Bookkeeping Basics 101 for Amazon Sellers: doola Guide 2024

With millions of sellers joining Amazon each year, staying financially savvy isn’t just smart—it’s survival.

That’s why we created doola’s A-Z guide on bookkeeping basics for Amazon sellers, packed with insights to help you stay ahead.

Hundreds of Amazon sellers from over 175 countries have switched to doola Bookkeeping, mastering their finances and dominating their niches.

Their success stories helped shape this guide, featuring:

• Real-world lessons from top Amazon sellers

• Expert tips and best practices for Amazon Bookkeeping

• A tax compliance checklist for sellers

Get ready to learn everything about bookkeeping basics for Amazon sellers—from setting up a bookkeeping system to navigating tax obligations and avoiding common pitfalls.

Book a free demo if you’d like to get started with doola Bookkeeping right away.

Bookkeeping for Amazon Sellers: Is It Hard?

Selling on Amazon’s global marketplace offers endless opportunities—but also comes with its own set of challenges.

To thrive, you’ll need to navigate Amazon’s fee structure, separate business and personal finances, and unlock insights from Amazon seller reports.

Managing inventory levels, tracking the cost of goods sold, selecting the right accounting software, reconciling accounts, and staying tax-compliant are equally critical.

Mastering bookkeeping basics for Amazon sellers, therefore, is integral to stress-free financial management and business growth.

In this guide, we’ll break down the dynamic demands of Amazon selling—fluctuating sales, variable fees, inventory turnover, and tax obligations—and provide actionable strategies to help you stay ahead.

Booking 101 for Amazon Sellers: How to Set Up Your Bookkeeping System

Mastering bookkeeping basics for Amazon sellers is key to managing finances effectively and scaling with confidence.

Here’s how to set up your bookkeeping system in a smart way to optimize operations:

Step 1: Pick the Right Accounting Software

Choose software designed for ecommerce, such as doola Bookkeeping.

Note: Double-entry accounting systems are essential for tracking assets, liabilities, and profits while generating key reports like balance sheets and cash flow statements.

Step 2: Optimize with Add-ons

Enhance your bookkeeping process with add-ons like A2X for Amazon integration and doola for automated sales tax tracking.

These tools simplify managing settlements, taxes, and multi-platform sales.

Step 3: Build a Chart of Accounts

Categorize your transactions into assets, liabilities, expenses, and revenue. Tailor subcategories for Amazon-specific costs, such as shipping fees and fulfillment charges, to maintain clarity.

Step 4: Track Cost of Goods Sold (COGS)

Track the true cost of your inventory, including purchase price, shipping, fees, and tariffs. Automated inventory management tools can help manage SKUs (Stock Keeping Units) and calculate profits seamlessly.

Step 5: Schedule Regular Entries

Consistency is key—set aside time weekly or monthly to record transactions and review your books. Staying organized avoids a last-minute scramble at tax time.

Step 6: Go Digital for Record-keeping

Save receipts and financial records using cloud solutions like Google Drive or Dropbox.

The IRS accepts digital formats, making audits and tax preparation stress-free.

Step 7: Know When to Outsource

When bookkeeping starts eating into valuable time, outsource to professionals like bookkeepers, accountants, or CPAs.

Or, hand over the reins to comprehensive services like doola Bookkeeping so you can free up productive hours to grow your business.

By setting up a strong system, leveraging automation, and knowing when to delegate, bookkeeping basics for Amazon sellers become a manageable and empowering part of running your store.

Bookkeeping Basics for Amazon: Recording Transactions from Amazon Sales

Accurate transaction recording is the cornerstone of bookkeeping basics for Amazon sellers, providing financial clarity and setting the stage for growth.

Here’s how to handle key aspects of Amazon sales:

1. Sales and Revenue:

Amazon payouts aren’t your total sales—they come after deductions for commissions, shipping, advertising, and more.

Always break down each payout into gross sales and specific deductions. This transparency ensures a clear understanding of your true revenue streams.

2. Expenses:

Track every operational cost tied to your Amazon business, including:

• Fulfillment fees: Charges for Amazon’s FBA services.

• Subscription costs: Monthly Seller Central fees.

• Marketing expenses: Costs for running Amazon ads or external campaigns.

• Shipping and storage charges: Fees for warehousing and logistics.

Organize expense receipts with digital tools like Expensify or Google Drive for efficient record-keeping and easy access during tax season.

3. Inventory Management:

Inventory plays a crucial role in your books. Keep a meticulous record of purchase costs, stock levels, and unsold items.

Use inventory management tools that sync with your bookkeeping software to streamline SKU tracking, cost calculations, and profit analysis.

By systematically managing these aspects, you’ll master bookkeeping basics for Amazon sellers and set your business up for scalable success.

If recording endless Amazon transactions feels like a tedious chore that eats into your productivity, let doola take the load off.

Select from doola’s complete suite of bookkeeping services tailored for Amazon sellers.

