Walmart Accounting: The Ultimate Guide for Ecommerce Sellers

Walmart Marketplace has emerged as a major ecommerce platform offering sellers access to millions of customers and rapidly growing market share. 

With lower competition than Amazon and the trust of the Walmart brand, the platform presents a compelling opportunity for ecommerce entrepreneurs looking to diversify and scale their businesses profitably.

Becoming a Walmart seller, however, comes with a critical challenge: Walmart’s unique structure contains ecommerce accounting requirements that differ from other platforms like Amazon or Shopify. 

In this comprehensive guide, we’ll walk you through everything you need to know about Walmart accounting for your store. You’ll learn how to:

• Set up and manage your accounting system for Walmart (after setting up your Walmart Sellers Account)
• Track sales, fees, and returns accurately
• Reconcile Walmart payouts with your bank
• Prepare for taxes and financial planning
• Use automation tools to streamline your ecommerce bookkeeping

Let’s dive in. 

Understanding Walmart's Financial Ecosystem

Walmart Marketplace operates on a sophisticated financial framework that differs significantly from other ecommerce platforms. Understanding this ecosystem is actually pretty important, in order to maintain accurate financial records and to make strategic business decisions (or at least giving it a shot).

The Structure of Walmart Marketplace Finances

Walmart acts as the facilitator of your sales, meaning they process customer payments, deduct their fees, and then remit the net proceeds to you. When you become a Walmart seller, you don’t collect funds directly from customers—you receive payouts from Walmart instead.

Walmart sends the payments to Walmart sellers, typically, every two weeks. But for new sellers, it could take longer, as Walmart may extend the hold period to evaluate performance and compliance. This longer the settlement period, the more robust cash flow planning you will need, as things could take time until they kick into a routine.

Overview of Fee Categories Unique to Walmart Sellers

Walmart charges several types of fees, including:

• Referral fees: Vary by category, generally 8–15%, but can rise to 20% for some industries
• Fulfillment costs: Fees for Walmart Fulfillment Services (WFS)
• Storage fees: Costs for keeping inventory in Walmart’s warehouses, based on size of items and length of storage time. 
• Adjustment fees: Adjustments for returns, refunds, or pricing errors, which can affect your payouts 
• Promotional fees: Advertising costs for Walmart Connect campaigns, and various optional deals or advertising programs

As these fees can really add up, accurate tracking of each one is vital for calculating profitability and tax obligations. Don’t say we didn’t warn you.

Getting Started with Walmart Accounting

Establishing proper ecommerce accounting foundations from the beginning - as soon as you make a Walmart seller’s account - is crucial for long-term success on Walmart Marketplace. 

If you are multi-channel (meaning, you sell on multiple platforms like Amazon, Shopify, etc), each Walmart transaction should be tagged with appropriate identifiers that distinguish it from sales through other marketplaces, direct-to-consumer channels, or wholesale operations. 

This separation helps you track profitability, maintain tax compliance, and make strategic decisions, per each channel. Many successful sellers create dedicated bank accounts for Walmart transactions, simplifying reconciliation processes and providing cleaner audit trails.

Setting Up the Correct Chart of Accounts

Customize your chart of accounts to reflect Walmart’s financial activities. Key accounts might include:

• Walmart Sales Revenue - to track gross sales from Walmart
• Walmart Shipping Income/Expense - if you charge customers for shipping
• Walmart Fees (Referral, Promotional, Adjustments) - All marketplace fees tracked in dedicated accounts
• Returns and Allowances - tracks returned sales and associated costs
• Sales Tax Payable (Walmart) - track sales collection, even if Walmart collects sales tax on your behalf 

Additional best practices

Revenue accounts should distinguish between different product categories, as Walmart's referral fees vary significantly by category. 

Expense accounts must capture the various fee types, advertising costs, and fulfillment expenses to understand your true costs and margins.  

Asset accounts should properly track inventory held at Walmart facilities versus inventory managed through other channels.

Tracking Walmart Sales and Revenue

Recording Sales Transactions

You can export sales data from the Walmart Seller Center or use tools like Finaloop to sync transactions automatically (and do so much more, see below).  

Walmart provides detailed transaction reports, including information about individual orders, shipping charges, tax collections, and fee deductions. For Walmart bookkeepers to keep pace,it’s a good idea to download these reports regularly. 

