Accounting for Amazon FBA: A Complete Guide for Sellers

Amazon FBA (Fulfilment by Amazon) provides sellers with a streamlined way to sell products, but it also brings unique accounting challenges. This guide will break down how Amazon processes payments, the types of reports it provides, and how to record transactions efficiently in accounting software like QuickBooks or Xero.

1. Understanding Amazon’s Payment Process

Amazon collects money from customers on behalf of sellers, deducts its fees and expenses, and then remits the net amount to the seller’s bank account. This means that when a seller checks their bank statement, they only see the final deposit—not the breakdown of how it was calculated.

What Does Amazon Deduct?

Amazon deducts various expenses before remitting the final payment, including:

• Selling Fees – These include referral fees, FBA fees, and closing fees.
• Fulfilment Costs – Charges for storage, picking, packing, and shipping.
• Advertising Costs – Costs related to sponsored ads on Amazon.
• Refunds & Returns – Reimbursements to customers, chargebacks, and refund administration fees.
• Other Deductions – Amazon withholds tax (if applicable), promotional rebates, and chargebacks.

These deductions are reflected in Amazon’s Settlement Reports, which sellers must use to reconcile their accounts.

2. Amazon Reports for Accounting

Amazon provides multiple reports to help sellers track sales, fees, and remittances. Key reports include:

• Settlement Reports – Shows total sales, refunds, Amazon’s deductions, and net payout.
• Transaction Reports – Details individual transactions, including order IDs and breakdowns.
• Advertising Reports – Shows ad spend and ROI from Amazon advertising campaigns.
• Inventory Reports – Lists stock levels, inbound shipments, and sales velocity.

For accurate bookkeeping, sellers should regularly download and review these reports.

3. Recording Amazon Transactions in QuickBooks or Xero

When recording Amazon transactions in QuickBooks or Xero, the method you choose will impact the workload and efficiency of your accounting process.

Using individual payouts increases both the volume of work and complexity, as each transaction(payout)  must be recorded separately. However, this approach ensures that accounts remain up to date.

Alternatively, using a monthly activity report is a more efficient and less labor-intensive method. This is suitable if the requirement is limited to monthly reporting for management accounts.

For statutory accounts required by Companies House and HMRC, figures from the annual activity report can be used for journal entries in the accounting software. This approach streamlines reporting and reduces administrative effort while ensuring compliance.

Step 1: Creating an Invoice for Amazon Sales

Since Amazon deducts fees before depositing money, sellers should create an invoice in their accounting software to reflect the full sales amount while accounting for deductions.

This journal can be based on individual pay outs or it can be based on the figures given in the activity report for a specific period as explained above.

Example Journal Entry:

Step 2: Matching Amazon Payouts to Bank Deposits

When Amazon transfers the net payment to your bank, it should be matched against the "Amazon Clearing Account" in QuickBooks or Xero to ensure accurate reconciliation.

Once this transaction is recorded, the Amazon Clearing Account balance becomes zero, meaning all sales and expenses are accounted for.

Tip: If you are just starting and do not want to spend money on integration software's like A2X or link my books, you can just simply take the activity report and post the above journal and use the accounting software alone.