Amazon Seller Accounting: A Complete Bookkeeping Guide

Last verified: June 2026

Amazon pays you a lump sum every two weeks, and that number tells you almost nothing on its own. Inside it: gross sales, referral fees, FBA fulfilment fees, storage charges, advertising costs, customer refunds, reserve holdbacks, and reimbursements — all netted together. If you're booking that deposit as "revenue," your accounts are wrong. Your tax return is probably wrong. And your margins are definitely wrong. This guide gives you a working system for Amazon accounting that actually holds up — from setting up your chart of accounts through to scaling with automation.

Foundations: setting up your Amazon accounting system

Start with the obvious thing most people skip: a clean separation between business and personal finances. Without that separation, HMRC or the IRS cannot verify your business expenses, and you lose deductions you're legally entitled to. Open a dedicated business bank account, get a business credit card, and never mix transactions. Do this before anything else — it's the one step you can't retrospectively fix without a painful reconciliation exercise.

Once that's in place, you need to decide on an accounting method.

Cash vs. accrual: which method should you use?

Accrual accounting is the right choice for most Amazon sellers beyond the earliest stage. Under cash accounting, you record revenue when money hits your bank account — so that fortnightly Amazon deposit gets booked as income on the day it arrives, regardless of when the underlying sales happened. Under accrual, you record revenue when it's earned (when the sale occurs) and expenses when they're incurred. All incorporated companies must use accrual accounting under GAAP, but even sole traders and partnerships benefit from it — it shows you what you actually earned in a given month rather than when Amazon happened to pay you.

The problem with cash accounting if you carry inventory is a timing one. Buy £15,000 of stock in November, sell most of it in December, and your cash-basis accounts show a loss in November and an inflated profit in December. Neither figure is accurate. Accrual smooths this out by matching the cost of goods sold to the period when those goods were actually sold.

Chart of accounts for Amazon sellers

A standard chart of accounts needs a few Amazon-specific additions. At minimum, set up separate income accounts for Amazon UK sales, Amazon US sales, and Amazon EU sales (if applicable) — don't lump all marketplace revenue into one line. On the expense side, create dedicated accounts for Amazon referral fees, FBA fulfilment fees, FBA storage fees, Amazon advertising, and customer returns. If you sell on other channels, keep those entirely separate too — mixing Shopify and Amazon revenue in the same account makes it impossible to understand channel profitability.

For sellers managing stock across multiple channels, multi-channel inventory management sits at the intersection of operations and accounting. Your inventory system is your source of truth for COGS — we'll come back to that.

Business structure considerations

Whether you're a sole trader, limited company, or LLC affects your accounting obligations. UK limited companies must file statutory accounts under GAAP — accrual is mandatory. US LLC members operating as sole traders have more flexibility, but if your Amazon business turns over more than a few hundred thousand dollars, the lack of formal financial statements will bite you when you try to get financing or sell the business. Set up properly from the start.

Amazon fees in 2026: what you're actually being charged

Amazon's fee structure is genuinely complex — FBA fees alone cover fulfilment, storage, returns processing, and customer service for every order Amazon handles on your behalf. Tracking each category separately is what tells you whether a product is actually profitable or just generating turnover.

Referral fees

Amazon charges a referral fee on every sale, calculated as a percentage of the total selling price including any delivery charges. Rates vary by category — typically between 8% and 15% for most product categories, though some categories (like consumer electronics accessories) sit at 8%, while others (like jewellery) can reach 20%. For accounting purposes, book these as a cost of sale, not a general expense — they're directly tied to revenue and belong in your gross margin calculation.

FBA fulfilment fees

FBA fulfilment fees are charged per unit shipped and vary by product size and weight. A standard small item — say a 200g phone case in a small parcel — attracts a lower fee than a large, heavy item. These fees go up periodically, so check your actual charges in Seller Central rather than relying on old estimates. Book these as cost of sale alongside referral fees.

Storage fees

Monthly storage fees accrue for every cubic foot (or cubic metre in Europe) your inventory occupies in Amazon's fulfilment centres. And this is where many sellers get caught out: aged inventory surcharges apply to units stored for longer than 181 days, and these can be substantial. If you're carrying slow-moving stock — say, £12,000 of units that haven't sold in six months — you might be paying aged inventory surcharges on top of standard storage, quietly eating into your margins. Track these separately so you can see the true carrying cost of dead stock.