Different transaction types require specific handling approaches: 

Standard sales transactions - include the base product price, shipping charges, and other associated fees. Record each item separately to maintain proper revenue categorization and enable accurate profitability analysis. 

Shipping revenue - record it as a separate line since it may be subject to different tax treatment and profitability calculations than product sales.

Sales tax - Walmart collects and remits sales tax in most states as a Marketplace Facilitator, but it still needs to be recorded properly in your books - as a liability on your balance sheet that is simultaneously relieved when Walmart remits the tax to authorities. This is not a P&L item!

Managing Customer Returns and Refunds

Returns and refunds create bookkeeping complexity. The financial impact goes beyond simply reversing the previous sale. It also affects inventory and cost of goods sold (COGS) and other key metrics such as gross revenue, net revenue, and return rates. 

Proper return accounting enables sellers to identify patterns in return behavior, assess the true profitability of different products, and make informed decisions about inventory management and product offerings. A lot of times, this behavior is not necessarily accounting or finance based (such as poor product description which leads to higher return rates), but keeping on top of your finances on a regular basis can help point these trends out to you.

Walmart's return policy allows customers to return most items within a reasonable period, but sellers may not recover all associated fees, particularly with respect to advertising costs already incurred. 

Reconciling inventory after returns requires careful attention to the condition and location of returned items. They could be available for resale, require refurbishment, or need to be written off as unsaleable. Each scenario requires different accounting treatment and impacts inventory valuation differently. 

Walmart Marketplace Fee Structure

Walmart Marketplace has a complex fee structure, with different referral fees for different categories of goods, with fluctuations based on transaction volume, product categories, and seasonal factors. 

Sellers should track effective fee rates by product category and time period to identify seasonal patterns. Electronics typically get charged a lower percentage, while jewelery is charged at the highest end. 

Fees are based on the total sale price including shipping, making it important to track the fee basis accurately.

There could also be variation on fees when Walmart runs promotions on certain products. 

It’s essential to monitor and analyze fee percentages relative to sales volume and identify trends. That could reveal hidden opportunities for optimization and hidden costs you weren’t aware of. 

Essential Bookkeeping Practices for Walmart Sellers

Maintaining accurate books for Walmart operations requires disciplined daily, weekly, monthly, and annual procedures that ensure no transactions are missed and all financial data is properly categorized and reconciled.

Alternatively, you can use specialized software for ecommerce, like Finaloop, to automate reconciliation and so much more. 

Daily and Weekly Accounting Tasks

Consistent Walmart bookkeeping prevents small errors from snowballing into large issues. Key tasks include:

• Download recent sales and fee data
• Categorize expenses (shipping, fees, marketing)
• Update inventory records for items sold or returned
• Reconcile matching payouts with orders
• Update inventory levels

Regular reconciliation is crucial for identifying discrepancies early and maintaining accurate cash flow records. Common causes of discrepancies include timing differences, holds on certain transactions, or errors in transaction processing.

Monthly Accounting Procedures

The end-of-month reconciliation process should include a comprehensive review of all Walmart transactions for the period, verification that all settlements have been received and properly recorded, and analysis of key performance metrics such as sales growth, return rates, and fee percentages.

Also:

• Prepare a profit and loss statement
• Review and reconcile inventory
• Monitor unpaid balances or customer disputes

Products stored at Walmart fulfillment centers may have different carrying costs than inventory held at your own facilities, and these differences should be reflected in your valuation methodology.

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Annual Tasks that relate to Tax

Tax preparation considerations for Walmart sellers include organizing all necessary documentation for income tax filing, sales tax compliance, and any international tax obligations. 

• Estimated tax payments to the IRS

At year-end (usually until the end of January), finalize your books, issue 1099s (if applicable), and prepare for filing your business taxes.

Year end is also a time to assess the entire year's operations to identify the most profitable products, seasonal trends, and opportunities for growth or cost reduction in the coming year.

Walmart Payment Reconciliation

With Walmart accounting, payment reconciliation can be challenging. The complexity of Walmart's settlement process, combined with various fees and timing differences, requires systematic approaches to ensure accuracy.

Understanding Walmart Settlement Reports

Walmart's settlement statements provide detailed breakdowns of all transactions included in each payout. But to decode the reports, you need a firm understanding of the various codes, categories, and calculation methodologies used. 

Each settlement report includes sales transactions, refunds, fees, adjustments, and any holds or reserves applied to the account.

