Classic Amazon Accounting Mistakes

Allison Walker talks about Amazon accounting mistakes and discusses practical solutions that are most applicable to your business.

Mint Accounting works for these sellers:

Anyone selling on Amazon based in the UK and or those registered for VAT inc Canadians and Americans

Classic Amazon Accounting error 1: “Swapping” your amazon account between a sole trader and Limited Company.

Depending on how you do this, you’ll likely need a new VAT registration number

It’s usually more tax-efficient to use the new VAT number

You can end up with a big-time lag

Amazon can take a long time to update records

You may end up with an old VAT number

How to move your Amazon business from sole trader to Limited Company in UK

Incorporate directly - you’re just rolling Sole Trader into Limited Company, which keeps same VAT number

But it can be more tax-efficient to sell your Sole Trader business to your Limited Company; which means you have a new VAT number in the new company.

This can mean you have to operate the two in parallel while Amazon works it through.

Running Amazon as Sole Trader and limited Company in parallel

Set up ltd co, had it VAT registered

If you’re moving Sole trader to a limited company.

If you’re selling ST to LC, run the two in parallel from an Accounting Pov for about 6 months

Two sets of Xero books?

Although just have one Amazon account!

That gives you time if amazon is using an old VAT number until you get the point where they’re using the corrected VAT number.

You may not be trading via your ltd co, ie no sales yet, but you may be

Making purchases

Incurring other costs

Amazon Accounting error 2 - Not dealing with numbers in bulk

The key is to get the right Software in place

The amount of data you get from Amazon seller central is crazy.

It’s good information but it’s huge amounts of info to process.

Getting the information into your accounting software can be tricky.

Link my books is the product that Allison uses.

It takes the info from Amazon and syncs it accurately with Xero

How do we set up Xero for Amazon?

Your accountant can do it for you - and this is by far the best way to do things. DIY is not a great plan!

How they want a chart of accounts structured is important so they can easily create statutory accounts (for tax authorities etc.)

You also need to know what you as the business owner need the accounts to do for you.

Things to look out for setting up a Xero account:

Xero has a standard Chart of Accounts

But based on understanding your business, you may wish to tweak things.

Amazon account setup: Detail vs. Bundling together info

Try to break things out into separate lines for the accountant.

However, you might just as the business owner want things to be bulked together for monthly monitoring.

For example:

Depreciation - if you have assets - chunk it together

Vehicles