As we close up the 2016 business year, it is a great time to review available tax deductions for Amazon sellers. If you wait until April, when taxes are actually due in the United States, it is TOO LATE to make any changes for the 2016 tax year.
The only things that can be used to reduce your taxable income for the tax year are items that you spend money on in the same calendar year (January-December). If this is your first year as an Amazon Seller, you may have never filed taxes as a self-employed person.
One of the things we as online business owners try to do is get our “taxable income” as low as possible — because that is the portion that we actually have to pay income tax and self-employment taxes on. Let’s take a look at some tax deductions for Amazon sellers that will help you out in April!
In today’s post, we are going to cover some of the things that you can use in your business, and that we feel are good purchases to not only bring down your total taxable income, but to increase your productivity for the upcoming year.
Disclaimer: I am not an accountant and do not play one on the internet. These are ideas/thoughts from running my own business and should not be taken as legal or tax advice 🙂
It’s Time To Get Some Tax Deductions For Amazon Sellers
At the end of every calendar year, I like to sit down and make a list of all of the things our business could really use. Coming off of a Q4 high, and of course a windfall of taxable income, it’s a great time to see how we can make some business purchases.
One thing my accountant has always commented on is the fact that Amazon Sellers just don’t have that many tax deductions overall.
It’s pretty simple for us, right?
- Inventory (COGS - Costs Of Goods Sold)
- Amazon Fees
- Shipping Supplies (labels, boxes, tape, etc)
A lot of times as new business owners, we try to keep our expenses to a bare minimum, because we need as much profit as possible.
Tax time is one of the only times that actually hurts us!
Once you have become profitable in your business, I highly recommend looking for ways you can improve your business set-up and systems.
What could make it easier to prep your inventory? How could you source faster? What could you outsource?
These are all things that help bring your taxable income down and your productivity levels up.
If you have been waiting for the perfect time to purchase some upgrades (or even bare necessities), now is the perfect time to get off the fence.
Here are some of the often overlooked tax deductible purchases you can make as an Amazon seller
New trainings/courses to help you grow your Amazon business
If there is a new niche you have been thinking about getting into, why not get the course now and then tap into it in January?
There’s no better time than the first of the year to add some new strategies to your business.
In fact, I actually recommend choosing one new technique to add to your business in the new year. This keeps your business constantly evolving, which is a great thing!
One strategy that you can implement in 2017 is Online Sourcing. Check out our ABCs of Online Sourcing video course. There is nothing better than sourcing inventory from the comfort of your own home, in your comfy clothes!
One guide I highly recommend that all Amazon sellers pick up heading into the new year is Stephen Smotherman’s “The Reseller’s Guide To A year In FBA.” This guide is awesome because it walks you through each month of the year and what Amazon sellers should be focusing on. Never forget any important seller dates with this guide!
You can take $10 off “The Reseller’s Guide To A year In FBA” using coupon code: JESSICA10
Perhaps you would like to add Private Label to your Amazon business this next year?
We recently did a webinar with Chris Guthrie, where he shared the exact steps it takes to start doing Private Label. You can check out the replay and know how Private Label works!
Add Beneficial Services Amazon Sellers Use
Now is a great time to upgrade any of your monthly services to a yearly subscription if offered.
If you have the funds available, it is a great way to both save on the cost of the subscriptions (because they usually offer a discount when you pay by the year) AND get the larger tax deduction for this year.
Yearly subscriptions add up to a good amount of tax deductions for Amazon sellers.
If you are not utilizing these services, now is a great time to evaluate your business and see which ones will help you to move forward in 2017.
Some of the services we recommend considering are:
Online Sourcing Daily Finds - This is where we share the finds that our VA’s have found online, that can be resold for a profit on Amazon! You get access to at least 8 product leads per day, with a minimum ROI of 50% and at least $5 profit. Our lists are only shared with 50 people per group. You can also get a sampling of the daily finds in our FREE Finds Facebook group.
AmaSuite - This is actually not a yearly subscription service, but a one-time fee. But it is great for anyone who is doing Private Label or creating their own listings on Amazon. It helps with keyword research, niche selection, analyzing competition and so much more! We’ve even got a $100 off bonus right now for The Selling Family readers!
RevSeller - This is actually one of my favorite Chrome extensions right now, and one of the only ones I’m willing to pay yearly for! This brings all of the features of the FBA Calculator right to the Amazon product page you are looking at.
Plus, with one click of a button, you can see if you are approved to sell the item or not. This is a major issue when looking for inventory, as you need to know if the brand / specific item is restricted or not!
