One of the aspects of running a business that most of us like to ignore, are the financials! Simply put, they are confusing. Fortunately for us Amazon FBA sellers, there are some amazing tools out there that can help us keep our “books” in order.
That brings us to the question of, what do I really need in my Amazon business? Can I use just one or the other? Do I need to have Go Daddy, Inventory Lab AND Tax Jar? Seriously, I get this question asked in email at least once a week.
The answer? Yes, we need ALL THREE…
In this post, I will share with you the benefits of each of these three softwares and why they are critical to your Amazon FBA business accounting. Each one of these programs has a very different purpose when it comes to your finances. They don't overlap and I can't live without any of them. Get ready for our reviews of each them below.
Go Daddy is a bookkeeping software that integrates with Amazon. With this program, you can easily see all of your yearly income/expenses broken down in one place. We have many facets of our business now, and they are all stored within the Go Daddy System. It works with all of our business, and works for just an Amazon business too.
The accounting method that is used inside of Go Daddy is what is known or referred to as “cash based accounting”. This means that the money that comes in for the year (-) the money that goes out for the year (=) your net profit. No keeping track of the individual inventory items purchased / sold throughout the year. You buy it today, you take the expense, no matter when that item actually sells. This is a major factor in our Amazon business since we may buy 100 of one item, and it could sell for weeks, months or even across a few years. We don't want to be keeping track of each of those and tallying exactly when it sells and for what price. We just take the inventory purchase as an expense at the time it is made.
Go Daddy is easy to integrate with Amazon and it will pull all of your sales data and expenses that come with your seller account.
It also integrates with many banks and credit cards. Meaning you can automatically pull all of your business expenses. Then you just categorize them and you are good to go. You can also add in mileage and receipts manually!
Once the end of the year comes, it is super simple to run your schedule C and either file your own taxes through a service like Turbo Tax (which we did for years) or give it to your accountant.
Now if you're reading this and your taxes are due FAST, the timing might not be great to start with Go Daddy. Instead, you might want to look at something like Catch Up Accounting. This course will teach you a method to help you get a whole year's worth of numbers in order fast. Some students get it done in one weekend!
Then, once your income taxes are under control for the year, you can move forward with a regular bookkeeping routine in Go Daddy.
The bottom line is that Go Daddy gives us our profitability as a business OVERALL. Considering all expenses and income. Not just what has sold / when. You can check out all of the features / benefits of Go Daddy by clicking here.
#2. Inventory Lab
It is no secret that The Selling Family loves using Inventory Lab! The reason is we use it in many aspects of our business. The focus of this section is going to be on the Accounting / Listing portion, but if you would like to read about the Scanning App, you can see our review of that here.
When it comes to accounting, the reason that we recommend Inventory Lab is because you can see your profitability per item sold. Meaning that as your products sell, you can see exactly what you made on each one. You can also get a breakdown of your profitability yearly, monthly and weekly. It is very important to know that the items you are selling are actually making you money! You wouldn't believe how often when we really dig deep into someone's numbers, they are selling items at little to no profit. This won't happen with Inventory Lab on your side, or if it does, you can see it and nip it.
You can keep track of where you purchase each item, how much you paid for it and the quantity. You can list more of an item later and Inventory Lab will know that those ones are a different cost (if they were) and keep track of that without having to create a new MSKU.
To get a better picture of the overall profitability of your business, you can add in other expenses manually. Like your mileage, supplies costs and more. Keep in mind though, the accounting type that Inventory Lab is referred to as “accrual based” accounting. This is the opposite of cash based that Go Daddy uses.
If you use accrual on your taxes, you are taking your expenses and income based on when they are allocated. Not necessarily when you make the purchase / deposit. This is something you would need to discuss with your personal CPA. I can't really say one is better than the other, just that we use cash based 🙂
That is the main reason that we don't use Inventory Lab only when it comes to accounting (well and the other businesses need to be tracked as well).
So, we use Inventory Lab to see our item profitability and monthly profitability based on what has SOLD. We use Go Daddy to see our overall business profitability based on what money has been SPENT and what money has been RECEIVED. Make sense why we need both? You can see all of the features and benefits by clicking here.
#3. Tax Jar
Tax Jar is actually in a whole different playing field than Go Daddy and Inventory Lab. Their one and only purpose is to make sure that you are keeping track of and paying your state sales taxes! Neither Inventory Lab nor Go Daddy do this. That is why you would need this third service 🙂
Sales tax is one of those things that everyone hates and no one likes to talk about…Me included. To be honest, I just don't get it. There are so many rules and laws that keep changing. So for me, I just like to hand it over to my CPA and say “handle this”. But for those of you who are more DIY with sales tax, you could work hand in hand with Tax Jar to take care of your sales tax.
You can see all of the features of Tax Jar by clicking here.
Lastly, there is an awesome beginner guide to sales tax that will let you know the in's/out's of what you need to know about collecting sales tax..
There you have it friends! When it is all said and done, you need all 3 services 🙂 They each play a vital role in our Amazon FBA business and will save you lots of time. These ones don't save you money like a lot of our other recommendations…But, time is money right?
To get all 3 services, you will be looking at about $70/month in fees (give or take depending if you get free months and sign up for a year at a time). We hope that helps you understand the benefits of each of these services and how they are different.