5 Things to Consider When Hiring Limited Company Accountants

5 Things to Consider When Hiring Limited Company Accountants

Thinking of outsourcing your business’ accounting? Let these five considerations help you find the right team of limited company accountants. 

What Should You Look for in Limited Company Accountants?

No matter how big your business is, accounting remains a crucial part of operations. It’s essential to work with a professional who can maintain your books and dispense sound accounting advice. However, choosing a team of limited company accountants that best fits your needs is quite challenging. 

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At whatever stage of your venture, hiring the right professional provides many more benefits than using software for bookkeeping and tax return preparation. Consider these five factors to help you find the perfect firm for solid financial management, strategic decisions, and optimum savings. 

Why Outsource Your Accounting? 

Some companies outsource accounting instead of hiring staff to handle related tasks. While the rationale usually varies from company to company, below are three common reasons:

1. Controls Costs

A primary motivation for businesses to get external limited company accountants is to cut down on operational expenses. Hiring employees may sometimes cost your business more than outsourcing because of salaries, paid benefits, training, and bad hires.  

Since oversights tend to happen more frequently with untrained staff, you may incur unnecessary but avoidable expenses. Prevent revenue leaks from rookie mistakes by working with an experienced accounting firm like Sterlinx Global

2. Improves Efficiency

Many companies hand off accounting to outside professionals to boost productivity and efficiency. When your business has limited resources, it’s crucial to utilise them in a way that delivers the most benefits. 

When you or your employees take on multiple roles to keep the business running, it leads to overworked people and underwhelming performance. Error-riddled outputs won’t do your business any good, primarily when it affects your clients. Make better use of company resources by taking non-core functions off your plate. 

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3. Maintains Focus on the Business

As you try to keep up with a non-core aspect of your business, such as accounting, you’re likely wasting time and effort on something that won’t bring in additional revenue or long-term growth. 

Outsourcing this area to experts lets you direct your full attention and energy into running your business’s core operations. Rather than worrying about the mundane tasks of recording daily transactions, you can focus on making strategic decisions to drive earnings, be competitive, and take your operations to the next level. 

Working with the right limited company accountants is worth the investment. So choose wisely with the following five considerations in mind. 

1. Experience

Like any hiring process, most companies prefer employees with great work experience to get the job done. This requirement is also applicable when you’re looking for someone to manage your accounts, file tax returns, and prepare financial statements. 

Hiring a professional with years of experience ensures your financial needs and goals will be met. A professional’s longevity in rendering accounting services suggests they’ve already worked with numerous clients and maintained good business relations with most of them over the past years. 

Look for a firm that’s been in business for at least ten years—Sterlinx Global already has 18 years of experience. They’ve likely gone through several economic cycles and survived some of the worst crises, pointing to their resilience and solid experience. 

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2. Expertise

Not all limited company accountants are the same; some specialise in certain industries or cater to particular businesses because they’ve developed expertise in handling accounting issues related to these areas. 

Before partnering with an accounting firm, identify their client portfolio to determine if your business is a good fit with them. Ask questions on their areas of expertise and core strengths. Remember—your requirements and their qualifications should be aligned at best. 

Suppose you’re an e-commerce seller, and your daily volume of transactions is substantial. Plus, you also need to comply with different local tax laws. Work with an accounting firm that manages clients in the same business as yours—they’ll already have the experience and will know what’s expected of them. 

3. Communication

One of the most critical but oft-overlooked considerations in hiring limited company accountants is communication. If you and the firm can’t communicate well, it will usually lead to more significant problems. 

Pick a firm that responds promptly to your queries and calls for assistance—if it takes them a while to get back to you, you are not their priority. Expect this type of interaction throughout your partnership, so think long and hard about whether it’s acceptable for you.

It’s also crucial to factor in language barriers and jargon, as these two can make communicating even more challenging. Look for an accountant who converses in a language you’re comfortable with to minimise errors due to mistranslation. 

It’s also better when limited company accountants can explain numbers, financial reports, and regulations at a level you can comprehend. If they can break it down in layman’s terms, you can gain insights and make strategic decisions faster. 

