Category Archives: Finances

4 Tips for Handling Amazon FBA Taxes

Before you hit the snooze button and move on to a more exciting post, let me acknowledge up front that taxes aren’t the most glamorous topic out there. Unless you’re a CPA or tax professional. In which case I don’t mean any offense by saying that taxes are boring.

Is anyone still with me at this point in this blog post? I hope so – because the topic of taxes, while potentially a snoozer, is of great importance to the success of your Amazon FBA business. If handled incorrectly, your business taxes could negatively impact your success at FBA – but taxes don’t have to be something that holds you back from making progress as an Amazon seller.

We at Full-Time FBA are not tax professionals or CPAs, and we do not intend to give advice for preparing your taxes in this blog post. We also do not give advice in our Facebook group, so if you ask tax questions there we will give you the same disclaimer and point you towards the services of someone qualified to give that type of advice.

Which leads us nicely to our first tip out of four for handling taxes for your Amazon FBA business…

1. Find a good CPA. 

Our biggest piece of advice for you when it comes to handling your taxes is to find a good CPA who can take care of all the nitty gritty details for you. We are greatly indebted to our own CPA for her help throughout the year and at tax time in keeping our business running smoothly and above board with our taxes. A good CPA will know all the ins and outs of the rules related to business taxes (both federal and state, depending on where you live), and a good CPA is worth every penny you pay for their services.

When I say you need to find a “good CPA” I mean a couple of things by it. First, you don’t want to just pick the first person who pops up in a Google search for CPAs in your area. You need to find someone who has the heart of a teacher, who is willing to help you understand the tax rules and how to be compliant. It might take time to find this person and to ask questions to make sure you’re a good fit with each other.

Note: Please do not go to a bunch of different CPAs and ask questions under the pretense of “seeing if you’re a good fit.” For a service professional, nothing is worse than being taken advantage of by someone looking for free advice. Be respectful of your potential CPA’s time and pay them well.

The second thing you need to look for in a CPA is someone who understands taxes as related to ecommerce, Amazon FBA, self-employment, an LLC, or whatever particular situation your business is in. Be sure to ask questions up front to make sure the person you hire has the relevant experience to best assist you in preparing your taxes.

2. Keep good records throughout the year.

Keeping good records is crucial to preparing your taxes and protecting yourself in case of audit. Your records should include (but aren’t limited to) receipts for inventory, receipts for supplies, receipts for any other business expenses, records of your disbursements or other income, any business-related fees, any payments for business-related services, etc.

We use Inventory Lab to track inventory-related financial information, and we have our CPA do our bookkeeping every month throughout the year. We have a simple system for filing our receipts by month, and we use Evernote and email folders to track online receipts.

Whether you already have a good system in place for keeping good records or not, nothing is stopping you from keeping your records organized from this point forward. You can’t change the past, but you can make a difference in the future. Don’t get overwhelmed with your receipts, take it one step at a time, and make the most of the year ahead by knowing your numbers, organizing your receipts, and paying attention to business reports in Seller Central, Inventory Lab, or whatever program you are using.

3. Run the right reports for your CPA.

In order to prepare your taxes, your CPA (or whoever is preparing your taxes) will need to know the money you have coming in, the money you have going out, the amount of inventory you have in stock that hasn’t been sold, etc. Talk with this individual to be sure exactly what they need.

As a good starting point you can check out this blog post with instructions for how to run the most useful year end reports within Seller Central. We like to run reports for our CPA on our year end inventory, our monthly inventory history, and our received inventory.

Note: It’s best to run your year end inventory report as close to December 31 or January 1 as possible, to give your CPA the most accurate picture of the inventory you had in FBA warehouses at year’s end.

4. When it comes to sales tax, look into services like TaxJar to automate the process for you.

We like to point our readers to the TaxJar website when it comes to handling sales tax. TaxJar has a wealth of free information and links on their website to point you in the right direction for knowing the sales tax regulations in each state. When you’re ready to automate the process of dealing with sales tax, TaxJar can help you get set up.

Dealing with taxes definitely isn’t the most fun part of running your own business – we would all rather be out sourcing and finding treasure and making big profits than talking about taxes, right? But getting your business set up to handle taxes correctly is an important component of business success. You really want to do things the right way as quickly as you can, so that you won’t have to pay penalties or fines later. You can take a few simple steps today to set yourself up for the year ahead and make the most of your Amazon FBA opportunities.

Make 2017 your Best Amazon Sales Year Ever! 

Imagine knowing exactly what to expect in your Amazon FBA business every month of the year.

Imagine what it would feel like knowing you were not missing out on any of the opportunities that will come your way in 2017.

Imagine working on your Amazon business knowing exactly what your priorities are, what you need to avoid, and what you need to accomplish during each month to make progress toward making 2017 your best sales year ever.

On January 10, the price of this book will be going up permanently. Find out more about The Reseller’s Guide to a Year in FBA: A Month by Month Guide to a Profitable Amazon Business today. The package includes a 200-page ebook, monthly live webinars, and 4 special bonuses.