FBM and SFP: different cost profiles

Not every Amazon seller uses FBA. Amazon's Seller Central 3P model charges referral fees of roughly 8–15% plus optional FBA costs; Vendor Central (1P) has a less transparent fee structure that includes damage allowances, marketing co-op fees, and chargebacks that can significantly reduce your effective margin. Fulfilled by Merchant (FBM) sellers pay referral fees but handle their own shipping — so your carrier costs replace FBA fulfilment fees in the P&L. Seller-Fulfilled Prime (SFP) requires hitting Amazon's shipping speed benchmarks while still self-fulfilling, which typically means using faster (and more expensive) carrier services. Map out which fees apply to your model before building your chart of accounts.

Other fees to track

Beyond the big three, Amazon charges for: returns processing (a proportion of the fulfilment fee), removal and disposal orders, labelling services, sponsored products and display advertising, and the monthly or annual Professional selling plan subscription. Each of these belongs in a named account — don't lump them into a catch-all "Amazon fees" bucket.

Inventory accounting and COGS: the key to true profitability

Your cost of goods sold (COGS) is the single most important number in your Amazon P&L, and it's also the one most commonly calculated incorrectly. COGS isn't just what you paid your supplier — it includes inbound freight, customs duties, prep fees, and any other costs incurred to get the product into a saleable state. Miss those and you're flattering your margins on paper while the real money quietly disappears.

Inventory valuation methods

There are three main methods for valuing inventory and calculating COGS:

• FIFO (First In, First Out): The first units purchased are assumed to be the first sold. Most common for Amazon sellers, especially those with perishable or date-sensitive products. Also required in the UK under IAS 2 (LIFO is prohibited under UK/EU GAAP).
• Weighted Average Cost (WAC): All units of a SKU are averaged together. Simpler to maintain when you have frequent replenishment at varying prices.
• Specific Identification: Each unit is tracked individually. Only practical for high-value, low-volume products (think luxury goods).

For most Amazon sellers running 50–500 SKUs, weighted average cost is pragmatic. For sellers with significant price volatility in their supply chain — or those whose accountants require GAAP compliance under FIFO — stick with FIFO.

A worked COGS example

Say you buy 500 units of a kitchen gadget. Supplier invoice: £4,000 (£8.00/unit). Freight from China: £600. UK import duty at 4.5%: £180. Total landed cost: £4,780, or £9.56 per unit. You also pay £75 for FBA prep (labelling at a third-party warehouse). Total cost per unit: £9.71.

You sell 200 units in a month at £24.99 each. Your COGS for that month is 200 × £9.71 = £1,942. Your gross revenue is 200 × £24.99 = £4,998. Subtract referral fees (say 15%: £750) and FBA fulfilment fees (say £2.85/unit: £570). Gross profit: £4,998 − £1,942 − £750 − £570 = £1,736. That's a gross margin of about 34.7%. Before storage fees, advertising, or overheads.

That per-unit landed cost calculation is why proper inventory features matter — you need your system to carry that £9.71 cost per unit through to the point of sale, not just count units.

Inventory accounting for multi-channel sellers

If you're selling the same SKUs on Amazon, Shopify, and wholesale, your COGS calculation has to apportion stock drawdown across all channels. A unit sold on Shopify costs the same to produce as one sold on Amazon — the difference is in the channel-specific fees layered on top. This is where managing inventory across channels becomes directly relevant to your accounts: if your stock movements aren't reconciled in real time, your COGS figures will be off before you've even opened your accounting software.

Sales tax compliance: marketplace facilitator laws and beyond

Amazon collects and remits sales tax on your behalf in every US state that imposes a marketplace facilitator obligation — and all 45 states with a general sales tax now have marketplace facilitator laws in place, which means Amazon handles the tax side of Amazon-channelled sales automatically. That's useful. But it doesn't close the loop.

