What is Amazon Bookkeeping?

Amazon bookkeeping is the process of recording and managing all financial transactions related to your Amazon business. It involves monitoring sales revenue, FBA and seller fees, Amazon payouts, returns, reimbursements, and tax obligations – providing a clear picture of your business's financial health and ensuring compliance. Without having that clear picture, you will be driving blind.

For many Amazon sellers, success isn't just about sourcing great products and optimizing listings – it's about maintaining precise financial records (and if this isn’t in the top one, it can be a close second). Amazon bookkeeping encompasses everything from tracking sales and revenue to managing inventory costs, FBA fees, and tax obligations. Whether you're a new seller or an established merchant, mastering the fundamentals of Amazon bookkeeping is crucial for long-term success in the marketplace. Because folks, the market is crowded, differentiation is tough, and only the strongest will survive.

This guide will walk you through everything you need to know about bookkeeping for Amazon sellers. We will cover the key components of Amazon bookkeeping, the differences between FBA and FBM accounting, essential tax considerations, bookkeeping software options, and when it may be time to hire a professional bookkeeper. By the end of this guide (if you make it to the end, it is a bit wordy), you will have the tools to streamline your bookkeeping process and set your business up for long-term success.

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Amazon bookkeeping includes:

Sales tracking

Keeping track of sales is the foundation of Amazon bookkeeping. This involves recording each transaction, including the sale price of items and total revenue earned, to ensure accurate financial reporting. Proper sales tracking is also crucial for tax calculations and making informed decisions about inventory management, pricing strategies, and overall business growth. Both on a SKU basis and as an entire business methodology. 

FBA fees

For sellers using Amazon’s Fulfillment by Amazon (FBA) program, tracking associated fees is essential to maintaining profitability and just staying on top of your business. These fees include storage charges for keeping inventory in Amazon’s warehouses and fulfillment fees for order processing, packing, and shipping. By closely monitoring these costs, sellers can make informed decisions about inventory management and pricing strategies.

Amazon seller fees

Every Amazon sale comes with associated platform fees that impact your bottom line. These may include referral fees, which are a percentage of each sale, closing fees for specific product categories, and high-volume listing fees for large inventories. Tracking these fees helps you understand your expenses per item and identify opportunities to optimize profitability.

Returns and reimbursements

When customers return items, Amazon may issue reimbursements to sellers, which must be properly recorded in bookkeeping records. This process includes tracking returned units, the reasons for returns, and the amounts refunded by Amazon. Monitoring reimbursements helps sellers ensure they receive the correct compensation and can assess potential issues with product quality or customer satisfaction. This is crucial in all lines of business, but some even more than others, like apparel. 

Amazon disbursements

Amazon disburses payments to sellers every two weeks, deducting applicable fees and charges before transferring funds. These settlements must be accurately recorded in financial statements to track cash flow and reconcile income with expected revenue. Understanding settlement reports helps sellers identify discrepancies and manage their business finances efficiently.

Amazon deferred transactions

Within this context, it is important to understand how Amazon’s deferred transactions work.

What are deferred transactions?

‍Deferred transactions occur when Amazon temporarily holds funds before releasing them to sellers. This happens in two key scenarios:

1. Delivery Date Reserve (DDR) Transactions – Under Amazon’s Delivery Date Reserve policy, funds are held for a set period after an order is delivered. Typically, this reserve period lasts seven days after delivery (DD+7).
   
   • Example: If an order is delivered on January 6, the payout becomes available on January 14.
2. Invoiced Orders – These are transactions awaiting payment from the buyer. Amazon releases the funds only after the customer completes their payment.

Each transaction falls under one of two statuses:
✅ Deferred – Funds are still held (reserved) by Amazon.
✅ Released – Funds have become available for payout.

Amazon’s 2024 Policy Update: What’s Changed?

In October 2024, Amazon updated how it reports DDR transactions—but not invoiced orders. Here’s what’s different:

New Reporting Format in Seller Central
The Summary and Transaction Reports within Amazon Seller Central have changed, and now there is:

• A new Deferred Transaction Report that tracks transactions while they are still held.

Note: This report is on-demand only and does not provide historical transaction data.

• Once a transaction is released, it automatically moves from this report to the Summary and Transaction Reports. To clarify, the sales and fees from the orders appear in the report only upon the release of the funds.

