So, you have been a seller on Amazon for a while, and now you’re realizing that the tax regulations are getting more and more complicated, and that you need to stay up to date in order to do everything right? Well, there’s no doubt that you certainly have a lot on your plate, and that the ever-changing rules are making things increasingly difficult. But, there is also no doubt that you can still do things the right way, if you just take your time to get familiar with the rules and regulations, or if you simply partner up with professionals that can do that for you. Let us not get ahead of ourselves, though.
Of course, you could also just now be looking into this market, trying to become an Amazon seller and make a profit doing that. Even in that case, though, you will absolutely need to be aware of all the tax laws and regulations, so that you can ensure you are staying in compliance with the laws, and that you are not getting into any legal trouble while running your business on this particular marketplace. So, whether you are just a beginner, or an experienced seller that has gotten slightly confused about all the rules, the same notion applies – you have to know the rules and you have to know how to be prepared for an Amazon sales tax audit when it comes your way.
How can you, thus, get prepared for an audit? Well, the main thing you have to understand here is that this is not something you can do in a few days, upon realizing that you have an audit upcoming. The preparation is actually done throughout the process of running your store, because if you keep everything right along the way, you won’t have to worry too much about the audit when it has to be done.
How can you do everything right along the way, though? Clearly, to succeed in this, you will have to get familiar with Amazon accounting as a concept, and understand how to do it perfectly. Therefore, this is the topic that we will cover below, after which we will share some precise tips on how to prepare for an audit as well. Without any further ado, thus, let us start getting you properly informed.
Amazon Accounting: How to Do It Right
What exactly is Amazon accounting, then? In short, it refers to the practice of managing financial transactions, inventory flow, as well as tax obligations specifically for those people who are selling on Amazon. In a sense, it is similar to general accounting, but with one crucial difference. It focuses specifically on the rules of Amazon, the frequent disbursement schedules, the unique reporting structure, the fee deductions, the tax rules, and anything else you have to do right in order to have any success while selling on this platform.
For this reason, it may not be enough for you to simply get an accountant for your business and hope that they will know how to do everything correctly. What you want, instead, is to get Amazon accounting services, that is, partner up with those professionals that have specialized in this particular area, and that know all the rules and regulations that you should follow while selling on this platform. Working with them will ensure that your finances are well organized and that everything will align with the systems of the platform, which will eventually lead to you being properly prepared for an audit when it happens.
The professionals we are talking about will provide you with services such as automated reconciliation of your sales with your financial records, sales tracking by jurisdiction, integration with certain tax automation platforms you may be using and similar. Furthermore, they will definitely provide you with the necessary support during the audit, helping you pull the necessary records easily, as well as communicate with the auditors successfully. There is no doubt, therefore, that working with these professionals will give you an edge, ensuring you are staying in compliance and ensuring that the audit goes well.
Of course, your main task here is, clearly, to choose the right company to partner up with when in need of Amazon accounting services. That means, that you shouldn’t rush into things and make hasty decisions. Quite on the contrary, what you have to do is find and carefully research different professionals that are ready to offer you these services, check their experience levels, their reputation, their fees and anything else you need to know in order to make a smart choice and thus gain a knowledgeable and supportive partner on your side.
How to Prepare for an Audit
Of course, even with the right partner on your side, you will still have to know how to prepare for the audit. Sure, the experts will do most of the hard work for you, but you want to stay in the loop, and you want to know what your responsibilities are during this process. Well, for one thing, you should understand why it is that you may be audited, because it doesn’t necessarily mean that you have done something wrong. An audit can happen for various reasons, including some inconsistencies in your reported income compared to your tax filings, a nexus trigger, customer complaints and more. But, you could also be randomly selected for an audit.
In any case, you need to be prepared. So, keep the sales tax records properly organized and easily accessible. Then, make sure to reconcile your sales and tax reports on a monthly basis, and emphasize the importance of this to the Amazon accounting service company you have previously partnered up with. Make sure to know what it is that the auditors may request from you, such as invoices, proof of tax-exempt sales, shipping details, sales tax return filings, bank statements, Amazon disbursement records, and other important records they may need during the process. Finally, always remember to correct any past mistakes before the audit starts, and don’t forget to stay up to date with the compliance rules, so that you are always properly prepared for the audit.
