The payout is not your revenue
The most common mistake in Amazon bookkeeping is recording each deposit as sales. A settlement payout is the net of everything that happened in the settlement period: product sales and shipping credits, minus referral fees, fulfillment fees, storage fees, advertising charges, refunds and promotional rebates, plus reimbursements, and with sales tax collected by Amazon handled separately.
Recording only the deposit understates revenue and expenses, hides where margin is going, and makes sales tax and income tax filings wrong. Every settlement needs to be broken out into its components and posted to the right accounts, with the net matching the deposit that lands in your bank.
Amazon also holds back reserves in some settlements, particularly for new accounts or after a spike in refunds, and releases them in later settlements. A reserve is still your money; it belongs in the clearing account as an amount receivable from Amazon, not as an expense. Tracking it separately prevents the common mistake of treating a reserve hold as a loss and its release as extra income.
Set up the right accounts
Create accounts that let you see Amazon economics on your P&L. At minimum, separate product sales, shipping income, refunds, referral fees, fulfillment (FBA) fees, storage fees, advertising, other fees, and reimbursements. On the balance sheet, add an Amazon clearing account that holds settlement balances until the payout reaches your bank, and inventory accounts that reflect stock at Amazon fulfillment centres as well as stock in your own warehouse.
If you sell on more than one marketplace, such as Amazon.ca and Amazon.com, track them separately with a class, location or separate accounts. Each marketplace settles in its own currency and has its own tax treatment.
- Product sales and shipping income (by marketplace)
- Refunds and returns
- Referral, fulfillment, storage and other Amazon fees
- Advertising (Sponsored Products, Brands, Display)
- Reimbursements for lost or damaged inventory
- Amazon clearing account and FBA inventory
Post settlements, not individual orders
Post each settlement as a summarized journal entry or a set of entries that break the settlement into the accounts above. Download the settlement report from Seller Central, group the transaction types, and post them. Then record the payout as a transfer from the Amazon clearing account to your bank. When the clearing account returns to zero after each payout, your books agree with Amazon.
Settlements do not line up with calendar months. For accurate monthly reporting, either split settlements at month-end or post order-level detail by order date. SeroBooks does both: it posts Amazon settlements and supports order-day invoicing, so sales land in the month they happened.
Marketplace facilitator tax
In the US, every state with a sales tax has marketplace facilitator rules under which Amazon collects and remits sales tax on marketplace sales. In Canada, Amazon collects GST/HST in some situations, and provinces including British Columbia, Saskatchewan and Québec have their own marketplace rules for provincial tax. The details depend on where you are registered and where your customers are.
In your books, keep tax collected by Amazon separate from tax you collect and remit yourself. If you post it as your own sales tax liability, you risk remitting the same tax twice. SeroBooks splits marketplace-facilitator tax from seller-collected tax when it posts Amazon settlements for Amazon.ca, Amazon.com and Amazon.com.mx.
Inventory and cost of goods sold
Your cost of goods sold should include the product cost plus the cost of getting it to Amazon: inbound freight, duties, brokerage and prep. Track inbound shipments so you know what is in transit, what has been received at fulfillment centres, and what is sitting in your own storage. Record removals, disposals and reimbursements so inventory value stays accurate.
Amazon reimburses sellers for inventory it loses or damages. Record reimbursements as income (or as a reduction of the related inventory loss) and make sure lost units come out of inventory at cost. Many sellers miss reimbursements they are owed; reviewing inventory adjustments against reimbursements each month catches them.
Put advertising on the P&L
Advertising is often the second-largest cost for an Amazon brand, and it can be billed through the settlement or charged to a card. Either way, record it as an advertising expense and, ideally, by campaign type. A useful metric is TACOS (total advertising cost of sale): ad spend divided by total sales, not just ad-attributed sales. It shows whether advertising is building the business or just buying the same sales.
SeroBooks brings Amazon Ads (Sponsored Products, Sponsored Brands and Sponsored Display) onto the P&L and reports TACOS alongside fees and returns.
A worked settlement example
Suppose a two-week settlement on Amazon.ca includes $12,400 of product sales and $600 of shipping credits. Amazon deducted $1,950 in referral fees, $2,700 in FBA fulfillment fees, $180 in storage fees and $1,100 in Sponsored Products charges. Customers were refunded $640, and Amazon reimbursed $210 for units lost in a fulfillment centre. The payout to your bank is $6,640.
Post the settlement to the Amazon clearing account: credit product sales $12,400 and shipping income $600; debit refunds $640; debit referral fees $1,950, fulfillment fees $2,700, storage fees $180 and advertising $1,100; credit reimbursements $210. The clearing account now holds $6,640, and recording the payout as a transfer to your bank brings it back to zero.
Then post cost of goods sold for the units shipped, reduce inventory for the lost units that were reimbursed, and handle any tax Amazon collected according to your registrations. Your P&L now shows $13,000 of revenue and the real cost of selling on Amazon, rather than a single $6,640 deposit.
Tax registrations and reconciliation
Canadian sellers should register for GST/HST once over the small supplier threshold, and review provincial registration if selling into BC, Saskatchewan, Manitoba or Québec. Canadian sellers using FBA in the US, or US sellers storing inventory in Canadian fulfillment centres, should get advice on cross-border tax obligations, since storing inventory in a jurisdiction can create filing requirements there.
Close each month by reconciling: every settlement posted, the clearing account at zero after each payout, inventory at Amazon matching the inventory report, and ad spend matching the Ads console. SeroBooks for Amazon costs $150 USD a month and combines settlement posting, fees, ads, returns, reimbursements, inventory and replenishment forecasting with the rest of your accounting, in place of a separate settlement-sync tool, profit dashboard and planning spreadsheet.