Category Archives: Taxes

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.

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!

Overcoming Your Fear of Handling Sales Tax

Fear of Sales TaxToday we have a guest post from Mark Faggiano. Mark is the founder and CEO of TaxJar. We hope you find the information as helpful as we have.

I get it. Sales tax can be confusing and intimidating. The rates change from location to location. The laws change from state to state. And don’t get me started on the legalese. What the heck is “nexus” anyway?

TJ_logo_color_office_pngAs the founder of TaxJar, I talk to eCommerce sellers of all experience levels every day. Over and over I’ve found that several common fears prevent sellers from tackling sales tax. These include:

1. Sales tax is governed at the state level – Sales tax laws are created at the state level, so there’s no central, overarching “IRS” for sales tax in the U.S. For this reason, one state might consider some items (like groceries or textbooks) taxable, while another might not. Or one state might want sellers to file their sales tax returns on the last day of the month while another will want to hear from that same seller on the 20th day of the month.  Dealing with multiple states’ laws can present a major challenge right out of the gate for eCommerce sellers.

targetstore2. Sales tax laws were written for brick-and-mortar businesses – Another reason sales tax can be so intimidating? The laws simply weren’t written with eCommerce sellers in mind. The language and thinking around many sales tax laws simply don’t apply.  For example, sometimes shipping charges aren’t taxable if a customer has the option to physically pick up a product at your location. This is, of course, impossible for Amazon sellers (among others). States are still interpreting their laws when it comes to online sellers.

3. There are a lot of rumors and misinformation out there – I demystify sales tax misconceptions every day. Common rumors include that online sellers don’t have to charge sales tax at all, or that Amazon takes care of all sales tax obligations if you use their sales tax collection service. Sales tax can seem much more complicated when you’re trying to untangle fact from fiction.

But fortunately…

gettting-startedGetting started is the hardest part – How many times have you dreaded a task like going to the gym or tackling a stack of laundry only to find that things are smooth sailing once you get started? Sales tax is the same way. Once you get started, it all clicks into place. Remember – states want you to collect sales tax from your buyers because it funds their budget items like roads and schools. And tools like TaxJar are here to help when you get stuck.

Now that I’ve talked about why sales tax is so intimidating, let’s demystify it together.

The 5 Basic Steps to Sales Tax Compliance


1. Determine your sales tax nexus states.

“Nexus” is Latin for a “tie” or “connection,” and sales tax nexus simply means that you have a tie or connection to a state that requires you to collect sales tax from buyers in that state. As I mentioned above, every state’s laws are different, but a few common factors generally create nexus: having a location or personnel in the state, attending a trade show in the state, or having other ties, such as a 3rd party affiliate or trade show presence, in a state.

Also, with the recent exception of Virginia, storing inventory in a state creates sales tax nexus in that state. This is where Amazon sellers often run into the intimidation factor. That’s why, if you are a new online seller, we often recommend starting with your home state when it comes to sales tax.

You can read a whole lot more about how to determine your sales tax nexus states in our free Sales Tax for Amazon FBA Sellers guide.

sales-tax-permit2. Register for a sales tax permit in your nexus state(s).

Once you’ve determined your nexus states, your next step is to register for a sales tax permit in that state.

Don’t skip this step! Most states consider it unlawful to collect sales tax without a permit. (They’re suspicious, and afraid you’ll tell customers you’re collecting sales tax while really keeping that extra percentage of the sale in your pocket.)

You can find step-by-step guides to registering for a sales tax permit by state here.

When you register for your sales tax permit, the state will tell you how often and on what dates they want you to file a sales tax return.

tax3. Collect sales tax from your buyers.

Once your business is registered to collect sales tax in a state, your next step is to ensure you’re collecting sales tax from your buyers in that state. If you sell on multiple channels, be sure you’re collecting sales tax on all of your shopping carts.

Out of the most popular shopping carts, Amazon has one of the most sophisticated when it comes to sales tax settings. To use Amazon’s sales tax settings, you’ll need to be a Pro Seller and then tell Amazon in which states you’d like to collect. You can find step-by-step instructions for setting up your Amazon sales tax settings here.

tax_return14. Report how much sales tax you’ve collected.

When it comes time to file your sales tax return, your next step is to report how much sales tax you’ve collected from customers in each state.

Unfortunately this isn’t as simple as sending the states a single amount. The vast majority of states want you to break down how much sales tax you’ve collected by city, county and other special taxing district. In essence, they require you to help them distribute the funds collected to the right part of the state.

This is where sales tax automation can help. Tools like TaxJar will integrate all of the channels you sell on and give you all of your sales tax collected in return-ready reports. As your business grows more complex, automation takes sales tax off your plate.

