Ultimate Guide to Personal and Business Finances for Amazon Sellers

Being your own boss and calling all of the shots is intoxicating! When you are your own boss, you can sneak in a nap during the day, you can work in your pajamas, and you are the envy of your cube-dwelling friends at the neighborhood cookout! They say to you, “Wow, you are so lucky, you can do what you want all day long!” “You don’t have to ask for time off!” “Your commute is just a few steps to your home office!”

As you agree sheepishly, you know there is much more to it than that, and some of you are even hiding the secret shame that your business and personal financials are a MESS. You know the real truth is that while running your own business is awesome, it is also very difficult.

Does this sound familiar? Are you tired of feeling shame and guilt because your finances are not in order? Fear no more, this article is a step-by-step guide to help you turn things around so you can feel in control!

Blog - Ultimate Guide to Personal and Business Finances for Amazon Sellers.png

And, if you are ready to jump in, here is our FREE guide with video tutorial to start your Amazon Accounting System:

AAS Landing Page - Mockup.png


Grab our FREE QBO Quickstart Guide with video tutorial and Chart of Accounts.

STEP ONE: admit that you are human and forgive yourself for your financial mistakes

Most importantly, it’s crucial that you admit that you are human. We are all busy, we have many responsibilities, and often keeping an eye on our finances from a business and personal perspective is on the bottom of the priority pile.

Accept that you are where you are, and you will start from here. By avoiding, the short-term gain is the relief of not having to deal with “it.” But, over time, the guilt looms and builds until finally the lack of control over your financial situation turns into shame, guilt, frustration, and greed.

We all have a natural resistance to those icky feelings, which is why we turn to avoidance. Instead, shift your thinking to a place of diagnosis and understanding. This is what a budget is for! A budget is a tool, not a trap!

Once you accept this new truth, forgive yourself so you are no longer a prisoner to your past. It’s now time to focus on moving forward!

STEP TWO: understand your money mindset

What is a money mindset?  It is a set of beliefs, established in childhood, about money. Inc Magazine defines money mindset as, “The overriding attitude that you have about your finances. It drives how you make key financial decisions every day. And it can have a big impact on your ability to achieve your goals. If you change your mindset about money, you tend to make better choices about how to overcome challenges.”

Sounds pretty easy, right? All you have to do is change your money mindset and you will be able to make better choices! But how do you do it?

First, you must rise above the lies! There are several common lies associated with a poor money mindset.

1.    The Hard Work Equals Success Lie: The only way to be truly successful is to work extremely hard.

2.    The Ignorance is Bliss Lie: I don’t know anything about money.

3.    The If Only Lie: If I made more money this would be easier.

4.    The Tomorrow Lie: I will start later, first I need to…

5. Too Broke To Save Lie – I don’t make enough to save.

These are all lies! These are limiting beliefs. Limiting beliefs are something you believe to be true about yourself, about others, or about the world that limits you in some way. Limiting beliefs could be poisoning your potential as an entrepreneur!

My favorite book about limiting beliefs is “The Big Leap,” by Gay Hendricks. I highly recommend it.

A little more about the lies; the “Hard Work Equals Success” lie. You do not need to be exhausted to be successful. Remember there is a difference between being busy and being productive. Be productive! Create a culture of fun and play! If you are not succeeding working a reasonable number of hours, step back and evaluate what is going wrong.

Burnout is real, and it can not only have negative heath repercussions, it causes you to be less productive.  Balance is key. It’s crucial to rest, switch off your mind, get enough sleep, maintain healthy relationships, develop and improve on hobbies, and exercise. There is growth in white space.

The “Ignorance is Bliss” lie is one I hear often in the e-commerce world. For some reason, people think, “Well, once I’m a real business I will do X (set up a separate business checking account, create an LLC, get organized, hire a bookkeeper.)” WHY WAIT? Do these things now because you are a real business. The first time you sell an item of inventory to an unrelated third party, you have made a business sale and you are a “real business.”

The “If Only” lie. Another lie I hear from sellers is when they complain about not having enough money to do Y (buy inventory, get training, acquire proper tools, attend conferences.) While you may not have enough dollars in your account today, and while you may wish you had more, please try remember there is more than enough to go around. Treat each moment with care and respect. One way you can do this is to change your money mindset, which will open your mind, heart, and bank account up to have enough. There is not just one pie to go around, the pie is actually limitless, and you are just as entitled to anyone else to enough.

