One post tagged with "Amazon sellers"

When your margins live on pennies, precision beats guesswork.

Selling on Amazon is a game of volume and velocity. But behind the rush of sales and shipments lies a complex web of fees, returns, inventory movements, and tax obligations. Standard bookkeeping software often struggles to capture this nuance, leaving sellers with a fuzzy picture of their true profitability.

This is where a plain-text accounting system like Beancount shines. By giving you total control over how you record transactions, you can build a financial source of truth that perfectly models the unique challenges of the Amazon marketplace. This guide provides a step-by-step workflow to keep you ahead of fees, taxes, and inventory headaches.

Why Amazon Bookkeeping Is Different​

If you’ve tried to reconcile an Amazon payout with your bank statement, you already know it's not straightforward. The financial reality of an Amazon business is hidden behind layers of abstraction.

• Bi-weekly lump-sum payouts: Amazon doesn't send you the revenue from each sale. Instead, it sends a single deposit every two weeks. This lump sum is a net figure, with gross sales reduced by referral fees, FBA fees, advertising costs, returns, and other withholdings. To understand your business, you must break this single number back into its constituent parts. (doola: A Business-in-a-Box™)
• Inventory everywhere: Your inventory is constantly in motion—from your supplier, to a prep center, to various FBA fulfillment centers across the country, and finally to the customer. Accurately tracking your Cost of Goods Sold (COGS) requires knowing which batch of inventory (at which cost) was used for each sale. (Bean Ninjas)
• Marketplace fees & promos: A significant portion of your revenue is immediately consumed by fees: referral fees, FBA pick-and-pack fees, monthly storage fees, and advertising costs. Tracking each of these expense categories separately is the only way to calculate your true gross margin and determine a product's real profitability. (Profitwise Accounting)
• Sales-tax patchwork: While Amazon's Marketplace Facilitator laws handle sales tax collection and remittance in most states, it's not a complete solution. Storing inventory in FBA warehouses can create "nexus" (a business presence), potentially requiring you to register and file in those states, even if no tax is due. This is a complex compliance area that demands careful tracking. (TaxDo)
• Lower 1099-K thresholds: With the reporting threshold for Form 1099-K dropping from $20,000 to $5,000 in 2024 (and set to fall to just $600 from 2026), nearly every serious seller will receive a form from Amazon reporting their gross transaction volume to the IRS. Your books must be able to reconcile perfectly with this number. (IRS)

Seven-Step Beancount Blueprint​

This blueprint leverages Beancount's precision to tackle Amazon's complexity head-on.

1. Separate Channels Early​

If you sell on multiple platforms, keep your accounting for each one separate. Within a single Beancount file for your legal entity, create dedicated, hierarchical accounts for each marketplace. This structure simplifies analytics and makes generating tax schedules trivial.

2025-07-22 open Income:Amazon               USD
2025-07-22 open Expenses:Amazon:FBAFee      USD
2025-07-22 open Assets:Amazon:Payouts       USD

2. Decompose Every Payout​

This is the most critical habit. Never book an Amazon deposit as a single line of income. Instead, download the "All Transactions" settlement report from Seller Central for the corresponding period. Use this report to create a single Beancount transaction that breaks the payout into its components.

The deposit you receive in the bank is the balancing entry. The gross sales are credited to Income, while all fees and refunds are debited from their respective Expenses accounts.

; bi-weekly payout from settlement report
2025-07-14 * "Amazon Settlement #4361"
  Assets:Bank:Operating            8432.17 USD
  Income:Amazon:Sales            -12274.50 USD
  Expenses:Amazon:FBAFee           2454.80 USD
  Expenses:Amazon:Adverts          1012.06 USD
  Expenses:Amazon:Refunds           375.47 USD
  Assets:Amazon:Reserve            -100.00 USD

3. Track Inventory & COGS with Lots​

Beancount has a first-class system for tracking inventory called "lots." When you purchase inventory, you record the number of units and their specific cost. When a unit is sold, you can expense that exact cost, giving you a perfect calculation for Cost of Goods Sold (COGS).