Tax management

Amazon sellers face complex tax obligations that vary by jurisdiction. This includes collecting and remitting the appropriate sales tax, VAT, or GST based on your selling locations. Proper bookkeeping ensures these tax obligations are tracked and reported correctly, helping sellers stay compliant with tax laws. Additionally, sellers may qualify for Amazon VAT refunds, which can provide financial benefits when managed properly.

It is worth noting that Amazon functions, in general, as a marketplace facilitator for sales tax purposes, responsible for collecting and remitting sales tax, although sellers may still need to file returns in certain states (see more below).

Why Accurate Bookkeeping is Essential for Amazon Sellers

Accurate bookkeeping is the backbone of a successful Amazon business, helping sellers track their financials, manage expenses, and make informed decisions. Keeping precise financial records also ensures compliance with tax regulations, maximizes profitability, and provides the financial clarity needed to scale operations effectively. As we saw above, if you don’t fully understand your Amazon reports, and/or if your accountant doesn’t prepare your books properly based on these reports, you will not have accurate reporting, and your visibility will go kaput. 

Understanding Amazon Seller Financials

Getting an overview of income and expenses

Your Amazon business generates a constant stream of financial data. Whether it's daily sales, promotions, reimbursements for returns, fees (FBA, referral, and closing fees), or shipping costs, sellers need a comprehensive bookkeeping system to properly categorize income and expenses and ensure accurate financial tracking.

The complexity of Amazon bookkeeping

Amazon sellers must navigate a maze of financial considerations, including FBA fees, storage costs, advertising expenses, shipping fees, and various charges. Each transaction involves multiple components that need to be categorized and recorded. This complexity is further amplified when selling across multiple jurisdictions, making it essential to have a robust bookkeeping system that can handle these activities.

The importance of accurate financial records

Maintaining detailed records serves multiple critical functions: They help sellers understand their profitability, optimize pricing, and reduce unnecessary expenses; prevent errors that could lead to tax penalties or financial losses; and provide the historical data needed for forecasting and business planning.

Benefits of Proper Amazon Bookkeeping

Avoiding tax issues

One of the primary benefits of proper Amazon bookkeeping is the ability to avoid tax-related complications. Well-maintained books ensure you can accurately report income, remit applicable taxes such as sales tax, VAT, and GST based on the location and sales volume, and comply with tax obligations across different states (which you may have- let’s say sales tax filing obligations- despite Amazon’s function as a marketplace facilitator).

Improving profitability

Effective bookkeeping is also a powerful tool for improving your bottom line. By maintaining detailed financial records, you can identify your most profitable products, understand your true costs, and spot areas where expenses can be reduced. This level of financial insight allows you to make data-driven decisions about inventory purchases, pricing strategies, and marketing spending, resulting in increased margins.

Scaling your Amazon business

As your operation grows, the complexity of your financials increases exponentially. Accurate bookkeeping provides the foundation needed to secure financing or attract investors. It helps you establish reliable cash flow projections, set realistic growth targets, and make informed decisions about expansion opportunities.

The Key Components of Amazon Bookkeeping 

Amazon Seller Accounts

What information is recorded?

Amazon seller accounts contain essential financial data that must be accurately recorded for bookkeeping purposes. This includes sales transactions, refunds, fees, reimbursements, and inventory-related expenses, all of which impact overall profitability. Properly recording this information is critical for monitoring business performance, preparing for tax filings, and ensuring compliance with financial regulations.

Seller account statements

Amazon provides detailed account statements that summarize a seller’s financial activity over a specific period. These statements include revenue from sales, deductions for Amazon fees, refunds issued to customers, and any reimbursements received. Reviewing these statements regularly helps sellers reconcile their books, spot discrepancies, and ensure accurate profit calculations (see above for more elaboration here).

Understanding Amazon payouts

Understanding Amazon payouts is crucial, as sellers receive disbursements every two weeks, with fees already deducted (see above for more elaboration here). Tracking and reconciling these payouts is essential to maintaining an accurate cash flow and ensuring that all deductions align with reported sales figures.