What marketplace facilitator laws don't cover

Amazon collecting tax on Amazon sales doesn't mean you have no sales tax obligations of your own. If you also sell on Shopify, your own website, or at trade shows, those sales aren't covered by Amazon's facilitation. You need to assess whether you have economic nexus in any state — typically triggered when you exceed a revenue or transaction threshold in that state — and handle registration, collection, and remittance on those sales yourself. Read our guide to US sales tax nexus for the full breakdown.

And if you're selling into the UK or EU, VAT is a separate obligation entirely — Amazon doesn't handle VAT registration or filing on your behalf for UK VAT purposes. UK VAT registration is required once your taxable turnover exceeds £90,000 in any rolling 12-month period (the threshold as of 2026). EU sales fall under the OSS (One Stop Shop) scheme for B2C distance sales, with its own registration and filing requirements.

How to account for sales tax correctly

Sales tax collected from customers is a liability, not revenue. When Amazon remits tax on your behalf, that amount should never appear in your income line — it passes straight through. In your accounting software, map sales tax to a liability account and make sure your revenue recognition strips it out. Sounds obvious. But in our experience reviewing Amazon seller accounts, it's one of the most frequently botched entries we encounter.

For the Amazon settlement specifically: Amazon's Settlement Report includes a "tax" line representing the marketplace-facilitated tax. Do not include this in your revenue figure. It's collected by Amazon, remitted by Amazon, and it isn't your money. Post it to a pass-through liability account, or simply exclude it from your revenue recognition entirely.

If you need to register in multiple states because of non-Amazon sales, every US state with a sales tax has its own economic nexus thresholds — there's no federal standard. Most set a revenue threshold of $100,000 in-state annual sales or 200 transactions, but several states differ. Managing this manually across channels is where automated tax tools earn their place in the stack.

Amazon payouts and reconciliation

Reconciling Amazon's settlement reports is the hardest part of Amazon accounting — and the part most guides skip over. Amazon reconciliation means matching your internal financial records with Amazon's reports to ensure consistency and identify discrepancies. Amazon pays out roughly every two weeks, and each settlement is a net figure that collapses dozens of transaction types into a single bank deposit.

Step 1: Download the settlement report

From Seller Central, go to Reports → Payments → Settlement Reports. Download the flat file for the settlement period you're reconciling. This file contains every transaction type: orders, refunds, FBA fees, storage fees, advertising fees, chargebacks, reimbursements, reserve movements, and more. A busy settlement period can run to thousands of rows — plan accordingly.

Step 2: Group transactions by type

Categorise every row into: gross sales, sales tax (pass-through), referral fees, FBA fees, storage fees, advertising, refunds, reimbursements, reserve changes, and miscellaneous adjustments. Sum each category. If you're doing this manually, a pivot table works reasonably well — we've written a guide to syncing Amazon payouts to Google Sheets if you want a lightweight approach.

Step 3: Reconcile against your bank statement

The net of all those transaction categories should equal the actual bank deposit Amazon made. If it doesn't match, there are three usual suspects. First: a reserve Amazon held back from this settlement that releases in the next one. Second: a reimbursement applied in the settlement but not yet identified in your records. Third: a late-arriving transaction that crossed settlement periods. Reserves in particular cause confusion — Amazon can hold back a portion of your funds as a safeguard against refunds, and that held amount sits in your accounts as a liability (money Amazon owes you), not as revenue received.

Step 4: Post the journal entries

Once you've reconciled the categories, post them as a journal entry in your accounting software. Debit gross sales to your Amazon revenue account, credit the bank account with the net deposit received, and post the fee and refund amounts to their respective accounts. The reserve goes to an "Amazon Reserve" asset account — it's money owed to you, not yet received. When it releases in a subsequent settlement, reverse the reserve entry and recognise the cash receipt.

A worked example: Settlement period total gross sales £8,200. Referral fees −£1,050. FBA fees −£960. Storage −£140. Advertising −£320. Refunds −£430. Reimbursements +£85. Reserve change −£200. Net deposit to bank: £5,185. Your journal books £8,200 revenue, £200 in the reserve asset, and the rest as cost/expense lines — not just £5,185 as "Amazon income."

For sellers managing reporting across Amazon and other channels simultaneously, see how connecting Seller Central to Looker Studio can help surface settlement-level data in a more readable format.