Tax Return5. File your sales tax return(s).

Now that you’ve reported how much sales tax you owe, your final step is to file your sales tax return and remit payment to the state.

You have a few options here. You can take your sales tax report and file online, or you can let a sales tax automation service file your sales tax for you. Either way, be sure you file on time to avoid fine and penalties. Some states will even give you a sales tax discount for filing on time! That means you get to keep a small amount of the sales tax you collected in your pocket!

Also don’t forget to file every time you have a sales tax return due, even if you don’t owe any sales tax to the state. Some states will fine you or even revoke your license for forgetting to file.

And that’s it – you’ve successfully mastered sales tax!

I know this is a lot of information, but most sellers tell me that once you face the learning curve, handling sales tax will become just another routine (but not necessarily fun) part of your business – like counting inventory or recording expenses.

Do you have questions or comments? Ask here or over in our Sales Tax for eCommerce Sellers Facebook Group.

For a much more in-depth explanation of sales tax, download our free Sales Tax for Amazon FBA Sellers guide.

mark_headshot_web_hAuthor Mark Faggiano is the founder and CEO of TaxJar, a service built to make sales tax compliance simple for eCommerce sellers. Click this link to get a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!

7 Tips for Navigating the April Sales Tax Perfect Storm

April Sales TaxToday we have a guest post from our friends at TaxJar. We hope you find the information as helpful as we have.

April is what we here at TaxJar call a “sales tax perfect storm.” Because quarterly and monthly sales tax deadlines converge this month, nearly every online seller will have at least one sales tax filing due in April. And that’s not to mention income tax day on April 15th. Yikes!

Fortunately, sales tax can be simplified and automated until it’s barely a chore at all. Here are my top 7 tips for navigating April’s sales tax perfect storm:

  1. TJ_logo_color_office_pngTake your sales tax discounts – About half of the 45 states (plus D.C.) that have a sales tax offer a very small discount to business owners who file on time. I guess they realize that collecting sales tax on their behalf isn’t easy! Don’t leave money on the table. Be sure to take your discount! (And if you AutoFile with TaxJar, rest assured knowing you always keep your sales tax discount.) Here’s a list of states that offer a sales tax discount.
  2. File your sales tax returns – You can file your sales tax returns the old-fashioned way by finding a sales tax form and mailing it in, or login to your state’s taxing authority website and file online. Or you can even let a service like TaxJar take this administrative hassle completely off your plate and AutoFile for you!
  3. Report how much sales tax you’ve collected (on all your sales channels!) – Now it gets trickier. You need to make sure that you know how much sales tax you’ve collected from customers in each state, on each of your sales channels. You could try to access a report from each channel and then combine it together, or you could use a sales tax automation service like TaxJar. TaxJar integrates with the channels you sell on and creates sales tax reports the way states want to see them. Speaking of the states…
  4. Know your sales tax filing due dates – You can’t file on time if you don’t know when to file. Here’s a list of April 2016 sales tax due dates by state.
  5. Breakdown how much you’ve collected – Wouldn’t it be nice if states just wanted to know one total amount of sales tax you’ve collected from buyers in their borders? Unfortunately, that’s far from the case. The vast majority of states want you to break down how much sales tax you’ve collected by state, county, city and special taxing district, too. You can do this manually (which can take hours upon hours and is rife with mistakes) or let TaxJar do it for you so you can file your returns in minutes!
  6. TaxesRemember to file zero returns – It’s very easy to forget that essentially every state wants you to file a return even if you didn’t collect a penny in sales tax over the taxable period. The states consider this your way of checking in to let them know you’re still in business. Some states will even charge you a penalty (Florida’s is $50!) if you don’t file a zero return.
  7. Give yourself a sales tax checkup – Once you’ve finished filing your April sales tax returns, assess your general sales tax health. Are you collecting sales tax on all of the platforms you sell on? If not, you may owe some sales tax out of pocket. (And no one wants that!) Have you hired someone or started storing inventory in a new state? You may have sales tax nexus in a new state and need to file for a sales tax permit there. Giving yourself a quick sales tax checkup now will ensure sales tax filing is even easier when the next “sales tax perfect storm” rolls around – in July!

If you have more questions about filing sales tax, check out our Sales Tax 101 for Amazon FBA Sellers guide or ask away over in the Sales Tax for eCommerce Sellers Facebook group!

mark_headshot_web_hAuthor Mark Faggiano is the founder and CEO of TaxJar, a service built to make sales tax compliance simple for eCommerce sellers. Click this link to get a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!

How to Run “End of the Year” Inventory & Sales Reports for Tax Purposes

year-end-reportsI admit the topic of “end of year reports” is not all that exciting, but it’s very necessary… in fact, if you don’t do this right it could have some negative impacts on your business.