The ”Tomorrow” lie. This is just flat out procrastination. If it needs to be done today, find a way to get it done. If it can’t be done today, then prioritize it for the next soonest opportunity. This includes saving money. (The “Too Broke to Save” lie.)  Everyone can start today. Even if you only save one dollar, or one penny, it adds up. If a person saves one penny every day, in ten years they will have over $3,500. While that may seem silly, don’t you wish you could go back in time and save just one penny every day? You would have $3,500 more than you have now.  

STEP THREE: stop comparing yourself to others – sales on FB cautionary tale

We’ve all done it. We’ve seen a post with a screenshot on Facebook where a seller has sold ($XXX,XXX,XXX – some unbelievably impressive number.) We’ve felt jealous, we’ve wondered what they are selling, how long they’ve been selling, how they’ve managed to be so successful. We feel bad about our sales and wonder what we are doing wrong.

In these Facebook posts, there is always someone who responds with, “Well, yeah, but what was your net.” Eye rolls follow. Someone always asks this, “What was your net.”  To me this is a bit like asking someone to open their wallet. You would never ask someone to open their wallet and show you how much money they have to spend. Why would it be ok to ask someone what their net is?

And yes, it’s obnoxious to burst someone’s bubble, but there is some truth to that “..what’s your net..” comment that inevitably happens. In my time working with e-commerce sellers for years, I have learned that sales is not a good predictor of success, assuming you define success as net income (revenue greater than expense.)

I think there are several reasons that sales don’t necessarily correlate with success. One is that I think those who boast or share on Facebook are doing it for a reason and it’s not always good. However, sometimes the reason is sincerely to share in the joy of success. And, other times, I think people make those posts to make themselves feel better about not having a healthy bottom line.

Another reason sales don’t necessarily correlate to a healthy business is because it’s expensive to make more revenue. A seller typically has to hire more people, take more risk with capital to buy more inventory, and needs more space to process and ship inventory. I work with one seller who had $2.8 million in sales in year one, and in year two she wanted to exceed $3 million. She met the sales goal, but she netted $160,000 less in year two, worked much, much harder, and her stress was doubled.

I point all of this out to remind you that you don’t always know what is truly going on behind the scenes of those shared sales numbers. Yes, sales is an important financial driver, but it’s not automatically an indicator of success.

Remember the proverb, “Comparison is the thief of joy!”

STEP FOUR: define your why

The goal of your business should be to meet your personal financial goals. For some, this means paying off debt or paying down bills. For others this means saving for an extra-nice vacation. For others, the goal may be to accumulate savings, pay off a home, or send a child to college.

It is very important that you define the personal financial goal you wish your business to achieve. Once you know that, focus on defining your “why.” It is more important than you realize. Your “why” is the purpose, cause, or belief that inspires you. Your goal is the outcome.

Your “why” and the outcome are two different things. I think weight loss is a good example of this. The “why” is “I want to be healthy.” The outcome is weight loss. If you eat less, move more, and do other healthy things, you will likely lose weight. Time and time again, studies have shown that those who say to themselves, “I want to lose weight” will be less successful than “I want to be healthy.”

The same applies here. If your goal is to “make money,” you will have a tougher time, unless your “why” is driving that.

Here are examples of business related “why” statements from real businesses we are all familiar with:

  • Facebook: “To give people the power to share and make the world more open and connected.”

  • PayPal: “To build the Web’s most convenient, secure, cost-effective payment solution.”

  • Tesla: “Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”

  • Sony: “To be a company that inspires and fulfills your curiosity.”

  • Google: “To organize the world’s information and make it universally accessible and useful.”

None of these companies have a purpose of “making money.” However, they are each very, very successful financially.

You can have that too! You can have a successful business that has a defined “why” which in turn will drive the outcome of making money.

So what will defining your “why” do for you, specifically?

·      It will give you will power – when you find something you are truly passionate about, it will prioritize itself.

·      It will help you find your way (“way power.”) Know where you are going. If you don’t define where you are going, you will be a part of someone else’s agenda.

·      It will allow you to cut through the noise – remember, when you say yes to one thing, you say no to something else. Being busy is not the same as being productive, so be sure you are able to cut through the noise! Focusing on your Why will get you there!

If you do not have your “why” defined, you will have a tougher time achieving your goals. They still may happen, but isn’t it more fun to do something with passion and commitment instead of just going through the motions? You deserve to be fulfilled in what you do every day. The author and TED Talk presenter, Simon Sinek says it best, “Fulfillment is a right, not a privilege.”

If you want to listen to his TED Talk, here is a link:


STEP FIVE: get organized

This is probably the easiest of the other steps, but yet the one that most seem to focus on first which is why so many sellers are stuck. I promise you, if you take care of Steps 1-4 first, you can’t help but want to do step five. This means if you skipped right to this section, please go back and do step 1-4 first!