FBA vs. FBM Bookkeeping

FBA (Fulfillment by Amazon) accounting

For sellers using Amazon’s Fulfillment by Amazon (FBA) service, bookkeeping must account for specific costs associated with storage, order fulfillment, and returns. Amazon charges FBA sellers fees for warehousing inventory, picking and packing orders, and handling customer service. Keeping track of these expenses is crucial for understanding profit margins and making informed pricing and inventory decisions.

FBM (Fulfilled by Merchant) bookkeeping

FBM sellers handle their own storage, shipping, and customer service, leading to different bookkeeping requirements. Instead of paying Amazon for fulfillment, FBM sellers must track expenses related to warehousing, packaging, and shipping, as well as customer service costs. Proper bookkeeping for FBM businesses involves closely monitoring logistics expenses to ensure competitive pricing and sustainable profit margins.

Differences between FBA and FBM bookkeeping and how they impact your accounting

The primary difference between FBA and FBM bookkeeping lies in how fulfillment costs are recorded and managed. FBA sellers must account for Amazon’s fulfillment fees, while FBM sellers track their own logistics expenses. This difference impacts cash flow, expense categorization, and tax deductions, making it essential for sellers to adapt their bookkeeping practices based on their fulfillment method. Understanding these differences helps sellers accurately assess profitability and optimize their financial strategies.

How to Set Up Bookkeeping for Your Amazon Business

Setting up an efficient bookkeeping system for your business is crucial for long-term success – and it starts with choosing a bookkeeping solution that meets your specific needs as an Amazon seller.

Selecting the Right Amazon Bookkeeping Software

When evaluating bookkeeping software for your Amazon business, look for these essential features:

Automated integration with Amazon

Whether you sell with Amazon FBA or Amazon FBM, an automated integration with Amazon is needed to ensure the necessary data is pulled into your books. At a minimum, your integration should bring in details on your:

• Amazon sales
• Amazon refunds and returns
• Amazon disputes
• Amazon fees (including selling fees, fulfillment service fees, etc.)
• Amazon Lending loan balances and interest
• Amazon advertising

Additionally, the ability to bring in inventory and cost of goods sold (COGS) data would go a long way to help you best manage your financials.

On this front, it is worth noting how Finaloop stands out here, compared to the rest of the market. Finaloop has a unique proprietary capability to pull real-time data from Amazon, providing unmatched visibility into real time data from Amazon.

Comprehensive reporting capabilities

Your software should generate essential financial reports like profit and loss statements, balance sheets, and cash flow statements. Look for customizable reporting features that can break down profitability by product, marketplace, or period.

Inventory management features 

The software should be able to track inventory costs, stock levels, and COGS to maintain accurate financial records. 

Bank and payment processor integration 

Look for software that can connect with your bank accounts and other payment processors to reconcile all your financial transactions in one place.

Scalability 

Choose software that can grow with your business, handling increasing transaction volumes and additional marketplaces without compromising performance or requiring a switch to a new system.

User-friendly interface 

The software should be intuitive enough for daily use while providing advanced features when needed. Look for good documentation and customer support to help you maximize the software's capabilities. An additional feature that you should definitely consider is which software has a triple reconciliation between your shops (Amazon), payment processors and banks- as this is the only real way to make sure your data is accurate. All the time, on time.

Before investing time setting up a new system, first consider if you are looking for a DIY bookkeeping software that you would spend the time managing yourself or if you prefer to outsource your bookkeeping to an ecommerce accounting service. 

If you decide to go the accounting service route, Finaloop is the best option on the market. Unlike tools like Quickbooks and Xero, Finaloop offers state-of-the-art accounting software AND bookkeeping services from specialized ecommerce accountants.

Finaloop's integration tool connects to your Amazon Seller Central account as well as other relevant apps to integrate all relevant data into your books. Finaloop reconciles data using a three way reconciliation, between banks, payment processors and online stores, providing users with real time data that they can actually trust. It also has an inventory tracking tool, accounts receivable (i.e., invoices) and accounts payable (i.e., bills) management, automated transaction categorization, and tax support.

If you are looking to spend less time on bookkeeping, Finaloop is a great choice since it's significantly cheaper than traditional bookkeepers or accountants and can provide you with accurate and real-time financials. 

