Amazon

Challenges faced by an E-Commerce Accountant of Amazon Seller

Amazon is one of the most prominent e-commerce selling channels. Maintaining proper books of accounts is imperative for an Amazon seller as it allows the business to survive in a competitive environment. It is the prerogative of an e-commerce accountant to build a solid accounting foundation, maintain accuracy, and ensure tax compliance. A large portion of sellers on Amazon faces a challenge in maintaining accurate records of their finances, which leads to the risk of future tax liabilities and coercive action from authorities. The main reason for Amazon’s popularity is its user-friendly portal, both from seller’s and buyer’s perspective. But if proper accounting controls are missing, then it becomes difficult to manage the affairs of the business as the decisions will be based on imprecise information. Let’s look at a few challenges that Amazon sellers face – 

• It is generally observed that many new Amazon sellers try to maintain accounts in a spreadsheet. Spreadsheet-handling becomes tricky when the volume of data increases. Eventually, they attempt to manage the situation by hiring an accounting expert and purchasing customized accounting software.

• Amazon makes bi-weekly deposits into the account of its seller. But, such an amount does not represent the true and fair picture of the entire sale data. This is because of the fact that this amount is arrived at after adjustment of other variables like discounts, fees, commissions, etc. The e-commerce accountant must handle the sales data diligently so as to furnish correct information pertaining to sales mix, selling cost, consumer preference, etc.

• Inventory is the mainstay of the E-Commerce business because it invests a major portion of its working capital into the inventory. Businesses must keep proper inventory control which permeates through physical handling of inventory as well as the recording of inventory. 

• After the ruling of the United States Supreme Court in the Wayfair case, the states are endowed with the power to impose Sales Tax on those businesses without the physical presence (E-Commerce businesses) generally if they do more than two hundred transactions in that state. Thus, if the said limit exceeds, then it is mandatory for a seller to comply with the regulatory compliance of each such state. This in itself is a colossal task.

To help Amazon businesses to tackle these issues, understand and improve key performance indicators, and avoid hefty penalties for non-compliance, we provide a full array of financial services such as assisting Amazon businesses with proper accounting systems set-up, ongoing Accounting, Tax Preparation and Planning, CFO/Advisory services, Sales Tax management, and Inventory management.