Financial reporting: key statements for Amazon sellers

Three financial statements matter for an Amazon business: the Profit & Loss (P&L), the Balance Sheet, and the Cash Flow Statement. Each tells you something the others don't.

The Profit & Loss statement

Your P&L should show gross profit before operating expenses. That means:

• Net revenue (gross sales minus returns)
• Cost of goods sold (landed cost of units sold)
• Gross profit
• Selling fees (referral + FBA fulfilment — some sellers include these in COGS; either is defensible as long as you're consistent)
• Storage fees
• Advertising
• Subscription and platform fees
• Operating overhead (staff, software, accountant fees, office)
• Operating profit (EBITDA proxy)

Run this monthly, by channel. If you're selling on multiple marketplaces, a channel-level P&L is far more useful than a blended view — you need to know whether Amazon is profitable at the channel level before lumping it in with your Shopify numbers. Our complete guide to e-commerce accounting covers this multi-channel P&L structure in more detail.

The balance sheet

For Amazon sellers, the balance sheet has a few line items that aren't typical in other businesses: FBA inventory (valued at cost, sitting in Amazon's warehouses), the Amazon reserve asset (funds Amazon holds back), and any FBA reimbursements owed but not yet credited. Make sure your balance sheet captures these — they can represent tens of thousands of pounds in assets that simply won't appear if you're only looking at your bank account.

Cash flow statement

The cash flow statement is where inventory-heavy businesses often get a nasty surprise. You can be profitable on an accrual P&L and cash-flow negative at the same time — this happens whenever you're building inventory faster than you're collecting cash from sales. A growing Amazon brand buying £40,000 of stock for Q4 in September will show that as a cash outflow in September, with the revenue arriving through October and November. The statement makes that timing mismatch visible before it becomes a liquidity problem.

Common bookkeeping mistakes and how to avoid them

The bookkeeping errors that cost Amazon sellers real money aren't exotic. They're the same mistakes, made repeatedly, by sellers at every stage — and most of them are entirely avoidable once you know what to watch for.

Booking the net payout as revenue

Treating the Amazon deposit as revenue is the most widespread mistake. You understate gross revenue, understate your fees as expenses, and produce a P&L that's accurate at the bottom line but useless for margin analysis. Always reconcile to gross. Always book fees separately.

Ignoring inventory on the balance sheet

Cash-basis sellers often expense inventory purchases immediately, which means their balance sheet shows no inventory asset. Under accrual accounting, stock you've purchased but not yet sold is an asset — expensing it immediately overstates your COGS in the purchase period. If you're building a business to sell, a missing inventory asset line makes your balance sheet look broken to any buyer or investor.

Mishandling refunds

Refunds reduce gross revenue — they're not an expense. Many sellers accidentally book Amazon refunds as an operating expense, which overstates revenue and inflates apparent operating costs at the same time. Post refunds as a contra-revenue entry against your sales account.

Missing reimbursements

Amazon occasionally loses or damages FBA inventory and issues reimbursements. These can be easy to miss in a large settlement file. Treat them as other income (or as a reduction of COGS, depending on your policy) — but track them. Across a year, unclaimed reimbursements can run into thousands of pounds for mid-sized sellers.

Inconsistent currency handling

If you sell on Amazon US, Amazon DE, or Amazon JP, you'll be receiving settlements in USD, EUR, or JPY. Under accrual accounting, those transactions need to be recorded at the exchange rate on the transaction date, not the payout date. The difference between the two rates is a foreign exchange gain or loss — book it separately in an FX account, and don't absorb it into revenue or fees.

Managing foreign currency gets more complex when you're also carrying cross-border inventory. Sellers running inventory across Shopify and Amazon simultaneously in multiple markets need their systems to handle multi-currency COGS as well as multi-currency settlement.

When to automate and when to hire help

Manual settlement reconciliation is fine at low volume — maybe up to a few hundred orders a month. Beyond that, doing it by hand is time-consuming and error-prone. We've watched teams lose entire weeks every quarter to spreadsheet work that could be automated in a day. At a certain scale, doing it manually isn't a choice you're making — it's a risk you're accepting.

