What bookkeeping does an Amazon seller need?
The biggest mistake Amazon sellers make with their bookkeeping is recording Amazon payouts as revenue. That deposit hitting your bank account is not your sales number. It’s what’s left after Amazon takes referral fees, FBA fees, storage fees, and deducts returns and adjustments. If you treat the deposit as revenue, you’re understating your actual sales and hiding the true cost of selling on the platform.
Start by reconciling your Amazon settlement reports. Every two weeks Amazon sends a settlement that breaks down gross sales, fees, refunds, promotions, and the net payout. Your bookkeeping needs to record gross revenue at the top and then separately categorize each fee type as an expense. This is the only way to see what Amazon is actually charging you and whether those costs are trending up over time.
Track your fees in separate categories. Referral fees, FBA fulfillment fees, monthly storage fees, long-term storage fees, and advertising spend should each have their own line. When you lump them together, you lose the ability to spot problems. Maybe your ad spend is eating your margins on a specific product, or long-term storage fees are piling up on slow-moving inventory. You can’t fix what you can’t see.
Inventory accounting is where many Amazon sellers fall behind. Every unit you purchase is not an expense at the time of purchase. It’s an asset that becomes a cost of goods sold when it sells. If you expense inventory when you buy it, your profit and loss statement will swing wildly based on when you place orders rather than reflecting actual business performance. Proper COGS tracking by product or product category shows you which items are truly profitable after all costs are factored in.
Returns and refunds need their own handling too. Amazon processes returns and sometimes issues refunds before you even know about them. These need to be recorded as reductions to revenue, not as expenses. And if Amazon damages or loses inventory in their warehouse, any reimbursements you receive should be tracked so you can verify you’re actually getting paid for what’s owed.
Sales tax is one area where Amazon simplifies things. As a marketplace facilitator, Amazon collects and remits sales tax in most states. But you should still understand where you have nexus and confirm Amazon is handling it correctly for your situation, especially if you also sell through your own website or other channels.
A small business bookkeeping service familiar with e-commerce can set all of this up so your reports actually tell you something useful. The goal is knowing your real profit margins by product, understanding what Amazon is costing you, and having clean books ready for tax time without a year-end scramble.
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More Questions
How can better bookkeeping improve my cash flow?
Accurate, up-to-date books give you visibility into what's coming in, what's going out, and when. That visibility is what lets you make smarter timing decisions around spending, collections, and planning.
Read answerHow do bookkeeping and tax preparation work together at year end?
Bookkeeping produces the accurate financial records your tax preparer needs to file your return. When your books are clean and current throughout the year, tax preparation becomes a smooth handoff instead of a stressful scramble.
Read answerCan my bookkeeper work directly with my tax preparer?
Yes, and they should. A good bookkeeper will coordinate directly with your tax preparer so financials are accurate, the year-end handoff is smooth, and you don't have to play middleman between the two.
Read answerWhat KPIs should a small business owner watch every month?
Focus on revenue trends, gross profit margin, net profit margin, cash on hand, and accounts receivable aging. These five metrics give you a clear picture of whether your business is healthy and where to take action.
Read answerHow do I find a bookkeeper who understands my industry?
Look for someone who has worked with businesses like yours, asks detailed questions about how your revenue and expenses flow, and can explain what they'd track differently for your industry compared to a generic setup.
Read answerHow should a general contractor track costs per project?
Set up every project as its own job in your accounting system, then assign every dollar of labor, materials, and subcontractor costs to that job. Break each project into phases and compare budget to actual on a weekly basis so you know your real margins before a job is done.
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