Why Should I Consider Hiring Ebiz Accounting?

Ebiz Accounting specializes in supporting businesses operating on the Amazon Marketplace. As a vast platform connecting millions of individuals with goods and services, Amazon streamlines both product purchasing for consumers and selling for vendors. To ensure business success, meticulous monitoring of purchases and sales is essential. Ebiz Accounting is dedicated to helping to organize and reconcile your finances, providing peace of mind. We proactively identify any financial vulnerabilities, bringing them to your immediate attention, so you can focus on running your business effectively. Please continue reading as we explore the benefits of enlisting the help of an eCommerce Accountant.

How Do Taxes Affect an Amazon Business?

Operating a business on the Amazon Marketplace, via either Fulfilment by Amazon (FBA) or Fulfilment by Merchant (FBM), requires understanding various tax obligations that are crucial for profitability and compliance. The primary tax considerations for Amazon sellers include sales tax, income tax, and, for some businesses, international tax implications.

When it comes to sales taxes, this is often the most complex area. Since Amazon operates under a marketplace model, sellers are generally responsible for collecting and remitting sales tax in states where they have a “nexus.” This term refers to a significant presence that obligates a business to collect sales tax. For Amazon sellers, a nexus can be created in several ways, including:

• Physical presence (having an office, warehouse, or employees in a state)
• Inventory stored in Amazon Warehouses
• Affiliate Nexus (you have affiliates in a state promoting your products)
• Economic nexus (even without a physical presence, if your sales or transaction volume into a state exceeds a certain threshold, you are required to collect sales tax)

Regardless of its structure, an Amazon business’s profits are subject to income tax. The specific tax obligations vary by business type, such as Sole Proprietorship/Single-Member LLC, Partnership/Multi-Member LLC, S Corporation, and C Corporation.

Meticulous record-keeping is imperative for all revenue streams and deductible business expenses. It’s important to note that most Amazon businesses are required to pay estimated quarterly income taxes; income is not subject to withholding. Failing to do so can lead to penalties.

How Can a Certified Public Accountant Help Me?

If you are an Amazon seller, it’s crucial to engage a certified public accountant from Ebiz Accounting. Maximizing profitability hinges on effective tax planning, which involves strategically utilizing all available deductions and credits, as taxes directly impact net profit.

Navigating the intricacies of sales tax, particularly across multiple states, and the continuous demands of income tax reporting, can impose a substantial administrative load. Many businesses discover that collaborating with tax experts proficient in e-commerce is advantageous for guaranteeing compliance and refining their tax approach.

Ultimately, the long-term success of an Amazon business hinges on a thorough understanding and proactive management of its tax obligations. Failure to address these crucial aspects can result in severe penalties, audits, and jeopardize the financial stability of your business. Connect with our firm today for an initial consultation to discuss your needs.