Bookkeeping Tips for Online Sellers

Why you need to care about bookkeeping when selling goods and services online

Many online platforms for selling products and services track some things for you. These include Amazon, Etsy and Shopify. We will go over some tips for Amazon and Etsy. For Shopify, read about our blog on Shopify e-commerce tips.

If you want to know exactly how much you are spending and making, and want to grow your business, bookkeeping is your best friend. Bookkeeping allows you to have an understanding of your business’s financial health. It also helps you keep track of what you are spending in comparison to what you are making. You can also track how much of what you are making is part of the platform’s cut. No matter what platform you are using, bookkeeping is useful in the following ways:

• Know the financial health of your business – Bookkeeping means keeping track of what you are spending and comparing it to what you have earned as profit. Your financial health is critically important if you want to grow as a business. Bookkeeping also provides the information you need to calculate your financial health and do it efficiently.
• Makes tax time more efficient – Keeping track of your expenses and profits makes tax time easier. You need to know what you have made for your taxes, and having that information already organized saves you time at tax time.
• Easily calculate your net profit – By taking your total sales income and subtracting what you spent to run your business. This could be shipping products around the world, purchasing materials to make your products and also paying for storage.
• Quickly make use of tax deductions – To find the best tax deductions for your business, doing proper bookkeeping is important. These deductions are based on business expenses so that you can reduce your taxes. There are also e-commerce-specific tax deductions. Knowing what your expenses are will make finding deductions easier.

International Sales

For any international sale, there are costs sellers who are looking to offer selling products internationally should be aware of. Some of these are duties and import fees. Also, exchange rates are an important factor to think of when selling in other countries.

Selling internationally through sites like Amazon means you will have to track how much money you are making from each site separately. The money you make on Canadian amazon.ca will have income and expenses separate from the United States amazon.com. Tracking these separately is important, it lets you know how profitable selling to each site is.

Dealing with Provincial Sales Taxes

In Canada, if you make less than $30,000 per year, then you do not need to charge sales tax on your products. But, after your business earns $30,000 or more a year you will need to start charging your customers sales taxes. Note that this is not $30,000 in profit but money earned by your business.

Here is the different sales taxes for each province and territory.

Bookkeeping Tips for Amazon Sellers

As an Amazon seller, you have access to many reports on how your products are selling. We will go over a few reports that you should pay attention to whether you provide your own fulfillment methods or you fulfill using Fulfillment by Amazon (FBA).

1. Units Ordered – This report will show you how many units were ordered over a certain date range. It will help you figure out what people are ordering a lot of and what items you are selling that need help or may not be worth the cost. Your sales also determine how you rank when people search for an item on Amazon.
2. Sales Dashboard – This is where you can find your sales, including the ability to compare sales, see a snapshot of your sales and see sales by category. This is updated once an hour. Comparing sales lets you compare different time periods and different categories.
3. Sessions – There are stats relevant when someone views your product page on Amazon. Page views and sessions. When one person views your product multiple times while browsing Amazon, those are multiple page views, but those page views happened during one session. So, sessions are unique page views by a user in a 24-hour period.
4. Order Item Session Percentage – This is a percentage calculated by taking the total number of items ordered in a time period divided by the number of sessions in that same time period. According to datafeedwatch, a percentage of 9.7 is average, and aiming for 10-15% is a good percentage.
5. By Date: Sales and Traffic – View the sales and traffic your marketplace page and product pages have gotten by date.

Tips for Etsy Bookkeeping

It is also important to find and download your spreadsheet of sold transactions for your own records. This can be found in Shop Manager > Settings > Options > Download Data. This will allow you to download the spreadsheet as a CSV file. Also, you can choose what month or year you want the data for.

This sold transaction report will give you the following information. Payment method, item price, item title, and SKUs should you have them. You can then input these CSV files into your spreadsheet program. For people in the United States or the United Kingdom, you can use QuickBooks to view this data if you have hooked up your Etsy account.

If you are in Canada, our team at Headquarters is here to help you with all your bookkeeping needs from your online shop. We can help you with any e-commerce platform, including Amazon, Etsy and your own store using Shopify. Contact us or book a consultation with us today!