Bookkeeping basics for Amazon sellers: doola’s services vs. pricing

Bookkeeping Basics for Amazon: Reconciling Your Accounts

Reconciling your accounts ensures your records match actual bank transactions. Here’s how to do it effectively:

1. Match Payouts with Statements:

Compare Amazon payouts against your bank statements, ensuring every deposit is accounted for.

2. Spot and Resolve Discrepancies:

Look for missing transactions, double entries, or errors. Investigate and correct these issues to maintain accurate records.

3. Update Your Books:

Adjust your bookkeeping entries to reflect any discrepancies, ensuring your data is precise and complete.

Consistent reconciliation minimizes errors, fortifies financial accuracy, and makes audits a breeze. Want error-free reconciliation without the hassle?

doola Bookkeeping ensures every cent is tracked and accounted for—check out how it works before you speak to our experts.

Bookkeeping Basics for Amazon: Tax Obligations to be Aware Of

Tax compliance plays a critical role in maintaining a thriving Amazon business.

To stay ahead, here are the essential tax responsibilities every seller should understand while mastering the bookkeeping basics for Amazon:

1. Sales Tax:

While Amazon collects and remits sales tax for numerous states, sellers are responsible for monitoring compliance in jurisdictions where this isn’t automated.

Utilize tools like doola Bookkeeping to track, calculate, and remit sales tax accurately, especially if you operate across multiple states or countries.

2. Income Tax:

As an Amazon seller, you’re required to pay income tax on your net profits.

Accurate bookkeeping is vital for precise profit calculation, enabling easy tax filing and minimizing the risk of errors.

📌 Note:

If applicable, don’t forget to plan for quarterly estimated tax payments.

By understanding these bookkeeping basics for Amazon sellers, you’ll ensure tax compliance while building a scalable business.

With doola Bookkeeping, you can simplify tax preparation and focus on growing your Amazon empire.

Best Practices for Amazon Bookkeeping

Understanding and implementing bookkeeping basics for Amazon sellers doesn’t stop at recording transactions or knowing your tax obligations.

Successful Amazon sellers implement the following best practices to stay a cut above:

1. Automate All You Can:

Utilize tools doola that integrate seamlessly with Amazon Seller Central to automate real-time tracking of sales, fees, and payouts.

Automation at any scale reduces errors and saves valuable time.

2. Track Inventory Closely:

Maintain a clear overview of your stock levels to avoid costly under-stocking or overstocking.

Integrated inventory management systems ensure precise tracking and informed purchasing decisions.

3. Prepare for Taxes Early:

Set aside a portion of your revenue for tax obligations to eliminate last-minute financial stress.

doola’s Tax Filing services can help streamline this process.

4. Generate Regular Reports:

Generate and review detailed Profit and Loss (P&L) statements to evaluate performance, spot trends, and make data-driven decisions.

Besides comprehending bookkeeping basics for Amazon, this habit is key to growing your business sustainably.

By incorporating these best practices into your workflow, you’ll gain financial clarity and set your business up for scalable success.

Need help streamlining your Amazon bookkeeping? Check out how doola Bookkeeping works.

Avoid These 4 Common Mistakes Amazon Sellers Make

While it’s a business imperative to learn the bookkeeping basics for Amazon, as a seller, you need to watch out for these four common mistakes and remediate them at the earliest:

1. Neglecting Reconciliation

Failing to reconcile Amazon payouts with your bank records can lead to costly discrepancies and financial confusion.

✅ Solution:

To prevent this, implement a regular reconciliation process to ensure your records match, making it easier to identify errors and maintain accurate financials.

Using tools like doola’s bookkeeping services can automate this process and help you stay on top of your finances with ease.

2. Mixing Personal and Business Expenses

One of the biggest bookkeeping mistakes Amazon sellers make is mixing personal and business expenses.

While it may seem convenient to use your credit card for business purchases, doing so can lead to a tax-season nightmare.

✅ Solution:

To simplify your finances and ensure accurate deductions, set up separate business bank accounts and credit cards.

3. Overlooking Fees and Sales Tax Obligations

Not accounting for Amazon’s fees can throw your profit margins off balance.

Again, many states require online retailers to collect and remit taxes. Unfortunately, some sellers forget these sales taxes levied in different states until penalties and back taxes pile up.

As a result, Amazon sellers often receive a hefty bill from state tax agencies or face penalties for non-compliance.

✅ Solution:

Avoid this by researching your sales tax obligations for each state or enlisting the help of a doola tax professional to stay compliant.

Ace the Basics for Amazon With doola Bookkeeping

About time you stop grappling with tax files and spreadsheets and focus on scaling your Amazon store instead.

Because doola not only helps with the bookkeeping basics for Amazon sellers but also offers capabilities such as:

• Automated Solutions: doola integrates seamlessly with Amazon for effortless updates.

• Real-Time Insights: Up-to-date financial reports tailored to ecommerce sellers.

• Tax-Ready Records: Organized, audit-proof books that are ready for tax season.

• Scalable Services: doola grows with your business and provides customized solutions at any stage.

Take the stress out of your finances and master the bookkeeping basics for Amazon sellers with doola’s All-in-One Accounting Solution.

Book a free demo today and see how doola can streamline your bookkeeping!