What bookkeeping does an Amazon or Shopify seller need?
The biggest mistake Amazon and Shopify sellers make is recording marketplace deposits as revenue. When Amazon sends you a $3,200 payout, that number has already had referral fees, FBA fees, storage fees, and advertising costs pulled out. Your actual gross revenue might have been $4,500. If you only record the deposit, you’re understating both your revenue and your expenses, which throws off your profit margins and can cause problems at tax time.
Proper e-commerce bookkeeping starts with breaking out gross sales, marketplace fees, and net deposits as separate line items. Every payout settlement report from Amazon or Shopify contains this detail. Your books should reflect the full picture: what you actually sold, what the platform took, and what landed in your bank account.
Inventory and cost of goods sold (COGS) tracking is critical for e-commerce businesses. You need to know what you paid for the products you sold, not just what you spent on purchasing inventory overall. When you buy 500 units at $8 each and sell 300 of them in a month, your COGS is $2,400, not $4,000. The remaining 200 units are still an asset on your balance sheet. Getting this wrong means your profit numbers are meaningless.
Sales tax is another area that catches sellers off guard. If you store inventory in Amazon FBA warehouses across multiple states, you likely have sales tax nexus in those states. Amazon collects and remits in most cases now, but you still need to track it in your books and may need to file returns in certain states. Ignoring this creates a liability that grows over time.
Your bookkeeping should also capture advertising spend separately. Amazon PPC costs, Facebook ads driving traffic to your Shopify store, and influencer payments all need proper categorization. These are often the second or third largest expense behind COGS, and lumping them together with other operating costs hides whether your ad spend is actually generating profitable sales.
Tools like A2X or Link My Books connect Amazon and Shopify to QuickBooks and break out settlement reports into proper accounting entries automatically. This saves hours compared to manual entry and dramatically reduces errors. A QuickBooks ProAdvisor in Chandler can set up these integrations correctly so your books capture everything from the start.
Returns and refunds need tracking too. Amazon processes returns and deducts them from future payouts. If your books don’t account for returns separately, your revenue numbers won’t match your 1099-K and your tax accountant will spend billable hours figuring out the discrepancy.
At a minimum, an Amazon or Shopify seller needs monthly reconciliation of all marketplace payouts, accurate COGS and inventory tracking, proper fee categorization, advertising spend tracking, and sales tax documentation. Without these fundamentals, you’re guessing at profitability and potentially missing deductions or creating tax issues you won’t discover until it’s too late.
Bookkeeping for East Valley Small Businesses
The Next Step:
Tell Us About Your Business
Let us know where things stand with your books and what kind of help you're looking for. We'll give you an honest assessment and a clear price.
More Questions
When should I write off an unpaid invoice as bad debt?
It depends on your accounting method. If you use cash basis, there's usually nothing to write off because you never recorded the income. For accrual basis businesses, write off an invoice once you've exhausted reasonable collection efforts, typically after 90 to 120 days.
Read answerWhat happens if I don't keep up with my bookkeeping?
You lose visibility into your cash flow, tax season becomes a scramble, and the cost to fix everything grows the longer you wait. Falling behind also means missed deductions and potential IRS penalties.
Read answerHow should a salon or barbershop track income and expenses?
Separate service revenue from product sales and booth rental income. Use a POS system that feeds into QuickBooks, track cash and tips daily, and categorize expenses by type so you can see where your money actually goes.
Read answerWhat does a bookkeeper actually do for a small business?
A bookkeeper keeps your financial records accurate and current. That means categorizing transactions, reconciling bank accounts, and producing reports that tell you how your business is actually performing.
Read answerWhat's the best way to track inventory for a retail business?
Use a POS system that syncs with your accounting software, do regular physical counts, and reconcile the two. The goal is knowing what you have on hand and what it's actually costing you.
Read answerHow do I create a budget for my small business?
Start with your actual financial data from the past 12 months, project your revenue conservatively, list every fixed and variable expense, and build in a buffer. Then compare your budget to actual results every month and adjust.
Read answer