No matter if you sell on Amazon as a serious income stream or as an occasional hobby, you’re still required to report your income to the IRS. It’s important to know that there are several reports you should be sure to send to your CPA (or whoever is doing your taxes).

Before we go any further I want you to know that I am not a tax specialist or giving you any tax advice. I highly recommend hiring a CPA who is knowledgable of online sales and all the tax implications. Today, I’m only showing you how to get the reports that you need to add to all of your other 2016 tax documents.

dec-31-calendarOk, there is one report that you MUST run on December 31st (or at the very latest, early in the morning on January 1st). This report will let you know how much inventory you have still stored at Amazon at the end of the year. The reason you need to run this report on December 31st is because, as far as I know, Amazon does not currently have an easy-to-use report that tells you what inventory you had in their FBA warehouses on specific dates in the past. The only way to get an accurate printout of the inventory you are rolling over into 2016 is to run this report on December 31st or early on January 1st.

Screen Shot 2014-12-23 at 12.09.38 PMTo pull this report, follow these simple steps:

  1. Log in to Seller Central.
  2. Hover your pointer over “Reports,” and then select “Fulfillment.”
  3. Under Inventory, click on “Amazon Fulfilled Inventory” on the left side of your screen. you might have to click “Show more” to find it.
  4. Click on the “Request Download” button.
  5. The report status column will state that this report is “In Progress” until it’s completed.
  6. Once the report is completed (usually a minute later), a “Download” button will appear. Press it.
  7. Your report is now downloaded to your computer as a .txt file. Open up the file.
  8. Screen Shot 2014-12-23 at 11.11.07 AMThe text is hard to read, so select all the text (Control A for PC users or Command A for Mac users).
  9. Open up an Excel type spreadsheet and paste the text you just copied. The data will now be more organized.
  10. Save the file with a name like “2016 Amazon Year End Inventory.”

Note: Do not print this document out. If I would have printed my document out, it would have used 784 pages. That’s because the document also contains all of the items in your inventory that are sold out and are at zero quantity. If you rarely (or never) delete any of your MSKUs that you no longer use (because you’re sold out and don’t plan on selling again), then you may have a file even longer than mine. So don’t print the file, but do save it and email it to your CPA (or whoever is doing your taxes).

Other reports on the same Reports/Fulfillment page that your CPA would probably like to see are the following:

 – Monthly Inventory History – Found under Reports, then Fulfillment, then Show More, then Monthly Inventory History. Click on the Download tab and run this report for the full year (choose “last 12 months” for the report time period) and it will show you a monthly breakdown of what you sold each month.

Screen Shot 2014-12-23 at 12.08.03 PM– Received Inventory – Found under Reports, then Fulfillment, then Show More, then Received Inventory. Click on the Download tab and run this report choosing “last 12 months” as your time period. This shows what inventory items Amazon received from you this year.

Note: As with the “Year End Inventory” report, be sure to move the report over to a spreadsheet program (like Excel or Google Sheets) so that it’s easier for you or your CPA to read.

When you run these reports, don’t forget to choose “last 365 days” or “last 12 months”  for your report dates. You want the reports for the whole year, not just the current month.

Screen Shot 2014-12-23 at 11.04.28 AMYour CPA would also like to see a report of your sales, fees, and income from Amazon. The way to find and run this report is a little different than above, so here is how you do it:

  1. Log in to Seller Central.
  2. Hover your mouse over “Reports,” and then select “Payment.”
  3. Click on the “Date Range Reports” tab.
  4. Click on the “Generate Report” button.
  5. Select Report Type: Summary
  6. Select Date Range: Custom
  7. Enter in the date range you want. For tax purposes enter “01/01/2016 – 12/31/2016”
  8. Click “Generate” to get the report started.
  9. Once the report is ready, it will be available to download.

Note: If you are running this report before December 31st, then the report will not be ready to download until January 2nd. Set a reminder somewhere to come back and download the report on January 2nd. If you are running this report after January 2nd, then it should be ready to download in a few minutes.

Get all of these reports to your CPA ASAP. You really don’t want to be late on getting the tax process started. Again, if you don’t have a CPA, I highly recommend getting one as soon as possible. It’s costly, but you want to be sure your numbers are right, and you want a professional to do the work that would eat up way too much of your time if you did it yourself.

Of course, these aren’t the only numbers you’ll need to give to your CPA. They will also need to know your cost of goods (you logged your receipts, right?) and any other business-related expenses that will deduct from your sales numbers.

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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.

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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Ok, 2016 is almost over. What other things are you doing during the last week of the year in order to prepare for 2017? I’d love to hear what you’re up to this week!