What to automate first

The settlement-to-ledger workflow is the highest-value thing to automate. Manually categorising thousands of settlement rows every two weeks is exactly the kind of repetitive, rules-based task that software handles well and humans do inconsistently. Automating this frees your time for actual financial analysis — understanding margin trends, optimising product mix, preparing for tax season — rather than data entry.

Inventory tracking is the second priority. If your COGS figures depend on manually updating a spreadsheet every time you make a purchase or ship an order, you'll always be working with stale data. An inventory management platform that carries landed cost per SKU through to point of sale means one less category of manual accounting work entirely. We covered the operational case for this in our guide to dynamic safety stock — the accounting case is equally strong.

When to hire an accountant

Most Amazon sellers bring in an accountant after HMRC or the IRS comes knocking, rather than before. That's the wrong order. Bring in a specialist when any of the following applies: you're turning over more than £150,000–£200,000 annually, you're selling in multiple countries, you have employees, you're considering a business sale, or your VAT and sales tax obligations span multiple jurisdictions. An Amazon-specialist accountant — one who understands settlement reconciliation, FBA inventory accounting, and marketplace facilitator rules — is worth paying a premium for over a generalist.

A note on Ceendesis Accounting

If manual reconciliation is already taking meaningful time every fortnight, Ceendesis Accounting is built specifically for this. It parses settlement and payout data from Amazon (via SP-API, covering all transaction types), as well as Shopify, eBay, Etsy, Walmart, TikTok Shop, Square, and WooCommerce — splitting each payout into gross sales, fees, refunds, reserves, and tax, with per-product COGS tracked through to journal entry. Clean, accrual-correct journals post directly into Xero. QuickBooks Online support is rolling out; there's no Sage integration yet. Check that against your stack before committing. But if you're running a multi-channel Amazon brand on Xero, it handles the fortnightly reconciliation process and keeps channel-level P&L current without the manual overhead.

Frequently asked questions

How do I do bookkeeping for my Amazon business?

Open a dedicated business bank account. Choose accrual accounting. Build a chart of accounts with separate lines for Amazon revenue, referral fees, FBA fees, storage, advertising, and refunds.

Then, every two weeks: download your Amazon settlement report and reconcile the net payout back to gross sales and individual fee categories before posting to your accounting software. Never book the lump-sum deposit as revenue. That's genuinely the core of it — everything else is detail layered on top of that discipline.

What is the best accounting method for Amazon sellers?

Accrual. Full stop.

It matches revenue to the period when sales occur and matches COGS to the period when units are sold, so your monthly P&L reflects what actually happened rather than when Amazon happened to pay you. Cash accounting distorts your numbers whenever you're building inventory, and incorporated companies are required to use accrual under GAAP in any case. The only sellers for whom cash accounting might be defensible are sole traders at very low volume with minimal stock on hand.

How do I account for Amazon FBA fees?

Book them as separate expense line items — never net them against revenue. Referral fees and FBA fulfilment fees belong in cost of sale because they're directly tied to each transaction. Storage fees and aged inventory surcharges can sit either in cost of sale or operating expenses, depending on your preference, as long as you're consistent across periods. Pull the exact amounts from your settlement report rather than estimating — the categories are all there, broken out by transaction type.

Do I need to worry about sales tax as an Amazon seller?

For your Amazon sales? Largely no — Amazon's marketplace facilitator status means it collects and remits automatically across all 45 US states with a general sales tax.

But if you also sell on Shopify, your own website, or through wholesale, those channels aren't covered. You may have economic nexus obligations in states where you exceed revenue or transaction thresholds, and those are yours to manage. Outside the US, UK VAT and EU OSS registration obligations apply independently — Amazon doesn't handle either of those for you.

Amazon accounting isn't inherently complicated. The underlying concepts are straightforward: what did you sell, what did it cost you, and what did you keep. The difficulty is that Amazon compresses dozens of transaction types into a single fortnightly deposit and calls it a payout. Once you understand that the deposit is a net figure and build a system to unpack it consistently — using accrual accounting, a clean chart of accounts, and reliable COGS tracking — you can actually run the business on the numbers rather than around them. Start with the reconciliation process. Get that right. Everything else in this guide builds on it.