Bookkeeping is one of the most important parts of running a profitable Amazon store. It shows you how much money you really make, how much you spend, and where your cash goes each month. Many sellers avoid bookkeeping because it feels confusing. But once you break it down into a simple system, it becomes easy to manage and even easier to scale.
Here’s a complete guide to accounting and bookkeeping for Amazon sellers.
Why Bookkeeping Matters for Amazon Sellers
Many sellers ignore Amazon FBA bookkeeping until tax time. That creates problems. When you only manage your books once a year, you cannot see issues early. You cannot check if you are overspending on ads, pricing too low, or losing profit to Amazon fees. And by the time you notice the issue, you may have already lost months of profit.
Good bookkeeping shows you your margins, cash flow, and ROI at all times. You know exactly where your money goes.
It also protects you from losing money to Amazon. Amazon sometimes miscalculates fees or mishandles inventory. You can only file claims when you track your units and compare your books to Amazon’s numbers.
Every Cost You Have as an Amazon Seller
Amazon sellers deal with many small fees that eat into profits. If you do not track them, your numbers will never be accurate.
Here are the main costs you need to know about:
Amazon Fees
These include referral fees (10-15% of each sale based on product type), FBA fees ($3–$10 per item, depending on size and weight), storage fees ($0.87–$2.40 per cubic foot monthly, more in October–December), return fees, closing fees, and disposal fees. Amazon charges these on every sale or every month.
Cost of Goods Sold (COGS)
This is what you pay your supplier to produce your product. It also includes packaging, inserts, and improvements you make to the product.
Shipping and Freight
This includes shipping from your supplier to your prep center or warehouse, shipping to Amazon, customs duties, import taxes, and freight insurance.
Prep and Packaging Costs
Any cost you pay to get your product ready for FBA. This includes labeling, polybags, bubble wrap, or outsourcing prep work to a prep center.
Amazon PPC Spend
Your advertising spend changes daily. You must track it as a key cost. Some sellers leave this out, and it makes their books inaccurate. Advertising costs can range from $100–$1,000 monthly.
Refunds and Returns
These affect revenue and COGS. You must record each return because Amazon may not reimburse everything.
Amazon FBA Report for Bookkeeping
Amazon gives you a lot of FBA reports, but most sellers don’t know which ones matter for bookkeeping. Here’s a list of the main reports you need to know about for Amazon seller accounting:
Payments Report
The Payments Report tells you how Amazon handled your money. Most sellers think this report shows profit, but it doesn’t. It only shows what Amazon paid you after subtracting fees. It also shows the total sales during the payout period and refunds and adjustments. It updates weekly or every two weeks.
Inventory Report
This report shows the full picture of your inventory inside Amazon’s warehouses. It explains where your units are, how many you sold, and what Amazon has done with your stock.
What it shows:
- Units in stock
- Units reserved
- Units shipped to customers
- Units returned
- Units damaged, lost, or disposed of
- Aging (how long stock has been in the warehouse)
- Storage fees (monthly and long-term fees in related reports)
Profit & Loss (P&L) Report
Amazon does NOT give a true P&L report. You have to build it using your accounting software (QuickBooks, Xero, or a tool like A2X/Link My Books). Your P&L report shows the real performance of your business. It brings together your revenue, COGS, fees, and expenses. It includes Gross sales, Cost of goods sold, Amazon fees, Advertising spend, Operating expenses, and Net profit.
Amazon Inventory Bookkeeping Essentials
Accurate inventory bookkeeping is what shows you the real profit in your Amazon FBA business. When you track your stock, COGS, and returns the right way, your numbers stay clear and your reports stay accurate. Here are the basics you need to follow:
Track Your COGS
Write down the exact cost of every unit you buy, including product cost, shipping, and duties. For example, if you order 200 plates at $4 each, record $800 as your total product cost.
Monitor Stock Levels
Check your Inventory Report in Seller Central regularly. It tells you how many units Amazon has, what is reserved, and what needs restocking. This helps you avoid running out of stock or paying extra storage fees.
Record Returns Properly
Review your returns in the Returns Report. When a customer returns an item, adjust your sales and update your inventory. If you get $300 worth of returns, your revenue and profit drop by that amount.
