Scaling your Business (Penny Lowe 2 of 2)

Last time on Amazing FBA, we talked about startup businesses. Today, in part two of my discussion with Penny Lowe, owner of Wellington Consulting, we're focusing on accounting for companies that would qualify for the 10k collective. In a nutshell, today we're going to be talking about scaling from an accounting perspective.

Please note that the information is discussed in a very general sense and you should consult a professional for information based on your needs.
The Biggest Problem for Amazon Sellers Growing to $10k-100k per Month in Turnover
One of the most substantial difficulties for Amazon sellers looking to scale up their business is undoubtedly inventory management. Where is my product? How many items are there? Is quality control being kept up? Are my items in storage or transit? These are all questions that become more and more difficult to answer without excellent record-keeping as businesses move from the startup sphere to the established.

Another stumbling block for scaling Amazon retailers is excess stock. Developing a system for identifying stagnant product lines and determining what to do with those dead items can be tough. Offering a discount in the Amazon Marketplace would be foolish; that would drive up demand for the product. Knowing when to throw in the towel and how to offload excess stock can mean the difference between staying in the black and falling into the red for sellers new to high turnover Amazon merchandising. Remember, storage space is valuable. That means it's expensive.
The U.K. Value Added Tax
If you find yourself approaching  £85k in turnover, you need to keep an eye on VAT. Even if you're selling abroad, you may be able to claim back some VAT for items shipped outside of the UK. On the other hand, if you've crept over that £85k, the taxman can come and claim that you owe VAT on items for which you haven't included it in your pricing; this could be an absolute disaster for the margins of a growing business.

If the competition is selling more than £85k and you want to check if they've registered for VAT, check out: HMRC.
The EU Value Added Tax
Each country in Europe has a different turnover limit before they require VAT registration. It's imperative that Amazon sellers keep an eye on their sales turnover in each country to make sure they're not in violation of VAT regulations. If you're selling £50k in Germany, you need to register for VAT in Germany.

The figures for VAT sales thresholds are typically calculated using each country's distance sales rules. The rules for digital delivery products are different. Mini One Stop Shop (or MOSS) is the resource digital-only sellers should use to avoid registering in all countries where they do business.
EU Distance Selling VAT Thresholds
Germany - €100,000

Spain - €35,000

Italy - €35,000

France - €35,000

U.K. - £85,000

Keep in mind, VAT return and payment processing can take months. If you've been overcharged or erroneously charged for VAT get your paperwork filed immediately. These kinds of things can wreak havoc on a growing business' cash flow. Don't wait until the last minute to make tax payments. The taxpayer is responsible for knowing business hours of banks and collection centres. The best practice is always to submit tax filings and payments as early as possible.
VAT and Import/Export
For VAT registered sellers, all goods brought in through customs in the U.K. are subject immediately to VAT. If you're exporting a shipment of items, that shipment will be subject to VAT return. Keep a record of all shipments outside of the country; you'll need detailed information if you want to receive VAT returns.

If you're exporting to other countries, make sure to pay attention to their list of restricted products. The last thing any Amazon seller wants is to be slapped with a penalty for importing controlled goods.
Cash Flow & Scaling
Entrepreneurs new to private label selling on Amazon often ...