As an Amazon FBA seller, understanding the complexities of accounting and taxes can be challenging. In this piece, we’ll walk you through the key elements you need to grasp in this domain.
Sales Tax
Wondering about collecting sales tax? Each State in the USA has distinctive rules and requirements. Although sales tax collection has sparked debate in Amazon forums, if your company is US-based, different States might eventually demand the sales tax owed.
You could face penalties for back taxes owed, so it’s wise to establish the appropriate paperwork soon after launching your Amazon business. However, some sellers adopt the strategy of filing sales tax only once it exceeds a certain amount.
Keep in mind, sales tax applies to international sellers as well. Although some evade taxes, it’s always better to follow regulations from the start. When in doubt, consult a professional.
Business Performance Reports
While Amazon provides rough business performance data, it’s not always up-to-date or comprehensive. Therefore, it’s advisable to prepare a monthly profit and loss statement from the onset. This will streamline your tax filing process and offer a precise business performance outlook. Ensure to factor in your freight costs, development costs, and possible home office expenses.
VAT
VAT requirements can be intricate, varying with different countries and their respective thresholds. Amazon and governments generally assume your sales price includes VAT, impacting your net margin %. It’s essential to stay updated on these rules and consult a tax professional to avoid severe penalties.
Profit Assessment
For a quick review of your daily profits, frequent performance assessments are beneficial. Employ a professional bookkeeper to prepare your monthly profit and loss statements to keep a clear track of your business and product performance.
Business Tax
After investing your resources and effort to yield profit, governments will claim their share. Therefore, maintaining accurate monthly income and expense statements is vital. Consider using online accounting software and hiring a CPA for reviews and tax filing.
Tax Minimization
Early consultation with a CPA can help strategize to lower your tax expense. If you reinvest a major chunk of your profit into additional stock, you can reduce your taxable income.
International Sellers
Overseas sellers can legitimately sell via Amazon USA and manage to pay minimal taxes. The local tax laws of your country apply, but it’s possible to use existing rules to your advantage. This greatly depends on your company’s registration and management location.
Conclusion
In the end, it’s prudent to strictly follow the rules, keep accurate accounts, and conduct monthly reviews of your overall business profit and loss. This proactive approach will prevent future hassles and keep you in tune with your business’s performance trajectory.
