Amazon Seller Accounting and Bookkeeping Guide

Amazon provides sellers with immediate access to hundreds of millions of active customers. While it's a top e-commerce platform, Amazon sellers manage a layer of financial complexity that standard small business accounting does not cover. That may seem intimidating, but it's manageable with the right strategy and insight.

Amazon sellers should use this article to guide their selection of an accounting method, chart of accounts management, cost of goods sold (COGS) tracking, fee reconciliation, ongoing tax obligations, and the optimal timing to bring in professional support.

Pick the Accounting Method That Works for Your Amazon Selling Business

You'll have to select an e-commerce accounting method for your Amazon business: either accrual-basis or cash-basis accounting.

Accrual accounting uses the actual act of exchanging a product or a service to determine when a transaction is recorded:

• Revenue transactions are recorded on the date that a customer becomes legally obligated to pay you for providing a product or a service. This may or may not be the same time when cash changes hands.

• Expense transactions are recorded on the date that you become legally obligated to pay for a product or service you receive. Just like with revenue transactions, this may or may not be the same time when cash changes hands.

Accrual-Basis Accounting Example #1: A customer buys something from you for $500 on November 15th. On the date of the sale, you give the customer an invoice for $500 but don’t get paid until December 15th. You’ll record the $500 of revenue on November 15th, the date of the sale.

Accrual-Basis Accounting Example #2: You hire a technician for $750 to repair your business computers. The technician makes the repairs on December 20th and gives you an invoice. You pay the $750 invoice a month later on January 20th. You’ll record the $750 expense when the technician performs the repairs on December 20th.

Cash accounting uses the cash itself to determine when a transaction is recorded:

• Revenue transactions are recorded on the date you receive cash from a customer as payment for a product or service.

• Expense transactions are recorded on the date you spend the cash when making a purchase.

Cash-Basis Accounting Example #1: A customer buys something from you for $500 on November 15th. On the date of the sale, you give the customer an invoice for $500 but don’t get paid until December 15th. You’ll record revenue when you receive the $500 in cash on December 15th.

Cash-Basis Accounting Example #2: You hire a technician for $750 to repair several of your business computers. The technician makes the repairs on December 20th and gives you an invoice. You pay the $750 invoice on January 20th. You’ll record the expense when you pay it.

There are pros and cons to using each method.

If your average annual gross receipts meet or exceed $25M, you must use the accrual method.

Setting Up Your Amazon Seller Accounting System

Consider these topics when setting up accounting and bookkeeping for your Amazon seller business.

Use the Right Accounting Support

One of the top considerations should be accounting support for your developing Amazon business. Many beginner Amazon small business owners use do-it-yourself accounting software to track their transactions, which is completely fine to start. However, as you experience business growth, taxes become more complicated than the best accounting software can handle.

This is where having an accountant and bookkeeper on your team will make a material difference. Your accountant will ensure you comply with state and federal tax regulations and help you save money by maximizing tax deductions and credits that apply to your Amazon seller business.

Create a Chart of Accounts

Your chart of accounts is an organized index of all the financial accounts your Amazon seller business uses to categorize its transactions, making it easier to ensure your business's financial health and generate accurate financial statements. You can categorize different financial transactions and also provide a name, a brief description, and an identification code.

A chart of accounts for your Amazon business contains five accounts, which are:

• Assets

• Liabilities

• Shareholder’s equity

• Revenue

• Expenses

To create your chart of accounts, you’ll start with your asset accounts. There are additional sub-accounts you can list for assets, including:

• Cash

• Savings account

• Accounts receivable

Amazon sellers should create custom sub-accounts specifically for Amazon fees, including fulfillment, referral, and storage fees, to make reconciliation easier.

You can also add sub-accounts to liabilities, such as:

• Accrued liabilities

• Accounts payable

• Payroll liabilities

List your shareholders’ equity account into sub-accounts:

• Common stock

• Preferred stock

• Retained earnings

You’ll list revenue and expenses after your assets, liabilities, and shareholder equity. Your revenue and expenses accounts follow what’s on the income statement for your Amazon seller business.

Track the Cost of Goods Sold

Tracking your COGS will help you determine the gross profit of your Amazon seller business. Track your COGS via one of these three ways:

• Average Cost method. The average cost method tracks your average product cost over time. This option is useful because it lets you track costs regardless of the purchase date.

• FIFO. FIFO is an acronym for First In, First Out. You can use this inventory method to track the earliest arriving products you plan to sell first and at the lowest price.

• LIFO. LIFO is an acronym for Last In, First Out. You can use this inventory method to track the latest products you plan to sell first and at the highest price.

