The twelve questions Amazon sellers ask most, answered without the throat-clearing. If you run a multi-marketplace business above seven figures, you should be able to answer all twelve.
Accrual, once you are past hobby scale. Cash basis records revenue when Amazon pays you and expenses when money leaves, which means a settlement that lands two weeks late drags revenue into the wrong month and a reserve distorts everything. Accrual matches sales and their costs to the period the sale happened, which is the only way to read true monthly margin. Sellers above roughly $2M in revenue should be on accrual.
When you sell on more than one marketplace, carry real inventory across locations, or cross into six figures. A spreadsheet cannot apply per-unit FIFO COGS across thousands of SKUs, split a settlement at month-end, or reconcile a reserve, and the manual effort grows faster than the business. The break point for most sellers is the second sales channel.
QuickBooks or Xero is the ledger you keep. What it does not do on its own is translate Amazon, Shopify, Walmart, eBay, and TikTok Shop settlement data into clean accrual entries with per-unit COGS. You need a layer that syncs marketplace data into the ledger. ConnectBooks does exactly that for QuickBooks Online, QuickBooks Desktop, and Xero. See /integrations/amazon-accounting.
Recognize gross sales at the point of sale on accrual, not the net deposit when Amazon pays. The deposit is net of fees, refunds, advertising, and any reserve, so booking it as revenue understates your sales and corrupts your margin. Treat your Amazon balance as a clearing account: sales increase it, fees and refunds decrease it, disbursements move it to your bank.
The landed cost of the units you sold: product cost, inbound freight, duties, and required prep. It excludes Amazon fees, advertising, and software, which are operating expenses. Cost it per unit, ideally on FIFO, so each sale carries the real price you paid for that batch rather than a blended average.
Operating expenses, not COGS. Referral fees, FBA fulfillment fees, and storage fees reduce profit below the gross-margin line. Putting them in COGS makes your gross margin look worse than it is and hides how much of your margin Amazon's fees consume.
They are opposites. A refund is money paid back to a buyer, recorded as contra-revenue that reduces sales. A reimbursement is money Amazon pays you for lost or damaged inventory, recorded as other income or a contra-COGS recovery. Keep them in separate accounts and never let either fall into your sales line.
Because the deposit is net of referral and FBA fees, refunds, advertising, and any reserve Amazon withholds for that cycle. A smaller deposit is normal and tells you nothing about your margin. Reconcile from the settlement report, which shows every deduction, rather than from the bank balance.
A reserve is funds Amazon withholds from an otherwise-payable balance to cover refund and return risk, released on a schedule. It is still your money, so it belongs on the balance sheet as an asset, never as revenue or an expense. When Amazon releases it, it flows into a later disbursement.
Split it. Sales and costs that occurred in the closing month belong to that month on accrual, even if the deposit arrives the following month. Done manually this means cutting the settlement report in half and re-totaling. Transaction-level sync dates each line to when it happened, which removes the split.
In most US states, Amazon collects and remits sales tax on your behalf as the marketplace facilitator, so that tax is not yours to remit. But you may still self-collect on sales through other channels. Your books need to separate marketplace-facilitated tax from self-collected tax so you remit the right amount and not a dollar more. ConnectBooks tracks the two separately.
Once your books are accurate and per-channel, the next question is forward-looking: which products to fund, where cash will be in 90 days, which SKUs to reorder. That is the analysis layer. Crunch, the ConnectBooks AI CFO, is in active beta with a waitlist for the full release. See /crunch.
| NEXT STEPGet accrual books, per-unit COGS, and per-channel P\&L without the spreadsheet. ConnectBooks starts at $149/mo. See /pricing. |
Booking the bank deposit as revenue. The deposit is a net figure produced by fees, refunds, advertising, and a reserve over a payout cycle that does not match your month. It misstates revenue and makes margin analysis impossible. Always book from the settlement report on accrual.
Software keeps the data accurate and current. A bookkeeper or accountant interprets it, handles tax strategy, and catches edge cases. The two are complementary: good software makes a bookkeeper far more effective and far less expensive because they are reconciling clean data instead of rebuilding it.
Monthly. Closing only at year-end leaves you blind to margin and cash for most of the year and turns reconciliation into a forensic project. A monthly close on accrual, with each settlement reconciled as it posts, keeps your numbers decision-ready.
Clean, accurate books make this manageable. Start a free trial of ConnectBooks to get settlement-level accuracy and real margin visibility for your ecommerce business. No credit card required.
Running an e-commerce business comes with plenty of challenges, but ConnectBooks is here to make your life easier. With real-time insights, seamless integrations, and detailed tracking of your profitability and inventory, you can stay ahead of the game. Whether you’re selling on Amazon, Shopify, Walmart, TikTok or eBay, ConnectBooks helps you manage your finances with 100% accuracy and confidence, so you can focus on growing your business.
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