Amazon Seller Accounting: What Businesses Need to Know

Accounting for an Amazon seller involves tracking sales, Amazon fees, refunds, inventory, advertising, taxes, and payouts accurately. It differs from regular small-business accounting because Amazon handles part of the transaction flow before money reaches your bank account. This makes it important to separate customer activity, Amazon charges, and actual bank deposits in your books. 

In this blog, you’ll learn which Amazon transactions to record, how to account for fees and settlements, and which accounting method may fit your business. With the right approach, you can turn Amazon’s detailed transaction data into reliable financial records and gain a clearer view of profitability and cash flow. 

Simplify Your Amazon Accounting

Keep Your Books Accurate & Up to Date with Experts

Learn More

What Is Amazon Seller Accounting?

Amazon seller accounting is the process of recording, classifying, and reconciling the financial activity of an Amazon business. It covers more than sales revenue, including marketplace fees, refunds, inventory, shipping costs, advertising, and Amazon payouts. 

Unlike regular small-business accounting, Amazon accounting must connect three different financial flows: 

• Customer activity: Orders, sales tax, refunds, discounts, and returns 
• Amazon activity: Referral fees, fulfillment fees, storage charges, advertising costs, and other marketplace charges 
• Bank activity: Net deposits Amazon sends to the seller’s bank account 

This creates an important accounting issue: the amount Amazon deposits is usually not the same as the seller’s gross sales. Amazon deducts various fees, refunds, and other adjustments before paying the remaining balance. 

What Transactions Should Amazon Sellers Record in Their Books?

Accounting for Amazon sellers involve recording gross sales, Amazon fees, refunds, inventory and COGS, advertising costs, taxes, and settlement activity separately rather than relying on net bank payouts. This gives a clearer view of revenue, costs, profitability, and cash. 

• Gross Sales: Record the underlying product sales and applicable shipping or other customer charges separately from Amazon’s deductions. 

• Amazon Fees: Record Amazon fees separately, including referral fees, FBA fulfillment fees, storage fees, selling plan fees, and other applicable service charges. 

• Refunds and Returns: Record customer refunds separately from sales. Refund transactions can affect both the sales proceeds and fees associated with the original transaction. 

• Inventory and COGS: Track inventory and recognize COGS according to the seller’s applicable accounting method. For businesses using inventory accounting, purchases and ending inventory are used to determine the cost of goods sold.  

• Advertising and Promotions: Record advertising costs separately, including Amazon advertising spend. Promotional amounts and coupon-related charges should also be classified according to their underlying nature rather than simply netted against the bank deposit.  

• Sales Tax: Keep applicable sales taxes separate from revenue. Amazon’s settlement reporting can include taxes collected from customers, and marketplace facilitator rules may mean Amazon collects and remits certain taxes on the seller’s behalf.  

• Reimbursements and Adjustments: Review reimbursements, credits, chargebacks, and other adjustments based on what caused them. Amazon’s reports can include FBA reimbursements and balance adjustments alongside other settlement activity.  

• Amazon Settlements and Bank Deposits: Reconcile the underlying Amazon transactions to the settlement amount and then to the bank deposit. Amazon specifically provides settlement reports to help sellers reconcile account activity and payouts. 

Which Accounting Method Should Amazon Sellers Use?

Amazon sellers generally use cash-basis or accrual-basis accounting, but the appropriate accounting method depends on the seller’s business, inventory, reporting needs, and applicable tax rules. Sellers should confirm the permitted method with their accounting professional before making a change. 

Cash-Basis Accounting

Under cash-basis accounting, income is generally recognized when received and expenses when paid, subject to applicable rules and exceptions. 

It can be simpler for smaller sellers with straightforward operations. However, the timing of Amazon sales, fees, inventory purchases, and payouts can differ, making monthly profitability harder to evaluate from cash activity alone. 

Accrual-Basis Accounting

Accrual accounting generally recognizes revenue and expenses based on when the underlying transactions occur, rather than when cash moves. 

This can provide a clearer view of business performance by reflecting sales, fees, and COGS in the periods they relate to. 

It can be particularly useful for sellers managing: 

• Significant inventory  
• High sales volumes  
• Multiple marketplaces  
• Supplier balances and purchase orders  
• More detailed financial reporting 

Keep Your Books Accurate with Expert Support

Accurate Amazon seller accounting gives you a clearer view of sales, fees, inventory, payouts, and profitability. As your business grows, regular reconciliation helps prevent errors and keeps your financial records reliable. 

 At Whiz Consulting, we help Amazon sellers manage transaction recording, settlement reconciliation, account reconciliation, and financial reporting. Our team can work with your existing accounting software and organize Amazon data into accurate, up-to-date books. 

With the right ecommerce accounting and bookkeeping services, you can spend less time sorting through Amazon transactions and more time using your financial data to make better business decisions.