. To get accurate financials, you need a solution that understands Amazon accounting and all of its nuances. That's why you need A2X.

A2X is an ecommerce accounting app that helps businesses, accountants and bookkeepers get accurate Amazon accounting so they have financial visibility into how their store is actually performing. So how does A2X accurately automate your Amazon accounting?

A2X connects to your Amazon Marketplace and your accounting software. Every time you receive an Amazon settlement, A2X will create a summary of your transactions and post it in QuickBooks or Xero. The summary will outline all of the transactions that made up your settlement, broken down into their appropriate categories - sales, promotions, fees, tax, shipping, warehousing, reimbursements, reserve balances. I could go on. All of the transactions will be accounted for.

If there is a settlement that covers two months, then A2X will create two entries, one for each month, and split the transactions down into the month they occurred in. The A2X summary will match perfectly with the Amazon settlement and your QuickBooks or Xero, meaning you can confidently reconcile in just one click.

With A2X, you'll save hours a month accurately accounting for every transaction on your Amazon Marketplace. You get the data you need to pay the right amount in taxes, not to mention also meaning you'll get the most out of your tax deductions, and you'll have more visibility into your numbers to make smarter decisions.

A2X is trusted by tens of thousands of ecommerce businesses around the world. It's built to scale and supports those selling on single or multiple channels in different states, countries, or even currencies. A2X supports the largest network of expert ecommerce accountants and bookkeepers. They trust A2X to help them provide their clients with accurate ecommerce accounting. If you're not working with an accountant or bookkeeper, we can't recommend our partners enough. They can help you make sense of your numbers.

Our support team is focused on your success. They understand ecommerce accounting better than most because they themselves have launched their own stores or have bookkeeping expertise. Our response time is in hours, not days. When it comes to trusting your numbers, making decisions about your business, paying tax, calculating your margins, or even valuing how much it's worth in a sale, close enough is not good enough. Set up a free trial of A2X now.