Tracking Amazon Sales and Inventory

Use software to track sales data

Using bookkeeping software that integrates with Amazon Seller Central is essential for accurately tracking sales data. The right software will automatically import transaction details, including order values, discounts, refunds, and Amazon fees, ensuring that all revenue is properly recorded. With real-time data synchronization, sellers can generate sales reports, monitor trends, and make informed decisions to optimize pricing and inventory management. And again, as mentioned above, this data really only has value when it is available real time. So make sure you are using real time software, that will give you this visibility.

Inventory management and COGS 

Tracking inventory levels and accurately calculating the cost of goods sold (COGS) is a precondition for understanding profitability. A good bookkeeping system should record inventory purchases, storage costs, and unit sales to determine how much each product truly costs. Proper inventory tracking helps prevent stockouts, reduce holding costs, and ensure financial records reflect actual product movement.

Automate bookkeeping for efficiency

Automating bookkeeping tasks reduces manual data entry and minimizes errors, improving overall efficiency. By setting up automated tracking for expenses, Amazon fees, and sales tax, sellers can streamline their accounting processes and save time. Integration with accounting software like Finaloop ensures that financial data is always up to date, making tax preparation and financial reporting much easier.

Setting Up Amazon Seller Reports

P&L (profit & loss) statements

A profit and loss (P&L) statement provides an overview of a seller’s revenue, expenses, and net profit over a specific period. This report helps Amazon sellers track their profitability by detailing income from sales, deductions for Amazon fees, advertising costs, and other business expenses. Regularly reviewing the P&L statement ensures sellers can make informed decisions about pricing, cost-cutting, and overall financial strategy.

Balance sheets

The balance sheet gives a snapshot of a seller’s financial position by outlining assets, liabilities, and equity. It includes key details such as inventory value, outstanding debts, and cash on hand, offering insights into the financial health of the business. Maintaining an accurate balance sheet helps sellers manage cash flow, secure financing, and assess business growth over time.

Sales tax reports

A sales tax report compiles all sales transactions and categorizes them based on applicable tax rates and jurisdictions. While Amazon collects and remits sales tax to the authorities, sellers need this report. It is their responsibility to register for a sales tax permit and report these taxes in every state they have a nexus in and that requires them to do so.

Specific Considerations for Amazon Bookkeeping

When selling on Amazon, success often hinges on understanding and accurately tracking specific financial components unique to the platform's business model. From complex fee structures to state and local tax requirements, Amazon FBA sellers face distinct bookkeeping challenges that require special attention to financial management.

Understanding Amazon FBA Fees

FBA storage fees

Amazon charges FBA sellers storage fees based on the volume of inventory stored in its fulfillment centers. These fees vary depending on the time of year, with higher rates during peak seasons like Q4. Accurately tracking storage fees is essential to avoid excessive costs and to make informed inventory management decisions, such as optimizing stock levels or removing slow-moving items.

FBA shipping and handling fees

FBA sellers pay fulfillment fees for Amazon’s picking, packing, and shipping services, which are calculated per unit based on weight and size. These fees cover the convenience of Amazon handling logistics but can significantly impact profit margins, especially for low-cost or bulky products. Keeping track of these fees allows sellers to adjust pricing strategies and evaluate whether FBA remains the most cost-effective fulfillment method.

Impact on your accounting and profitability

Since FBA fees are deducted directly from Amazon payouts, they must be carefully recorded to maintain accurate financial records. Mismanaging these expenses can lead to overstated profits and cash flow issues, making it harder to assess business performance. Understanding and accounting for FBA fees ensures sellers can price their products appropriately, manage profitability, and avoid unexpected financial shortfalls.

Tax Considerations for Amazon FBA Sellers

Sales tax collection and reporting

States in the US that impose sales taxes have passed legislation requiring marketplaces to collect and remit sales taxes on behalf of third-party sellers. Putting the onus on marketplaces means that brands selling on Amazon or Walmart are not obligated to collect or pay sales tax on their sales. However, if these brands have nexus in a state, they must register and file a sales tax return there. 

Tax deductions specific to Amazon sellers

Amazon sellers can take advantage of various tax deductions to reduce their taxable income, including costs related to inventory, shipping, Amazon fees, advertising, and home office expenses. Proper bookkeeping helps track deductible expenses throughout the year, making tax filing more efficient and minimizing the risk of audits.