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What are you doing today to prepare for the year ahead? How are you taking steps to handle your taxes the right way? We would love to hear from you in the comments!

Calculating Amazon FBA Fees – Know Your Numbers and Make Better Buying Decisions

Know Your Numbers - FeesA while back I saw a super scary video. It was truly horrifying. I still have nightmares when I think about it for too long.

I showed a short clip of this video to my wife. She actually screamed at the TV: “Nooooooo!!!!!!!!” She was just as terrified as I was.

In this video people were walking the aisles of a big box retail store, scanning toys with the Amazon app. Not the Amazon Seller app. The Amazon app. The one you use to buy merchandise from Amazon. These people were looking up toys on Amazon, comparing the price on the retail store shelf, and loading up a shopping cart if the price was even the slightest bit higher on Amazon. They intended to buy this shopping cart full of toys and sell them on Amazon.

As if this scenario weren’t gruesome enough, these people were actually encouraging their viewers to go out and do the same thing. They exuberantly proclaimed that anyone can sell on Amazon, see, look, there’s merchandise everywhere that sells higher on Amazon than in stores. You, too, should go out and buy toys by the shopping cart load, and just send them in to Amazon and wait for your paycheck.

At this point you might be ready to ask me a few questions. “How is this scene any different than what you do in your Amazon FBA business every day? Don’t you use retail arbitrage as one of your strategies for finding FBA inventory? Isn’t that what these folks are doing – and showing others how to do?”

The key difference boils down to one simple factor: I never buy an item for resale without knowing the Amazon FBA fees for that item first. If someone were to actually follow the methods these people were using in this Amazon FBA horror movie, they would be hit with fees they hadn’t calculated beforehand and suffer financial loss.

2631823For anyone who wants to make a profit running an FBA business, you have to know your numbers. You have to know all of your expenses, including inbound shipping, taxes where applicable, prep fees, materials, and the cost of any subscriptions or services you buy. You also have to have a good handle on the FBA fees that apply to any items you intend to have Amazon fulfill for you.

If you aren’t aware, the name of this blog is Full-Time FBA. About 99% of our Amazon business is through the FBA (Fulfillment By Amazon) program. We do choose to Merchant Fulfill items on occasion (check out our YouTube video where we discuss those occasions), but overall we prefer to stick with having Amazon fulfill our inventory when a customer buys it (see also our blog post “Overcoming Your Fear of Selling via FBA versus Merchant Fulfilled or eBay”).

There are 4 easy ways you can calculate the potential Amazon FBA fees before you buy an inventory item. We’ve listed below two options for calculating fees on your smart phone and two for calculating fees on a web browser:

  1. AZ Seller app screen shotAmazon Seller app – FREE

The Amazon Seller app is free and allows you to scan items either by barcode or using Amazon Flow (the camera of your phone recognizes an item’s image and matches it with the product in the Amazon catalog). The Amazon Seller app allows you to see the fees for an item if you sell it Merchant Fulfilled or through FBA. It allows you to adjust your selling price, your inbound shipping cost, and the cost of purchase. It then subtracts the fees and your cost of purchases, giving you your estimated net proceeds. (See this blog post for more pros and cons on the Amazon Seller app.)

  1. Photo Apr 15, 10 23 15 PMThird party scanning app, like Scoutify, Profit Bandit, or ScanPower – PAID

Similar to the Amazon Seller app, third party scanning apps allow you to scan items by barcode or enter a text search for the item. Third party apps also allow you to adjust selling price, inbound shipping, and cost of purchase before you subtract out the FBA fees and see your estimated net proceeds. We personally use Scoutify most often when sourcing, with Profit Bandit being our back-up on occasion. (For more info on third party scanning apps, check out our blog post about why we use Scoutify.)

  1. FBA CalculatorThe FBA Calculator website – FREE

If you are doing product research on a web browser, Amazon Seller Central has an FBA revenue calculator where you can enter the ASIN, UPC, or product name of an item and do the same calculations as above to find out your potential fees and potential profit. We highly recommend creating a bookmark for the revenue calculator so you can easily reference it when making online purchases, determining prices for your inventory during the listing process, or repricing your inventory after it’s at the warehouse. We’ve also created a quick link for the calculator: www.fulltimefba.com/calculator

To see the FBA revenue calculator in action, I’ve created a screen capture video explaining how it works.

  1. Scanalyze 1Google Chrome extensions, like Scanalyze  – PAID

Another easy way to see FBA fees when doing online arbitrage or product research is by using Google Chrome extensions that show the fees right on the Amazon product page. We use Scanalyze (available through the Cyber Monkey Deals website) and love it. You simply click the “Scanalyze” button and the fee calculator pops up at the bottom of your screen.

Scanalyze 2

Hopefully you’re equipped now to calculate your fees and know up front what your profit potential is before you buy inventory to send to Amazon. Please don’t become another victim in a scary movie! You can make good choices. You can build a profitable Amazon FBA business because you know your numbers.