How do I prepare my Amazon seller books for tax season?
The most important task is reconciling your Amazon settlements to your bank deposits. Amazon doesn’t send you gross sales. They send the net amount after deducting fees, refunds, and other charges. Your bank shows one deposit, but behind that deposit is a mess of transactions you need to untangle. Many e-commerce sellers skip this step and end up with inaccurate profit margins because they recorded net deposits as revenue instead of breaking out the components.
Download your Amazon settlement reports for the entire year from Seller Central. These reports show every transaction, fee, and adjustment that makes up each deposit. Your accounting software should track gross revenue separately, then record FBA fees, referral fees, storage fees, advertising costs, and refunds as distinct expense categories.
Inventory is where most Amazon sellers struggle at tax time. You need to calculate cost of goods sold, which means tracking what inventory you started with, what you purchased during the year, and what you had left at year end. If you use FBA, pull your inventory reports from Seller Central and match them to your purchase records. Beginning inventory plus purchases minus ending inventory gives you COGS. Get this wrong and you either overpay taxes or trigger audit flags.
Gather your 1099-K from Amazon. The gross amount on the 1099-K should match closely to what you recorded as revenue for the year. If there’s a significant difference, something went wrong in your bookkeeping and you need to find the discrepancy before filing. The IRS receives a copy of that 1099-K and will notice if your reported revenue doesn’t align.
Sales tax has gotten simpler since Amazon now collects and remits in most states as a marketplace facilitator. But you still need records of what was collected and where, especially if you sell through other channels or have nexus in multiple states from inventory stored in FBA warehouses.
Get your books to your accountant at least a month before you want to file. Give them clean financial statements, your 1099-K, settlement report summaries, and your inventory calculations. If you hand over a login to messy books and expect them to figure it out, you’ll pay for the cleanup in accounting fees.
If your books aren’t in good shape right now, consider getting help from Scottsdale bookkeeping services that understand Amazon accounting. The settlement reports and inventory tracking are specialized enough that generic bookkeeping often misses important details that affect your tax liability.
Full-Service Bookkeeping for Greater Phoenix
The Next Step:
A Quick Conversation
Tell us about your situation. We'll listen, ask a few questions, and give you a clear price to handle the work.
More Questions
How do I do bookkeeping for a retail store?
Retail bookkeeping centers on tracking sales from your point of sale system, managing inventory costs, reconciling cash, and handling sales tax. The key is connecting your daily sales activity to accurate cost of goods sold calculations.
Read answerHow do I do bookkeeping for a restaurant?
Restaurant bookkeeping requires tracking daily sales from your POS, managing food and labor costs as percentages of revenue, handling tips correctly for payroll, and reconciling cash every single day.
Read answerHow often should I reconcile my e-commerce accounts?
Weekly reconciliation works best for most e-commerce businesses. The transaction volume and complexity of multiple platforms, payment processors, and fee structures make monthly reconciliation too risky. Problems are much harder to track down weeks after they happen.
Read answerHow do I track business mileage and vehicle expenses?
Choose between the standard mileage rate or actual expenses method, then track every business trip with an app or log that records date, destination, purpose, and miles. Keep receipts for all vehicle-related costs if using actual expenses.
Read answerWhat financial reports should I review each month?
Start with your income statement to see if you're profitable, then check cash flow to make sure you can actually pay bills. Add accounts receivable and payable aging reports to track what's owed to you and what you owe others.
Read answerWhat's the best way to manage accounts payable for retail vendors?
Centralize all invoices in one system, match them to receiving documents before approving, and schedule payments based on each vendor's terms. Weekly AP reviews prevent missed payments and help you take advantage of early payment discounts.
Read answer