To understand discrepancies between sales and deposits, you often need to compare multiple data sources - individual transaction reports, settlement summaries, and bank deposit records. 

Common discrepancies arise from timing differences between when sales are recorded and when they appear in settlements, holds placed on certain transactions, or errors in fee calculations.

You can also use automated tools like Finaloop to automatically categorize and summarize the settlement data and integrate it into real time financials, saving you time reconciling the data and improving its accuracy, along with giving you tools to make real time financial decisions.  

Matching Bank Deposits to Transactions

Sometimes, the net deposit from Walmart won’t match the total from sales due to:

• Returns processed after the sale
• Delayed payouts or weekend payments
• Cross-period adjustments

Developing standard procedures for addressing these issues ensures consistent and accurate reconciliation.

Tax Considerations for Walmart Sellers

Tax compliance for Walmart sellers involves multiple layers of complexity, from sales tax obligations to income tax planning and international considerations for cross-border selling.

Sales Tax Compliance

Walmart's role as a marketplace facilitator means that in most states, Walmart collects and remits sales tax on behalf of sellers. However, sellers must still understand their obligations and maintain proper records for compliance purposes. 

Some states may still require sellers to register and file returns even when Walmart handles collection and remittance.

State-specific considerations vary significantly, with some states imposing additional requirements on marketplace sellers beyond what Walmart handles automatically. Sellers must stay informed about changing regulations and ensure compliance with all applicable state and local tax requirements.

Your responsibilities for sales tax include maintaining accurate records of all sales transactions, understanding which states require separate registration, and monitoring changes in tax laws that might affect your obligations. Even when Walmart handles most tax compliance, sellers remain ultimately responsible for ensuring all requirements are met.

Income Tax Planning

Tax deductions specific to Walmart sellers include referral fees, advertising costs, fulfillment fees, and other marketplace-related expenses. Make sure to categorize and document these expenses to maximize deductions and maintain compliance with tax regulations.

Estimated tax payment strategies should account for the seasonal nature of many Walmart businesses and the timing differences between sales and cash receipts. Quarterly payments should be calculated based on projected annual income from all sources, with appropriate adjustments for Walmart's contribution to overall earnings.

Record-keeping requirements for tax compliance include: 

• Maintaining detailed documentation of all income and expenses related to Walmart operations 
• Supporting documentation for deductions claimed
• Organized filing systems that enable easy retrieval of information during tax preparation or audit situations

Accounting Software and Automation for Walmart

Today, accounting software and automation tools can make your Walmart accounting dramatically more accurate and efficient and reduce the manual effort required for routine tasks.

Choosing the Right Accounting System

Popular accounting solutions that integrate with Walmart include Finaloop, QuickBooks Online, and Xero. Both Quickbooks and Xero offer robust accounting capabilities. But neither platform was designed for ecommerce, and they both require significant additional work (plus generally a bookkeeper) to get your books straight. Only Finaloop was designed with ecommerce sellers in mind, providing you with fully reconciled, real-time financials that you can actually trust. 

The software should handle the complexity of marketplace transactions while providing clear visibility into profitability and performance metrics.

At a minimum, your software should be able to:

• Sync with Walmart or accept third-party data
• Track COGS, inventory, and fees
• Provide data per sales channel

Automating Walmart Bookkeeping

Using software that has automation capabilities for your Walmart accounting has many benefits. You can dramatically reduce the need for manual entry, saving time and eliminating human error. Automation also means you can close your books at the end of the month much faster. 

Automation reduces the risk of errors that can compound over time. Integration tools and other specialized platforms can automatically import Walmart transaction data into your accounting system, categorize transactions appropriately, and create the necessary journal entries for settlement reconciliation. Just a caveat- make sure a human is involved in the loop.

Building a Sustainable Accounting System

Implementing a robust financial tracking system begins with establishing clear objectives for what information is needed and how it will be used. The system should be designed to provide accurate, timely information that supports decision-making while minimizing manual effort and reducing the risk of errors.

Best practices for Walmart accounting include maintaining separate records for Walmart transactions, implementing systematic reconciliation procedures, using appropriate automation tools, and conducting regular reviews of financial performance and accounting accuracy.

It is also important to stay current with changes in Walmart policies, tax regulations, and accounting standards. 

You can integrate Finaloop with your Walmart account to automate the reconciliation process and close your books for each month as quickly as possible. 

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