We have a special Selling Family discount for you, too 🙂 You can grab RevSeller for $20 off the normal price and get it for just $79/year. Coupon Code: THESELLINGFAM
Inventory Lab - Easily list your products on Amazon and keep track of individual item profitability.
Tax Jar - Handles the bulk of the work for submitting sales tax to the states you are registered in. Sales tax is one of those topics no one likes to talk about or do, so I like to give the bulk of the work over to them 🙂
Go Daddy Bookkeeping - This is the bookkeeping service that we use for our business. It is very simple to use and integrates directly with Amazon. We have a course that helps you set up this service if needed as well.
I know that these services may seem to overlap, so I’ve got a post to break down the difference for each one and why we use all three in our business!
Stock Up On The Best Tools For Amazon Sellers –
If you have been a reader of The selling Family for some time, you will know that we love to have the best tools to get the job done. This is one area we try not to skimp on. Check out our Top 10 Must-Have Tools For Amazon FBA Sellers and see if there are any that you must add to your business this year!
Here are some others that will make your selling life easier next year:
Self Sealing Poly Bags - I always get at least one case of our most-used sizes this time of year. A case is 1,000 bags, so it will last a majority of the year. The sizes we always have on hand: 8×10, 11×14 & 14×20. We order them from Uline by the case. You can also order them on Amazon by the 100.
Heavy Duty Packing Tape - Tape is one of the areas that we no longer try to save on. We have found that when we use “cheap” tape, we use way more and it costs us more in the long run. The best tape we have found is the Scotch Heavy Duty Shipping & Packing Tape. Amazon has a great price on the 6-pack! I usually buy at least 24 rolls. Since we have a tape machine, that will last us almost all year.
USB Scanner - Help yourself out when it comes time to create your shipments. A handheld barcode scanner will save you from having to enter all of those UPC codes for every item you are sending to Amazon.
Dymo Printer - If you want to print labels as you create your shipment, then you definitely need a Dymo Printer! We have the 400, but you can get the 450 Turbo for around the same price and it is faster.
Upgraded Shipping Scale - After we finally upgraded our shipping scale, we loved it! You wouldn’t think a scale matters much. But not having to move the box before we can see the weight and having a bigger base has made a big difference.
Laser Printer - We actually now have TWO laser printers in our house — one in each office. They save us so much money on ink in the long run and are so fast!
Some other small things to consider stocking up on that you may use in your Amazon business:
- Large size permanent markers
- Dymo Labels
- Avery Shipping Labels,
- Avery Shipping Labels
- Post Its
- Printer Paper
- BoxesBubble Mailers.
- Bubble Mailers
Upgrade Your Office Space For Comfort In 2017
Your home office as a whole is deductible for your taxes. It is important to make sure that you are ONLY using the space for business, though.
As a general rule, you must use a part of your home regularly and exclusively for business purposes. If your office is your principal place of business (as it is for most Amazon sellers), it’s definitely a tax deduction you’ll want to carefully & thoroughly investigate. If you have questions it’s important to reach out to the IRS directly or a tax professional. (Source)
Last year, we made a lot of upgrades to our office spaces. Here are some of the things we purchased:
New Desk - My office got a new corner desk with hutch (LOVE IT)
New Macbook - I got a new Macbook Pro for the business. This is used for creating shipments and on-the-go work.
New iMac computer for the upstairs office where I do most of the computer work.
New iPhones - We both got new iPhones. Man, we seem to be Apple People for sure 🙂
Color Laser Printer - I use the black and white printer for all of the shipping needs of our Amazon business. But this year I upgraded my main office to include a color laser printer so that I could print nice printable sheets and ebooks.
New Office Chair - Comfort is a plus when working from home!
A Few Other Tax Deductions Amazon Sellers Often Forget:
Business checking fees. Charges for checking accounts, ATM withdrawals and other bank services are deductible. Love it! Even more good news? Some of the interest on your credit cards may be deductible if you’ve used a card to finance a qualifying business expense.
Cell phones. Hang onto your cell phone bills because a portion can be deducted come tax time. It boils down to what percentage of your phone is used for business, so great record-keeping is important. (Warning: claiming 100% of your cell phone for business use can trigger red flags for the IRS because that’s so unlikely to be the truth.)
Auto expenses. If you used your vehicle to source products for your Amazon business, you may be able to deduct some of your travel expenses. The 2016 IRS mileage rate is 54 cents per mile for business miles driven. (See the IRS topic Business Use of a Car.)
The important thing with mileage is it needs to be tracked as you go. We recommend using a small mileage notebook in your car to write your trips daily, or a smart phone app like TripLog that can track your trips using GPS.
Now that you have some ideas on how to get some last-minute tax deductions, which items will you choose? Are there any purchases you made this week in anticipation of lowering your tax bill?