4. Resources and Technology

Ask your prospective accounting firm about the tools and technologies they’ll use in managing your accounts and preparing reports. Also, inquire how capable their resources are in handling your requirements—some applications have limited capabilities, hindering the proper delivery of services. 

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Innovations like expense management software and online platforms simplify tasks; however, they require training to be used effectively. If your firm’s accountants are familiar with these tools, it means their skills are up-to-date and they can handle some of the most rigorous activities.

5. Support

Select a firm that offers prompt, quality support to its clients. A good team of limited company accountants will be proactive in handling your accounts to prevent problems from cropping up and eventually snowballing. 

To determine whether a firm is a good fit for your business, ask about their risk tolerance—are they conservative or willing to take on calculated risks? How will they treat income and deductions that may impact your bottom line? If you’re on the same page on such matters, then they can provide the support you need. 

It’s also reassuring to know you can reach out to them when issues arise at your end, even outside business hours, on the weekend, or during the holidays. But if there’s a significant time difference, note how long it takes for them to respond and see if the waiting time is reasonable for you. 

Frequently Asked Questions

  • Should cost be an important consideration when hiring? 

    It mainly depends on your priorities. If you’re too focused on spending as little as possible, you’ll probably choose the least expensive alternative. However, keep in mind that it isn’t always the best. The firm is likely cutting corners to offer the lowest rates, resulting in sub-par service. 

    Consider the costs but look into other factors as well. 

  • Are there downsides to outsourcing accounting? 

    As with any business activity, there are risks associated with hiring external limited company accountants than employing in-house. One is the possibility of security breaches since they can access your company’s sensitive data and confidential information. 

    Another is miscommunication between the two parties, which can cause delays or problems.

  • How do I begin the search for an accounting firm? 

    Nowadays, the best place to start is on the Internet—a quick search will reveal thousands of results. Narrow down your choices by adding keywords to your search phrase. Once you have a list, read customer reviews and feedback to understand how they work with their clients. 

Conclusion

Searching for a team of limited company accountants that best fits your financial needs and goals doesn’t have to be a hit or miss. Let these five key considerations guide your vetting process to find the right business partner. 

How to Use Amazon Accounting to Increase Your Income

How to Use Amazon Accounting to Increase Your Income

Want to grow your online store’s earnings but unsure where to start? Find out how you can go from surviving to thriving with a few tips and tricks on Amazon accounting.

A Guide on Generating Higher Income Through Amazon Accounting

Being a seller on the world’s largest e-commerce platform can be immensely rewarding but just as challenging. Turning your online business into a lucrative venture takes more than a good product listing—you also need a solid understanding of Amazon accounting. Here are some important things to consider.

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How Amazon Accounting Differs from Other E-Commerce Accounting

Accounting for e-commerce is a different ballgame from the typical business accounting, even more so when you’re a seller on Amazon. There are a few extra considerations to keep in mind, such as the following:  

FBA vs FBM

Some e-commerce sellers are under the fulfilment by Amazon (FBA) arrangement, wherein they pass on their entire shipping responsibility to Amazon by handing off some or all of their inventory. Such service isn’t available on other online marketplaces like eBay and Etsy, and this setup is called fulfilment by merchant (FBM). 

Accounting for inventory under the FBA is slightly more complicated than FBM of other platforms since it’s harder to keep track of your products. They could be at a fulfilment warehouse, en route to buyers, or for returns. 

Since Amazon only relays the information to the seller, you don’t have an accurate picture of your inventory figures compared to when you manage the entire order processing. 

Taxation

VAT and sales tax are already confusing to begin with. And with FBA in the picture, Amazon accounting becomes even more cumbersome. 

If you’re selling in the US via FBA, your tax nexus includes states where your products are warehoused. The same principle applies to Pan-EU FBA but not the term. Talk to an Amazon accounting expert from Sterlinx Global to determine if there’s a tax implication to your business and how you can address it. 

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Seller Fees

Another aspect wherein Amazon accounting is unlike accounting for other e-commerce platforms is the fees. 

As the largest online marketplace, Amazon understands how powerful its reach can be. If you want to make more sales, selling on the platform comes at a higher price—commission and FBA fees are some of the expenses weighing on your margins.

