As you continue to grow your reselling business, you may notice that small business book-keeping can be fairly overwhelming.
While some reselling marketplaces offer inventory reports and sales reports, others provide virtually no tools to resellers for the record-keeping you require to run your business.
As a high volume multi-platform seller, you will need to find a solution for you that helps to keep everything in order in the most efficient and inexpensive way possible.
Book-keeping is not fun, but services like Vendoo make it much easier for resellers!
To find a book-keeping solution for your reselling business, you will first need to determine what information you need to record.
Generally, you will need to figure out:
What you need to know for tax purposes.
What you need to know for personal accounting.
What you need to know for practical purposes.
Which analytics you need to scale and grow.
Here is your guide to everything you need to know about reseller book-keeping to answer these questions and more.
1. Reseller Taxes and Reseller Tax Preparation
First and foremost, you need to speak with an accountant or licensed tax professional. This is general information, but no blog or social media post should be substituted for professional tax advice.
To ensure that you are in compliance with state and federal requirements and that you are receiving all of the deductions for which you are eligible, consult with a pro.
Generally, reseller taxes will require the following information:
Your Beginning Inventory Balance balance (the total cost of your inventory at the start of the period- either the year or the quarter).
Be sure to save all receipts for the purchase of inventory, or to keep diligent records as to your costs when you do not have a receipt (i.e. when you purchase inventory at a yard sale or estate sale and the seller does not provide a proof of purchase).
Your Ending Inventory Balance
Expenses include those which are not inventory, such as fees for your business entity, programs and softwares (photo-editors, automation services, cross-listing service, etc.), supplies such as cleaning products and packaging materials), services such as shipping services, repair, maintenance, or dry-cleaning, storage costs, and qualifying education or training expenses such as a course you may have taken. Be sure to save all receipts and records for expenses.
Other Records for Deduction Eligibility
Almost every reseller can claim miles traveled for business purposes, though there are stipulations as to which miles are deductible, as well as qualifying travel expenses, and even qualifying meals.
Note: Labor, Insurance, Utilities, and Sales Tax Collections are other important considerations for which you should keep records. Because these are specific to state and unique to your business structure, we will not explore these in this article. Be sure to keep diligent records of any and all expenses, so that your accountant can determine which are reportable and deductible.
The bottom line is to save all records for anything you pay for that is related to your business.
The easiest way to do this is to separate your business records from your personal records: using only a business bank account for business purchases, so the transactions are easy to review.
Did you know that most banks offer small business accounts where your transactions are recorded. For example, with a Bank of America Business Card, you can categorize all purchases made from Amazon as “supplies” and all made from Goodwill as “inventory” to receive monthly, quarterly, and yearly statements with all categories calculated.
Reseller Tip: You do not necessarily need to establish an official business such as an LLC or Corporation, however there may be tax benefits associated with establishing one. The amount of taxes that you will pay and the amount of deductibles varies depending on the type of business (or lack thereof) that you have. Yet another reason to speak with a professional!
Also, make sure you check out: 9 Steps to Start a Reselling Business Online for Profit
2. Reseller Accounting
Aside from the information you need for tax purposes, what do you want to know? You likely want to have an idea of how much money you have expended on unsold inventory, or your monthly operating expenses.
You likely want to establish a budget or at least some goals, which require staying on top of your numbers.
Be sure to review your statements and check the accuracy of incoming and outgoing transactions. Seriously, you would be surprised how often companies make billing mistakes: I was double-charged by a photo-editing subscription last month, and I also determined that I never received a pending pay-out from a marketplace that I received a confirmation email for. A weekly review of your accounts can save you money.
While you can customize your accounting practices to what works best for you, a simple metric to keep track of is your net profit: your total profit (incoming funds) minus your costs and expenses (outgoing payables).
3. Reseller Business Reports and Book-Keeping
Also, you will want to consider what you need to know for practical purposes. While your accountant might not require that you have the individual COG for each piece in your inventory, you might want to know this information to determine your return on investment.
You might also sell items on consignment, which requires diligent records as to the exact numbers associated with each piece of consigned inventory.
You also likely require documents that provide information such as: the inventory you have in stock, where it is listed for sale, where it is physically stored, and more. All of this information can be stored in Vendoo and even downloaded from Vendoo to a CSV spreadsheet.
4. Reseller Analytics
In addition to the information you need for taxes and practical operation, what information do you calculate and analyze to help you grow and scale your reselling business?
Are you able to determine your profit and revenue based upon platform, your total sales volume, average sale price, and top-selling categories and brands across marketplaces?
Vendoo provides all of these and more! These valuable analytics can help you establish goals and concentrate your time on the platforms and items that yield the most profit.
This is Vendoo’s analytics dashboard, where you can track your profit, volume sold, volume listed, and average sale price (ASP). With the ability to compare to the prior period, you can see if changes in your activity are paying off!
See which marketplaces are the most profitable for you!
Check out your average sale price (ASP) across marketplaces.
Keep track of your top-selling brands and categories.
For book-keeping and profit and revenue calculation, I use Vendoo. Whatever method you choose, you will want to make sure that it is reliable and efficient, because the less time you spend book-keeping, the more time you can spend doing literally anything else.
What are your best book-keeping tips and tricks? Share with us below!