; Purchase 1,000 units from a supplier
2025-07-01 * "Supplier PO-7421"
  Assets:Inventory:WidgetA     1000 WidgetA {@ 4.20 USD}
  Assets:Bank:Operating

; Later, record the cost of a single sale
2025-07-16 * "FBA sale WidgetA | COGS"
  Expenses:COGS                1 WidgetA {4.20 USD}
  Assets:Inventory:WidgetA

4. Choose Accrual for Clarity​

For any inventory-based business, the accrual method is superior. A cash-basis approach would show a massive expense in the month you buy inventory and artificially high profits in the months you sell it, distorting your performance. Accrual accounting correctly matches the cost of the goods sold (COGS) to the revenue from that sale in the same period, providing a much clearer picture of your gross profit. (Bean Ninjas)

5. Automate Imports​

Manually entering settlement reports is educational at first, but it doesn't scale. The plain-text ecosystem excels at automation:

• Use bean-extract to pull data from formatted CSVs exported by services like A2X.
• Write simple Python scripts to pull data directly from Amazon's SP-API.
• Use existing importers to pull bank CSV files to reconcile deposits and fees charged directly to credit cards.

6. Reconcile Weekly​

Make it a habit to check your numbers. Use Beancount's powerful command-line tools to quickly validate balances and review performance.

# Check your current inventory counts and value
bean-balance books.bean "Assets:Inventory" "2025-07-21"

# Generate an income statement for the last period
bean-report books.bean income_statement -e 2025-07-21

7. Archive Source Docs​

For every major transaction, link to the source document. Attach the official Amazon settlement PDF, the supplier invoice for an inventory purchase, or a shipping receipt using Beancount's metadata syntax (document:). This creates a self-contained, audit-ready financial record.

Sales-Tax & Compliance Checklist​

• Marketplace Facilitator Laws: Understand that while Amazon remits sales tax on your behalf in most states, storing inventory in states like California, Texas, or Pennsylvania can still create economic nexus, potentially requiring you to register your business there. (TaxGPT)
• 1099-K Reconciliation: Ensure that the total you record in Income:Amazon:Sales for the year matches the gross amount reported on your Form 1099-K to the cent. Any discrepancy is an audit flag. (IRS)
• Direct Sales Tax: If you sell through other channels not covered by a facilitator, maintain a Liabilities:SalesTaxPayable:State account subtree to track taxes you owe directly.

Common Pitfalls (and Fixes)​

• Pitfall: Recording only the net deposit from Amazon.
  • Fix: Always decompose payouts using the full settlement report.
• Pitfall: Ignoring reimbursed returns or damaged goods.
  • Fix: Log both the initial refund expense and the subsequent reimbursement from Amazon as a separate credit.
• Pitfall: Forgetting about rolling reserves.
  • Fix: Amazon often withholds a "reserve" balance from payouts, especially for new accounts. Track this money you're owed in a dedicated Assets:Amazon:Reserve account.
• Pitfall: Mismatching SKU aliases between your system and Amazon's.
  • Fix: Normalize all SKU codes in your import scripts to ensure COGS lookups don't fail.

Quick-Start To-Do​

• Enable and download your first settlement report in Seller Central.
• Clone a Beancount starter repository and build a chart of accounts specific to Amazon.
• Write a small importer script that converts a settlement CSV into a Beancount transaction (.txn file).
• Schedule a weekly reminder to pull new reports and run bean-check to ensure your files are valid.
• Review your income statement monthly to make data-driven decisions on ad spend, pricing, and inventory.

Further Reading​

• Amazon Seller Central → 1099-K FAQs
• IRS Notice 2024-85 on Form 1099-K thresholds
• Bean Ninjas COGS guide for Amazon sellers

Ship more, fret less—keep your beans balanced. Happy selling!