How Amazon Sellers Can Scale with Accounting

Growing your online store takes more than a keen eye for business—you also need to do your Amazon accounting right. Improve financial performance by being savvy with your accounts and books. 

1. Stick to the Accrual-Based Method

There are two business accounting techniques: accrual and cash basis. Of the two, it’s better to use the accrual method to see your revenue streams and expenses more clearly—you recognise sales when earned and expenses as incurred, regardless of when cash exchanged hands. 

As such, you can make more strategic decisions for income growth from the derived profitability figures. 

That said, it doesn’t mean you should write off the cash basis method altogether. The technique comes in handy when tracking cash flow. However, don’t fall for the trap that being cash-rich is tantamount to profitability; it isn’t since it doesn’t consider accounts payables.    

2. Pay Attention to Your Inventory  

If you want to boost your bottom line, one of the essential Amazon accounting items to monitor is your inventory. 

The e-commerce charges fees for products under FBA in exchange for handling storage and shipping—that’s the price of convenience. However, such inventory-related costs may set you back more than they should, narrowing your margins. 

Figure out which products are more cost-effective with FBA. Amazon charges a range of fees related to inventory, including storage and returns processing fees, which can then add up to your cost of goods sold. Identify items that cost you more to maintain in your store than remove altogether. 

If Amazon fees are trimming your profits, consider opting out of FBA to keep inventory costs down. A good rule of thumb is to downgrade when the total number of units sold is less than 40 per month. 

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3. Focus on Profitable Products

Another way to increase your Amazon earnings is by identifying products with high returns and focusing efforts on marketing them. 

Many vendors make the mistake of maintaining excessive inventory in anticipation of higher profits with sudden increased demand. However, betting on trends doesn’t always translate to sales and higher earnings unless you’ve researched them extensively. 

Instead, determine your top-performing products based on their margins and develop cost-effective strategies, like campaigns and bundling, to drive sales. As for your poor performers, decide whether they’re worth the push or better off taken out.  

4. Keep a Close Eye on Expenses

Inventory-related fees aren’t the only costs you should be worried about—your overhead expenses will also weigh on your earnings. 

Understand how the platform’s seller fees impact performance. You are likely incurring other expenses necessary to run your online business, including utilities. The higher your operational costs are, the narrower your margins will be. And an ideal net profit margin is around 40%.  

Break down expenses and examine them on a more granular level to identify areas for improvement. For example, you may be better off with an individual seller account, purchasing stock with lower shipping fees, or streamlining operations. 

5. Calculate the Correct Tax

Whether you’re collecting VAT or sales tax, it’s your responsibility to remit these taxes to the proper authorities. But with different local tax regulations in every market you’re in, it’s easy to get confused with compliance.

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Paying the incorrect amount on your tax liabilities results in unnecessary costs to your e-commerce business. When you overpay, you cannot refund, but when you remit less than the tax due, you’ll be fined. Aim to compute the correct tax amounts to improve your bottom line. 

6. Work with Professionals

If you want your store to gain traction and increase earnings but are unsure where to begin, it’s better to consult an Amazon accounting expert from Sterlinx Global. They have the expertise and experience in managing and analysing accounts, as well as providing accurate financial reports so you can make sound business decisions.

By handing off accounting services to professionals, you can focus more on growing your business instead of figuring out what the numbers mean. 

Frequently Asked Questions on Amazon Accounting

  • Would VAT or sales tax reduce my income? 

    No, it shouldn’t. Consumption taxes like VAT and sales tax are charged to the buyers. As a seller, you are responsible for collecting and remitting them to the government. 

    However, many Amazon sellers incorrectly estimate their tax liabilities. When this happens, taxes become an additional expense that cuts through your profits.  

  • Can I handle Amazon accounting myself? 

    Yes, you can manage accounting on your own if you have a good grasp of the basics. But, it can be time-consuming, especially when you’re meticulous in dealing with numbers. Also, it diverts your attention and effort away from activities with better returns, such as creating campaigns and improving brand reputation. 

  • Amazon deposits an amount in my bank account regularly. Should I consider this as sales?