Managing state and local tax requirements

The distributed nature of FBA inventory creates a complex web of state and local tax obligations that requires careful management. Storing inventory in Amazon's fulfillment centers often establishes a physical nexus in multiple states, requiring you to register for sales tax permits and file returns in each jurisdiction. Each state has different filing frequencies, deadlines, and reporting requirements, making it essential to create a systematic approach to tracking and meeting these obligations (hint- Pennsylvania and California are not the same).

Hiring an Amazon Bookkeeper: Is It Worth It?

Deciding to hire a professional Amazon bookkeeper is a critical turning point for many sellers as their businesses grow and financial complexity increases. Whether you're struggling to keep up with day-to-day bookkeeping tasks or looking to optimize financial operations, understanding when and why to bring in expert help can significantly impact your business's success.

Signs you need help with Amazon accounting

Several key indicators suggest it's time to consider professional help with your Amazon bookkeeping. Warning signs include falling behind on reconciling Amazon settlements, struggling to track inventory costs accurately, missing tax filing deadlines, or spending excessive time on accounting tasks that take you away from core business activities like product sourcing and marketing.

How an Amazon bookkeeper can save you time and money

An experienced Amazon bookkeeper can automate financial tracking, ensure tax compliance, and identify cost-saving opportunities. Hiring an Amazon bookkeeper can help you avoid penalties, optimize tax deductions, and gain a clear picture of profitability. Their expertise allows you to focus on scaling your business while they handle the tedious accounting tasks.

Key qualifications to look for

When hiring a bookkeeper, look for someone with experience in e-commerce and Amazon FBA accounting. They should be familiar with Amazon Seller Central reports, sales tax regulations, and bookkeeping software like Finaloop. Strong analytical skills and attention to detail are also essential for ensuring accuracy in financial records.

Cost vs. benefit of hiring an expert

While hiring a bookkeeper is an added expense, the long-term benefits often outweigh the costs. A skilled bookkeeper can help you avoid financial errors, maximize deductions, and improve cash flow, leading to increased profitability. For many sellers, the time saved and financial insights gained make hiring a bookkeeper a worthwhile investment.

Final Thoughts: Streamline Your Amazon Bookkeeping

Selling on Amazon requires more than great products and marketing – it demands meticulous financial management and organized bookkeeping practices. From tracking complex FBA fees to managing multi-state tax obligations, sellers must maintain precise records to understand their true profitability and make informed business decisions. The foundation of this success lies in streamlining sales tracking, managing inventory efficiently, and monitoring all associated costs and fees. All on time, and real time.

Without a proper bookkeeping system, Amazon sellers risk financial mismanagement, tax penalties, and missed opportunities for business growth. Keeping accurate financial records not only ensures compliance but also allows sellers to optimize pricing strategies, manage cash flow effectively, and make data-driven decisions. As your Amazon business scales, the complexity of your accounting will increase, making it even more critical to have a well-structured bookkeeping process in place.

Now is the time to take action – implement the strategies outlined in this guide to streamline your bookkeeping and set your business up for long-term success. Consider using specialized accounting solutions like Finaloop to automate your financial management and reduce the burden of manual bookkeeping. By prioritizing financial organization, you can focus on growing your Amazon business with confidence and clarity.

Amazon Bookkeeping FAQs

What is the best accounting software for Amazon sellers?

The best accounting software for Amazon sellers is Finaloop, as it is specifically designed for ecommerce brands. Finaloop offers seamless integration with Amazon Seller Central, includes inventory tracking, automated transaction categorization, and tax support, and provides full bookkeeping services from specialized ecommerce accountants, all at a lower cost than hiring a bookkeeper.

‍What accounting system does Amazon use?

Amazon does not use a single accounting system for sellers but provides financial reports through Amazon Seller Central, which sellers can integrate with their own bookkeeping software. Sellers typically use third-party accounting tools like Finaloop, QuickBooks, or Xero to organize their financial data. Amazon provides detailed transaction records, including settlement reports, sales tax reports, and account statements, which sellers must reconcile in their accounting system to ensure accurate financial tracking.

Do you need a business account to be an Amazon seller?

No, you do not need a business account to sell on Amazon. Individuals can start selling with a personal account, known as an Individual Seller account, which is best for those selling a small number of items. However, for those looking to scale their business, track expenses efficiently, and separate personal and business finances, having a business bank account and using a Professional Seller account is highly recommended.