Learn Accounting for Amazon Sellers UK from Allison Walker as she discusses dividends and bookkeeping.
These links are primarily for Accounting for Amazon Sellers UK. But you’ll find US version easily too:
Rule #1: don’t use your personal bank account!
– It’s really painful for book-keeping
Touch on Amazon issue of swapping sole trader for ltd co!
Owners see a healthy bank balance and take money out.
This is almost the opposite position to where you’ve tied all your cash up in stock (and not differentiating between profit and loss vs. Cashflow).
The cash in the bank is NOT the same as the profit in the company!
You’re only allowed to take out dividends out of profit.
You need to know what is LEFT (reserved profits) after all costs including accrued tax liability.
You need to deduct costs including corporation tax (19% of the profit) before you know what the post-tax net profit is.
If you take out more, you end up with an overdrawn director’s loan account – meaning you now owe the business some of the money you took out.
The dividend tax rate in Feb 2020 is currently only 7%.
This is much lower than the tax on salary in the UK (20% basic rate, 40% higher rate, 45% top rate)
Most directors take a salary up to their personal allowance threshold (£12.5K a year in the UK in 2020) in salary, and dividends after that.
HMRC don’t necessarily like it, but it’s legal!
If you take out more than you should have, that has to be paid back
Or you have to go into the following year and declare profits and it gets messy
There is a big difference …
They are the ones running processes.
Allison’s preference is that book-keeping and reconciling bank accounts are done DAILY!
You can use Xero or Quickbooks – and then you can instantly see how you’re doing.
And you can link Amazon to either with “Link My Books” LInkmybooks.com
Above all, they can educate and advise you on what the numbers actually mean in your business.
They can help you set targets and goals; check your margins, and monitor trends.
Make sure you look for someone qualified!
Work that they do includes:
They also submit tax returns etc. and interact with government bodies (in the UK, HMRC, or companies’ house), etc.
Cost: £200 plus VAT/month
£400 plus VAT/month
Xero starter license is included
50% off premium license for 1st year (most Amazon sellers need this because have international transactions)
50% off Linkmybooks for 1st year
(save £600 a year)
Set those up free of charge (usual charge of £300)
Amazon Accounting Mistakes – with Allison Walker
Amazon Accounting Basics with Penny Lowe
Scaling your Amazon Business with Penny Lowe