    No, you shouldn’t. It’s a common mistake of many Amazon sellers to record these bank deposits as revenues. 

    While these cash deposits include store sales, they are net of fees charged by the e-commerce platform. Moreover, the remitted funds do not reflect the date of actual sales. Avoid using these as a gauge of your profitability. 

Conclusion

Scaling your online store operations takes more than savvy marketing campaigns—you must also have a deep understanding of Amazon accounting to spot pain points in your profitability and address them. 

Let an accounting firm like Sterlinx Global help in easing the burden so you can redirect your efforts to revenue-generating activities. 

How to Promote Your Bookkeeping Services for Massive Growth

How to Promote Your Bookkeeping Services for Massive Growth

Marketing is a crucial part of business for firms offering bookkeeping services like yours. Learn how to do it effectively for sustainable growth. 

9 Marketing Tactics to Scale Your Bookkeeping Services 

Generally, bookkeepers are in demand. Most businesses work with an accounting firm for years since switching to a new one is often complicated and costly. 

But because of technology and the Internet, moving to a new bookkeeping services provider has become easier and less expensive. With more choices available, how can you stand out from the rest? The answer: an effective marketing strategy. 

Here are nine tactics to edge out the competition and gain new clients for long-term growth.

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1. Create Engaging Content

If your business has a website, publish blogs your potential clients are interested in. Or, if you have a YouTube channel, make easy-to-understand videos. Brainstorm ideas for possible topics, say, answers to frequently asked questions on complex accounting principles or new guidelines. 

Whatever content you create, ensure that it adds value to your target audience. Establish what you want them to walk away with, and define steps they should take when they’re done. When you do this regularly, you can position your firm as an authority or a go-to resource. 

Always align your content ideas with what your audience wants and what you can offer to be effective. Suppose your clients are mainly into construction. Write a blog on why regularly updating books is a crucial industry practice. 

For instance, Sterlinx Global focuses on e-commerce, so you’ll find several blogs about bookkeeping services for online sellers on our site. 

2. Make Your Site SEO-Friendly

It’s essential for businesses to have a website that clients can look up and visit for more information. But no matter how amazing your web design is, it won’t get as much traffic as expected if it isn’t search engine-friendly. 

If you want your bookkeeping services to get noticed, make sure your web page applies search engine optimisation (SEO). An SEO-friendly site ranks higher in search engine results, driving more traffic to your site and, by extension, exposure to potential clients. 

Make your site technically sound with keywords, meta descriptions, quality links, and good content. Or, you can leave the optimisation to an SEO agency. 

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3. Harness Social Media

In today’s business landscape, social media is more of a necessity than a nice-to-have. That’s because potential clients for your bookkeeping services are likely using such platforms, and you have to be where they are. Engaging with them on these channels puts your firm on top of their minds. 

Since most consumers visit a business’s social pages first before its website, set one up to reach your target audience. Plus, you can use social media channels to repurpose content, share page links, and drive traffic to your site. 

4. Be Involved, Online and Offline

By now, you should realise that online presence is important in promoting your bookkeeping services. Besides having an optimised website, you should also learn how to network. 

Build valuable connections by joining online communities and actively participating in conversations. Establish your credibility and authority in the field through well-thought-out posts in relevant forums and blogs.

But it isn’t only online where you should be present. Join offline events like trade shows to get your accounting firm out there—after all, many decision-makers attend these in-person events to know potential business partners. 

5. Consider an Email Marketing Strategy

Here’s a surprising fact—email marketing is still effective. That’s why companies continue using this strategy to promote, and so should you with your bookkeeping services. 

Emails can be an excellent medium for nurturing relationships with potential clients and maintaining a connection with them, even if they aren’t ready to work with you straight away. 

If you want to stay top-of-mind, create well-written, properly targeted emails to be useful to the recipients. Write about tax return deadlines, new guidance, laws, relevant accounting policies, and other topics of interest for your audience. 

Don’t forget to add a compelling CTA in your email signature to encourage recipients—existing, former, and potential clients—to take action.  

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6. Seek Referrals

One of the most effective techniques for promoting your business is referrals. Personal recommendations by your existing clients have far more worth during decision-making than ads and messages from strangers on the Internet. 

