My top-5 tax tips for Amazon.com sellers

1. Incorporate correctly

One of the most important decisions we’ll make as you establish your Amazon business is how to incorporate the right way. Choosing the best business structure is crucial for growth, profitability, and also managing your tax liability, yet it’s definitely not a “one-size-fits-all” proposition.

Think of the right incorporation strategy as setting a solid foundation for your business upon which all else is built!

2. Deductions are a seller’s best friend!

When I first meet with clients and review their accounting records, I find that the vast majority haven’t taken full advantage of all the tax deductions available. From deductions for Amazon seller fees to charity donations, online advertising to some travel and home office expenses, here (attach link) is a little more information on deductions.

Not maximizing your deductions means that you’re literally leaving money on the table!

3. Choosing the right inventory accounting method is crucial

As you may know, there have been several significant changes with inventory accounting over the last several years, starting with the Tax Cut and Jobs Act in 2017. Some of those changes include raising the limit for non-incidental material and supplies for inventory from $1 million to $25 million, among others. Some of these can simplify our system and make your life easier, while some may actually save you a lot of money!

So, we have several choices to scrutinize when establishing your inventory accounting method, which is a key point when selling successfully on Amazon.com or online.

4. Think “smart & strategic” when it comes time to sales tax

If you’re selling on Amazon.com or other e-commerce platforms and not paying detailed attention to your sales taxes, then you could easily get yourself in trouble. In fact, too many online sellers don’t fully understand the rules, regulations, and responsibilities when it comes to reporting sales tax from online selling, particularly when it comes to their state tax obligation.

Suffice to say that sales taxes can get incredibly complicated – and can quickly turn a profitable venture into an anchor of liability, penalties, and worse. I highly recommend a program called TaxJar for my clients as part of a comprehensive tax planning system so you can sleep well at night (as your sales keep rolling in!).

5. Get a GREAT tax accountant or tax advisor who’s experienced in Amazon and e-commerce sales…like me!

If you’re serious about your Amazon.com or e-commerce business, I highly recommend utilizing a tax accountant or tax advisor with experience, commitment, and foresight to keep up with new regulations, laws, as well as technology.

I’d be happy to chat with you about your Amazon.com business, whether you’re just starting out or already bringing home significant income. It’s worth getting right!

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If you’re ready to take your business to the next level, schedule discovery call here.