Amazon sellers can use the Fulfillment by Amazon (FBA) method. According to Amazon, using the FBA program allows you to outsource your fulfillment duties to Amazon and offer your customers free, two-day shipping. Note that an Amazon FBA seller's COGS calculation must include inbound shipping, prep fees, and Amazon's receiving fees.

Figure Out Storage Needs

Amazon offers inventory management based on how long you plan to store your product, arranged on a first-in, first-out basis.

Your monthly storage fees will vary according to the product you sell and other factors, including:

• Average daily units stored at FBA per month.

• The current month you’re selling your product.

• Your product’s dimensions and volume.

• Your product’s size tier.

• Whether your Amazon product has a dangerous goods classification.

If you plan on storing your products longer, there are additional FBA fees. Amazon charges long-term storage fees for products in its fulfillment center for over a year. Long-term storage fees are billed monthly, and you’ll pay a rate based on the unit amount or volume. You’ll pay the higher of the two amounts: $6.90 per cubic foot or $0.30 per unit.

Aged inventory reports inside your Amazon Seller Central account can help you proactively manage storage fees.

Maintain a Recordkeeping System

Establishing a recordkeeping system and streamlining it over time will help you track your transactions more efficiently. So will opening a dedicated business bank account and business credit card. You’ll want to maintain your financial records by doing the following:

• Track your expenses and revenue.

• Keep your business expenses separate from your personal expenses.

• Review your records often, ideally bi-monthly or monthly.

• Record your financial transactions.

• Print your financial transactions as different reports: a balance sheet, an income statement, an accounts payable report, and an accounts receivable aging report.

Amazon's Settlement Reports, available in Seller Central, are the starting point for monthly reconciliation.

Account for Amazon Fees and Transaction Types

You'll have to account for the various fees and transaction types from Amazon and reconcile them correctly. Account reconciliation ensures that your general ledger and other records are accurate and complete.

Amazon Fees include:

Amazon Transactions include:

• Adjustments

• Payable to Amazon

• Promotions

• Refunds

• Reimbursements

• Reserve Balances

• Sales

Account for Amazon’s marketplace facilitator tax and VAT

The marketplace facilitator tax shifts the responsibility of collecting sales tax from your e-commerce business to Amazon. They're now responsible for collecting and remitting sales tax to your state, which may lead to issues if there are inconsistencies between your economic/sales tax nexus tracking and Amazon's. Some states, including Tennessee, Texas, and Pennsylvania, require sellers to track thresholds or actively file returns, even if Amazon handles the remittance for your sales.

If you sell to customers in the European Union or other countries that use the Value-Added Tax (VAT) system, you will be responsible for calculating and submitting taxes to the appropriate government authorities. Thresholds differ by country.

Reconciling ‘Payable to Amazon/Successful Charge’ transactions

You must also reconcile Payable to Amazon and Successful Charge transactions.

The Payable to Amazon transaction represents the full amount you owe to the platform. If Amazon believes it is owed a large amount, it will charge your credit card and label the transaction as a Successful Charge.

Steps to reconcile a settlement report:

1. Download from Seller Central

2. Match totals to your bank deposit

3. Categorize each line item in your accounting software

Consider Multi-Currency Transactions

You will not be subject to multi-currency transactions if you sell exclusively in the United States.

Multi-currency transactions involve processing payments in different currencies. Your customer pays for an item in their currency, while you receive the funds in yours.

Shifting foreign exchange rates can create discrepancies and complicate recording multi-currency transactions, adding complexity to international selling on your Amazon store. Accounting software with multi-currency support, like QuickBooks Online or Xero, can automate much of the conversion tracking, simplifying this complex task.

Amazon’s Payment Settlement System

Amazon's Payment Settlement System generates financial reports that provide a detailed breakdown of your account activity for a designated period. Settlement reports are generated regularly and provide insight into the deposits your business may have received, helping ensure accurate records.

View your settlement report in a text editor or common spreadsheet software (Microsoft Excel, Google Sheets, etc.) to manage your information. Settlements typically occur every 14 days. Catch discrepancies early by comparing each settlement to the corresponding sales period.

Accounting Software Tools for Amazon Sellers

Review some of the common accounting tools Amazon sellers use in 2026, including integration and best-fit considerations.

While do-it-yourself software can handle transaction volume, it does not replace strategic tax advice.

Keeping Your Amazon Business Financially on Track

While the platform provides numerous opportunities, Amazon sellers must balance their chosen accounting method, create and maintain their chart of accounts, track COGS, and manage other tax obligations with their core sales duties. As your sales grow, so do your tax responsibilities, turning professional support from a nice-to-have to an essential part of your operations.

If you're ready to focus on selling while your accountant handles the rest, explore 1-800Accountant's suite of affordable accounting and e-commerce bookkeeping services for your Amazon selling business.