Ask your clients to refer their business partners or associates to you when they need bookkeeping services. For every successful onboarding, offer vouchers for free or discounted services—one for your client and another for their referred business.   

7. Ask for Reviews

Next to referrals, reviews also carry a lot of weight when companies decide to use your firm for bookkeeping services. Positive feedback from your customers establishes your business’s credibility and competence. Just look at what our clients say about working with Sterlinx Global

Potential clients are more likely to trust your business after reading about other people’s successful working experiences with you. Plus, adding reviews to your website may boost your rankings on the results page since search engines recognise the value of customer feedback.

However, don’t be fixated on getting positive reviews only. Encourage clients to leave an honest assessment of your service. And if they’re dissatisfied, ask why, address the issue, and offer to compensate them for the less-than-stellar experience. 

8. Offer Discounted or Free Services

Free consultations and introductory discounts are effective in attracting new clients. Offering these deals won’t result in a substantial loss to your firm. Instead, you have a lot to gain by taking market share. 

Prospective customers can try your bookkeeping services minus the heavy financial commitment with discounted rates or no-obligation initial consultation. This slowly builds trust on your potential client’s end since they’re virtually exposing their operations to you, an unknown party. 

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9. Advertise

If you want the fastest way to market your services, consider paying for ads. Advertising via different channels and media gives your business much-needed exposure and a wider reach. 

This strategy is effective when it’s targeted to specific audiences and their pain points—running ads can be costly, so ensure it gets to the right people to be worth every penny.  

Frequently Asked Questions

  • Is it better to promote my bookkeeping services myself? 

    It depends on several factors like your time, expertise, and goals. If you’re patient in slowly building your customer base, you may find some of the tasks fulfilling and fun, like writing blogs and posting content on social media. Otherwise, it may be better to hand off marketing to an agency.  

  • How often should I engage in marketing my firm? 

    There’s no hard and fast rule as to how frequently you should actively promote your services. Seize every opportunity to put your firm front and centre. And whenever possible, update your website, publish new content at least once a week, and communicate with existing and potential clients regularly. 

  • When do I stop promoting my bookkeeping services?

    There’s no end to marketing your firm—it is a constant activity. Simply because you’ve scaled your operations doesn’t mean you no longer have to exert effort in gaining new clients. Instead, continue understanding your clients’ needs, and act on this information to offer better services, which is the best kind of marketing.  

Conclusion

Promoting your bookkeeping services may sound daunting, but all the hard work will be worth it when you see your business grow at an exponential rate. With the right strategies and enough time, your firm can gain better visibility and pull in more clients. 

How to Deal with Amazon Suspension Appeal Quick

How to Deal with Amazon Suspension Appeal Quick

Had your Amazon seller account suspended? Don’t panic—you can still have it reinstated when done right. Get back on track by learning how to handle an Amazon suspension appeal.  

A Guide on Managing an Amazon Suspension Appeal

When you’re a seller on the largest online marketplace, getting your account suspended is a nightmare. It translates to lost revenues, with these losses increasing further the longer your account is inactive. Fortunately, you can make a strong case for reversing your suspension with Amazon. Here’s how you should do it. 

What an Account Suspension Means

When Amazon suspends your seller’s account, you won’t have selling privileges. During this time, your product listings will not be visible on the platform. It translates to a significant loss in revenues and reputation, especially if you’ve been frequently among the top results. 

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Depending on the type of account suspension, you can request your status to be reversed and your selling privileges reinstated through an Amazon suspension appeal. 

Why Amazon Suspends an Account

The main reason Amazon revokes the privileges of more than a thousand sellers is the latter’s violation of the platform’s guidelines, terms, and conditions. Because of the e-commerce giant’s many complicated policies, some sellers have inadvertently overstepped some of these strict regulations, resulting in their suspension. 