Ok, so now that you’ve done step 1-4, you can finally do step 5.

What is the most important task of getting organized?

Get your bookkeeping caught up! Please! Do not wait until tax time to see if you’ve made money or not. If you are waiting and procrastinating, you do not have a business. The IRS will still expect you to file a tax return, but the simple fact that you have a tax reporting obligation does not mean you have A. Real. Business.

You DESERVE to know whether or not your business is successful! While you may not know, exactly, on a daily basis, what your net income is, you should know monthly. You can’t manage what you don’t measure. It’s as simple as that.

Do you want to have a successful business? If the answer is yes, you have a responsibility to manage and grow that business, and the truth is you cannot do that if you only know your numbers once a year.

Here is how you can get organized:

1.    Gather receipts and organize by account and then date. For example, if you have a Chase checking account and a Chase credit card, create two piles. One pile of receipts is for Chase checking and the other pile of receipts is for the Chase credit card. The reason for this is your bookkeeping is organized by account. Yes, you want to know, as a whole, what you spent to run your business, but what is just as important is what you spent from checking and what you incurred credit card debt to pay for/acquire inventory. Once you have the two piles, THEN you can organize by date.

2.    Storage for financial documents – determine how you want to store bank statements and receipts. We really love Dropbox which is free, online cloud-based storage. Most bank and credit card statements are available via download from the bank website. You want to save all bank and credit card statements for two reasons. One is because you will need these to reconcile your accounts in your accounting software and the other is because you may need these if you are ever audited.

3.    Establish a monthly routine – once you get in the habit of keeping up with your books, it’s really not that difficult and will feel like second nature. What I suggest is this:

a.    Ensure your transactions are feeding in to your accounting software and categorize those transactions at least twice a month.

 b.    Record adjustments to sales deposits. For example, if you receive an Amazon deposit, the deposit is “net of fees.” In other words, Amazon takes the fees from your sales and gives you the difference. You need to adjust the deposit to reflect the fact that gross sales less fees equals cash in bank.

c.     Record Cost of Goods Sold (COGS) – I recommend you record COGS at month end. This entry will reduce inventory by the amount sold during the period and move it to COGS on the income statement. 

d.    Reconcile accounts – this is the process of matching the balances in your accounting records for a bank/credit card account to the corresponding information on a bank statement. The goal of this process is to ascertain the differences between the two, and to record changes to the accounting records as appropriate.

STEP SIX: set goals by creating a budget

People are programmed to avoid things that cause fear. Sure enjoy a Friday night horror movie, but when it comes to living our day-to-day lives, most of us go out of our way to avoid scary things.

Budgets are scary and we don’t want to have one because. We seem them as limiting and constricting. We don’t want to know the number, sort of like stepping on the scale after vacation. No thanks!

Change your mindset and think of a budget as a diagnostic tool.  It is a baseline for financial wellness.

To aid in the budgeting process, I have created a FREE budget template for you to download below. You can customize the budget spreadsheet to fit your business.

Mockup - Simple Business Budget.png


These will probably not all apply, but you can either disregard or remove those that do not fit.

Revenue (and associated fees) for:

  • Amazon

  • eBay

  • Shopify

  • Etsy

  • Poshmark

  • Amazon Merch

  • Other Sales

  • Cost of Goods Sold

  • Prep Center Fees

  • PayPal Fees

  • Other Fees

Operating Expenses include:

  • Advertising & Marketing

  • Bank & Credit Card Fees

  • Business Meals

  • Consulting Fees

  • Contractors

  • Dues & Subscriptions

  • Insurance Expense

  • Interest Expense

  • Legal & Professional Services

  • Office Equipment

  • Office Supplies & Software

  • Payroll Expense

  • Rent & Lease

  • Repairs & Maintenance

  • Sales Tax Expense

  • Shipping & Delivery

  • Shipping Supplies

  • Taxes & Licenses

  • Training & Education

  • Travel

  • Travel – Meals

  • Utilities

  • Other 

Incidentally, these categories in your budget are also how I suggest you should be tracking the transactions in your accounting software. If you need help getting your accounting set up, download our FREE guide with video tutorial below.

STEP SEVEN: show gratitude

Money is a beautiful tool that can be used for good. It can meet your personal financial goals, it can free you from stress, it can allow you to make a positive difference in your world.

Money is also a responsibility. It’s important to spend it wisely, even if “spending” means saving it. I like this quote about money by Will Rogers, “Too many people spend money they earned to buy things they don't want to impress people that they don't like.”

The secret to using money as the tool it was meant to be is to show gratitude. Feelings of gratitude will help you avoid impulse purchases and spending on instant gratification. You work very hard for your money, it is important to respect it!