Track Storage Fees
Amazon charges monthly storage fees, so record them as they show up in your reports. These fees add up quickly, so it’s important to keep them in your books.
Pro Tip:
Review your inventory and sales every month. Match your units sold with your COGS, check returns, and update fees. Monthly updates keep your books accurate and help you spot problems early.
Cash Method vs Accrual Method
To record income and expenses for Amazon bookkeeping, there are usually 2 types of accounting methods used. This includes:
Cash Accounting
Under Cash Accounting, income and expenses are recorded only when cash is received or paid. This method may not always provide an accurate financial picture for Amazon FBA sellers. This is because Amazon usually processes payments every two weeks, which can make certain months seem exceptionally profitable, when in fact those numbers may not truly represent the month’s sales. Or, if you have a high volume of bills to pay in a specific month, your accounts might show a significant loss. This tracks real cash flow.
Accrual Accounting
The Accrual Accounting Method records income and expenses when the transaction occurs, regardless of when the actual money is received or paid. This means that purchase orders are recorded as income, even if the money has not been received upfront, and costs are registered as expenses, even if no cash has been paid out. This method tracks inventory better.
Easy Guide on How to Set Up Bookkeeping for Amazon Sellers
Setting up bookkeeping the right way helps you stay organized, track real profit, and avoid problems later. Here’s what to do:
Open a Business Bank Account
Create a separate bank account only for your Amazon business. This makes it easy to track sales, payouts, refunds, and expenses without mixing them with your personal spending. All Amazon deposits should go here.
Pro Tip: Pick a low-fee or no-fee business account so you don’t lose money to unnecessary charges.
Choose Your Bookkeeping Tool
Pick a tool that fits your budget and your business size. QuickBooks and Xero are the most popular choices as they integrate with Amazon data and automate the bookkeeping. If you’re just starting, a simple Google Sheet or Excel file also works.
Pro Tip: Make use of templates and automation tools when you can. They eliminate errors and save time.
Import Your Amazon Data
Get the main reports you need from Seller Central. The most important are your Payment Report, Inventory Report, and any financial summaries you use to track sales. Import these files into your accounting software so all your data stays in one place.
Pro Tip: Export your reports as CSV files. They upload faster and they’re easier to file.
Categorize Every Transaction
Sort your transactions into clear categories so you can always see what you’re spending your money on. Break down sales, Amazon fees, COGS, refunds, advertising, and operating expenses. This way, your books stay clean and you can see your real margins.
Pro Tip: Tools like A2X or Link My Books can sort fees and sales automatically.
Reconcile Every Month
Match your Amazon payouts with your bank statements once a month. Make sure deposits, sales, refunds, and fees line up correctly. This will allow you to identify any missing refunds, incorrect fees, or errors in your books.
Pro Tip: Use a simple monthly checklist so you don’t miss anything. Reconciliation becomes quick when you follow the same steps each month.
Review Your Books Quarterly
Every three months, review all your numbers with a deeper look. Update your COGS, look at storage fees, and make sure your reports are good to go for tax season. This not only saves time at the end of the year, but also helps keep your financial records accurate.
Pro Tip: Keep photos or scans of all receipts. Amazon accounting services like Expensify or Dext can keep you organised and simplify audits.
Keep Supporting Records Organized
Good bookkeeping isn’t only about numbers. Save invoices from suppliers, shipping receipts, Amazon fee breakdowns, and advertising statements. These backups prove your expenses and help your accountant file taxes correctly.
Pro Tip: Use a shared folder (Google Drive or Dropbox) to store documents in monthly folders.
Update Your Books on a Schedule
The biggest bookkeeping mistake sellers make is waiting too long. Set a weekly and monthly routine to stay updated. Weekly updates keep your numbers clean. Monthly checks confirm your true profit.
Pro Tip: Set reminders so you never skip your bookkeeping routine.
Final Thoughts
Bookkeeping for Amazon FBA does not need to feel complex. Once you break it into steps, it becomes a clear and simple process.
Need help setting up clean, accurate books? Enso Brands can take care of the heavy lifting. We organize your reports, fix messy numbers, track your true profit, and build a simple system you can rely on every month. Contact us for more information about our services.