Although Amazon doesn’t publicly disclose why they suspend accounts to protect their process, some sellers have figured out a few of the most common reasons for revoked privileges. Some of these include:

  • Poor product quality
  • Counterfeit or inauthentic items
  • Sale of restricted or prohibited products
  • Goods are not as advertised
  • Intellectual property violations
  • Delays in fulfilling orders
  • No shipment tracking provided
  • Multiple negative customer experiences
  • Manipulating reviews or feedback
  • Running multiple seller accounts

Amazon’s main priority is its customers, not the sellers. No matter how big a brand or store is, the e-commerce giant will suspend it if it finds reasonable grounds to do so, especially if the complaints come from the buyers. 

Despite being strict, the platform allows sellers to request a reversal. They can file an appeal, but it doesn’t always guarantee promising results, especially if done incorrectly.

How to Handle an Account Suspension Appeal

The suspension of your Amazon seller’s account can be catastrophic to your business and finances. Besides lost revenues, you continue incurring operational expenses, such as employee wages, warehousing fees, and other costs, impacting your earnings. 

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It’s crucial to end the unfavourable status as soon as possible, so below are five tips on efficiently dealing with an Amazon suspension appeal. 

1. Never Rush Your Appeal 

When Amazon sends a notification regarding account suspension, it only includes a simple explanation for its action. If it’s your first time receiving one, do not panic. Avoid sending out multiple emails asking the online marketplace to reconsider their decision—this hurts your chances of a reversal even more. 

Fortunately, Amazon gives suspended accounts a 17-day window to file an appeal for reinstatement through seller central. Take this time to examine your operations and identify possible reasons your selling privileges have been removed. 

Also, refrain from asking for more details from Amazon—every communication sent counts as an appeal on their end, further hurting your chances of reinstatement.  

2. Be Professional 

Another common mistake made by many online sellers on their Amazon suspension appeal is responding with high emotions. It’s only expected that you’d be angry over the sudden deactivation, especially if you’ve been faithfully abiding by the rules. 

Never use foul language, threats, and emotional appeal in your response. Avoid criticising the e-commerce giant’s policies and processes—your opinion is unwarranted and unprofessional. Plus, it puts you in a less favourable position in their eyes. 

Instead, be concise with your communication and remain professional in every interaction. Amazon will likely be more considerate of your situation. 

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3. Perform a Comprehensive Assessment

Use the 17-day period to conduct an internal assessment of your operations and performance. Begin your investigation based on Amazon’s disclosed justification in its suspension notice.

For example, if Amazon suspended your account for sub-par performance, check the metrics in your seller central dashboard. Below are acceptable performance ratios:

  • Order defect rate <1.0%
  • Pre-fulfilment cancellation rate <2.5%
  • Late shipment rate <4.0%

Order defect rate: The ratio of orders with negative feedback, chargebacks, or A-Z guarantee claims to total completed orders.

Pre-fulfilment cancellation rate: The ratio of orders you’ve cancelled prior to shipping out vis-à-vis total orders received. 

Late shipment rate: The percentage of items dispatched past the estimated shipping date. 

Since Amazon doesn’t go into specifics regarding your suspension, the problem may have also stemmed from violating one of the online marketplace’s many rules. It can range from selling counterfeit goods and unauthorised product distribution to offering discounts in exchange for positive reviews and copyright infringement. 

4. Create a Solid Plan of Action

Suspensions vary in severity—the more serious it is, the longer the reinstatement may take or the less likely the appeal will be successful. But don’t despair—a well-constructed Amazon suspension appeal can overturn a punishment. 

When the e-commerce giant requests a Plan of Action, refrain from submitting a generic plan. Amazon will usually detail what should be included, such as supporting documents like invoices and product safety information. Furnish them to strengthen your case. 

Your Plan of Action should cover the following:

  • Root cause analysis: Identifies the reason for suspension or offence based on your internal examination
  • Remediation: Discusses actionable steps to rectify or address the problem
  • Preventative section: Outlines clear corrective measures to prevent future violations, reiterating your intention to continue providing top-notch customer service  
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Remember to keep your Plan of Action brief but comprehensive. While Amazon prefers data-driven, fact-based appeals, it’s also essential to admit fault and acknowledge the harm done to your buyers. 

If you’d rather not take chances with your Amazon suspension appeal, consult an expert from Sterlinx Global

5. Avoid Asking for Updates Immediately

After sending your appeal through the proper channel, refrain from requesting updates immediately. Wait for at least 48 hours before sending a follow-up email; generally, Amazon acknowledges receipt of your appeal. 

Sometimes, the e-commerce giant requests clarifications or supplementary information. Do your best to respond right away since the 17-day window doesn’t pause or reset. If you don’t provide the information, Amazon may reject your appeal. 

Frequently Asked Questions

What will happen if I don’t file an appeal?

If you forgo filing an appeal, do not expect your account to be reinstated. Amazon takes customer complaints and policy violations seriously, which is why they’ve revoked your selling privileges. 

Keep in mind that submitting an appeal is a formal process and one that sellers should be aware of. 

If my account gets suspended, should I open another account instead?

No. While you can open another seller account, don’t do it—Amazon will treat such action as circumventing your suspension, jeopardizing your chances of reinstating your privileges. 

Moreover, the platform treats multiple seller accounts as a policy violation, putting you further into an unfavourable position. 

What should I do if my appeal gets denied? 

If Amazon denies your suspension appeal, don’t despair—you still have another chance to submit your Plan of Action. Revise it to be more detail-oriented. 

There is no limit to how many times you can re-submit your plan. However, the longer it takes to reactivate your account, the higher your losses. Speak to a professional, like someone from Sterlinx Global, to draft a better appeal.    

Conclusion

Getting your account suspended isn’t something you want to happen, but when it does, look at the bright side of your ordeal. Knowing how to navigate negative circumstances and manage an Amazon suspension appeal is an excellent learning experience for sellers.

Implement long-lasting changes to ensure you’re always up to par with Amazon’s quality standards. And if you need help on where to start, let the professionals at Sterlinx Global lend a hand. 

Comprehensive Guide to Full Understanding of German VAT for E-Commerce Sellers

Comprehensive Guide to Full Understanding of German VAT for E-Commerce Sellers

Planning to expand your customer base to Germany? Learn about the German VAT regulations and how to comply with them as an online seller.

A Guide on German VAT for E-Commerce Businesses

The best way to grow your business as an online seller is to expand your reach beyond your current customer base. Germany, like other European Union (EU) member states, is an excellent place to begin your strategy. Start on the right foot with crucial information about German VAT and its compliance.  

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1. All Imported Goods Are Subject to VAT

When you’re based outside the EU, any goods you sell are considered an import. And if your buyer lives in Germany, they must pay VAT on products purchased from your store, which you will remit to the government. 

Prior to 1 July 2021, imported goods with less than €22 value were exempt from German VAT. However, the EU abolished the exemption in the revised VAT rules for cross-border e-commerce activities. 

Some non-EU sellers mislabel and undervalue the consigned goods to avoid charging VAT. This loophole allows them to lower prices than their EU competitors and circumvent paying taxes, costing the government millions in uncollected revenue. 

2. There Is a Minimum Threshold

Before the revised VAT rules were issued in 2021, EU countries had different turnover threshold requirements for VAT registration. In Germany, distance sellers only needed to register if their annual sales revenue exceeds €100,000. But now, that has been replaced with a lower limit. 

The new EU-wide threshold to register for VAT is €10,000. If you intend to carry out transactions subject to German VAT, i.e., sell goods online, it’s better to arrange registration even if you anticipate gross sales to be below the set threshold.

3. You Must Be Registered for VAT

Remember to apply for German VAT registration before commencing your business activities. Otherwise, you may face penalties for submitting your registration late or while already doing business involving taxable goods in the country. German tax authorities can be severe in penalising violations. 

Like in other EU states, Germany doesn’t require non-resident e-commerce sellers to establish a local presence to trade. It does, however, mandate VAT registration on activities like importation and distance selling.  

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To register correctly, contact the jurisdictional tax office in the relevant German state. Submit the registration form completed in German along with the following documents: 

•          A copy of the Articles of Association

•          An excerpt from the business’s trade register

•          Certificate of VAT liability if registered in other EU member states

•          Proof of economic activity in the country

•          Power of attorney, if using a fiscal representative or agent

The local tax authorities may require some documents to be translated into German. Moreover, they are quite critical of foreign companies’ VAT registration because of substantial lost government revenues and the potential for carousel fraud.

4. Fiscal Representation Is Optional

When registering for German VAT, non-EU businesses don’t need to appoint a fiscal representative. Foreign companies can apply themselves if they know the language and are familiar with the process.  

However, working with a fiscal representative or a tax advisor from Sterlinx Global is still highly recommended. Their primary responsibility is fulfilling tax obligations, such as submitting and filing VAT returns, on behalf of their clients.  

5. VAT Registration Can Be with One EU State Only

To improve VAT collection in the EU, one of the new rules for cross-border e-commerce activities includes the introduction of the Import One Stop Shop (IOSS). This online platform for non-EU sellers allows them to register for VAT in only one EU member state.    

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Once online sellers obtain their IOSS number, there’s no need to register for VAT in all the EU countries they will sell in. They can declare and pay the VAT of goods imported from non-EU territories. 

The streamlined system ensures that the correct tax amount goes to the right EU member state. That’s because keeping track of the applicable VAT rate can be confusing, even to seasoned e-commerce businesses, because of the different tax legislations in each EU country.

6. Standard VAT Rate Is Above 15%

As a member of the EU, Germany based its VAT legislation on EU directives. Although the country can set its standard rate, it should be higher than 15%. The German VAT rate is currently 19%. 

At the height of the COVID pandemic crisis, Germany temporarily cut its standard rate to 16% to support the economy. Except for hospitality businesses, the VAT rate has now reverted to its pre-pandemic level. 

Like other EU member states, the country’s VAT system is tiered. Apart from the standard 19% rate applicable to most goods and services, the country applies the reduced rate of 7% to certain items like food, books, newspapers, other periodicals, timber, and some agricultural inputs, to name a few. 

7. Know Your VAT Obligations

Being registered for German VAT as an e-commerce seller means you have certain responsibilities to fulfil. Two important obligations are to settle your tax liability with the proper authorities and file the corresponding returns. 

Filing Frequency

For newly registered businesses, they must submit VAT returns monthly for the first two years. After the prescribed period, the frequency varies according to net VAT due in the prior year: 

  • Above €7,500: File every month
  • Below €7,500: File every quarter
  • Less than or equal to €1,000: File every year; no preliminary VAT returns required

In addition to monthly or quarterly filings, all companies that are VAT-registered must file an annual return for each calendar year, regardless of revenue. 

VAT returns are due by the 10th of the month following the covered period. Moreover, the annual VAT return should be submitted by the end of May of the next calendar year. But if it falls on a weekend or national holiday, it is extended to the next working day. 

VAT returns submissions are done electronically through the ELSTER systems of the relevant German tax office, which depends on your country of residency. 

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Late Penalties

The charges for failing to comply with the deadlines are as follows:

• Late filing: 10% of the VAT due but no more than €25,000 per return

• Late payment: 1% of the VAT due per month of delay

Avoid paying hefty fines for non-compliance with the assistance of a tax agent or fiscal representative from Sterlinx Global

Frequently Asked Questions about German VAT

  • How long does it take to be VAT-registered in Germany? 

    Getting your VAT registration number in Germany often takes several weeks or up to a month. The processing period is slightly longer than in other EU states because German tax offices conduct thorough checks on foreign companies to prevent fraudsters from applying and to minimise revenue losses.   

  • Can I register for German VAT myself?

    Yes, you can. However, it’s not the most efficient use of your resources. Remember that German tax offices are generally strict with VAT registration to reduce fraudulent transactions involving non-EU businesses. Expect to spend a lot of time and effort, both things which are better utilised in running your business. 

  • Is it possible to compute VAT obligations on my own?

    You can compute your German VAT obligations yourself—the IOSS makes it easier to track your tax liabilities. But it can quickly get confusing when you’re also selling in other EU states since VAT rates vary across the region. Save yourself the trouble by working with an accountant from Sterlinx Global

Conclusion

Expanding your market reach to Germany is an excellent growth opportunity. But before venturing into it, learn more about the German VAT to avoid surprises that may cost you. And if you need professional advice or assistance, the experts at Sterlinx Global are ready to lend a hand.