By far the most useful quickbooks and amazon seller central tutorial I have ever come across on either platform!!! It's upsetting how bad the question and answer sections are on both quickbooks and amazon seller central about every topic. Thank You!!!
This is by far the best video on UA-cam for doing Amazon accounting in Quickbooks without any integration. You made it so easy. Thank you so much for creating this video and your other video with the chart of accounts. It has been a struggle for over a year now. I was able to adapt it to Quickbooks for Desktop (Mac 2019) and ended up creating an account for each item on the date range report by Income or Expense. I then grouped them by the account names you show in your video. Each statement is so easy to enter because my chart of accounts now match exactly to the date range report and my expectation is the groups will match the 1099. :-) You are a rock star!!!
Thank you Sarah, wondered how to handle exchange rates with this. I have created the Amazon Holding Account in USD; and been able to record the transfer's to the CAD bank account. My issue is record the income and expenses and tax which have to be recorded in CAD,
I use the transfers section to determine an average exchange rate for the month. Once I have calculated the average exchange rate, I apply that to each income or expense line.
Thank you Sarah, excellent video and just want I was looking for. I do have a question though. I have entered my Amazon statements from April and May following your instructions and my Amazon Holding account is negative $800+. Is this correct, it seems wrong to me!
Amazon Holding will go negative during the month, and then should be positive once you post the monthly journal entry. If it is negative after you post the journal entry, then something has gone wrong. Possibly a beginning balance issue?
Hi Sarah, Excellent work explaining the holding balance. I am one year in into selling and this will be my first year filling. I just started using QuickBooks online also. However, last year I maintained a spreadsheet of all my accounting and strictly used my business account for expenses and incomes. The problem is that the amount in my checking account, as deposited by Amazon, and the amount on 1099K and the amount on statement summary for the whole year do not match. I cannot reconcile them.
Hello Sarah. I have a question about the Journal Entry. What if I am paying my Amazon Ads with my credit card? Should I include them when I do the Journal Entry from the Monthly amazon report or should I ignore the Cost of advertising and just register the credit card payment so that it is not duplicated? Please let me know your thoughts and thanks so much for your time, support and amazing videos!
From what I can tell, Ads can be charged either through the summary report, billed separately, or both! Maybe this is due to different Ad types? Not sure. If Ad expense appears in your summary, then include it in your JE. If Ads are charged separately then go ahead and categorize them directly to an Advertising Expense account, and do not include them in your journal entry.
Hello Sarah, thanks for the tutorial. I do have a question. If you take the income and subtract out the expenses, the amount does not equal the payment amount. Is the difference the amount that is relegated to your reserve?
Yes, Amazon holds money for quite awhile before they distribute it to you, so there is always a beginning and ending balance, which is why we need the Amazon Bank/Holding account to handle that easily.
Still trying to figure out how to replicate this in waveapps. Replicating the monthly income/expense report is fine. However, im stuck @ the part where you catagorize the amazon deposits posted to your bank as "amazon holding". I created a bank in waveapps, "amazon holding" and for all the amazon deposits posted to my business checking, I switch the account to "amazon holding". I can choose "withdraw" or "deposist". I picked "deposit". It also asks for the income catagory but dont know what to select.
You are way way way way way better than 5 minute bookkeeping , even i am doing a stupid thing that i am comparing you with that , You are the only one!!
Hi Sarah, thank you for creating these FBA accounting videos. I downloaded the monthly payment summaries as you described and compared them to the 1099-K from Amazon and some of the numbers still do not match. I have 7 months where the numbers match exactly, 4 months where the Product sales are slightly off and everything else matches, and 1 month where none of the numbers match? Do you have any ideas where the discrepancies are from? I don't understand why Amazon's monthly payment summary reports don't match up the monthly line items on the 1099-K. Should I just use the numbers from the 1099K instead?
I agree, it seems like the 1099 should match their own summaries! Sometimes it can just be a timing difference. I wouldn't make adjustments month by month, but just make a total adjustment at year-end to tie out to the 1099. It probably won't be a significant adjustment that has to be made.
Question for you RE: Sales Tax. 1.)If there's a difference of Sales Tax collected and withheld on the monthly statement, what type of Chart of Account do I need to setup in QBO? 2.) Do I create a Sales Tax Expense or Sales Tax Income account? For some reason I had some small difference for 4 months of the year between sales tax collected and withheld that I need to figure out what to do with. Thank youuu for your help!!!!
Just Subscribed! Thank you for making this video. This is the first Amazon QB video I have found that makes it simple. Every other video seems to make it as complicated as possible. Great job on the video!
Thank you so much Sarah. What a fantastic video. Clear and simple to follow. I was a button-click away from purchasing software I didn't actually need. God bless your generosity, and keep up the good work.
Thanks you so much for going through this step by step! I was really struggling with my new Amazon business accounting but can’t afford an accountant yet. If possible, would love more videos on the expense side or bank reconciliation, or a list of “do this 1/wk, this 1/ month, etc’
I have a couple playlists of bookkeeping start to finish. One for bloggers one for Etsy sellers. Most of the information in those videos will apply to Amazon sellers too. I like your idea about a video on what to do each week/month, etc.
One of the best Amazon accounting Videos I have seen so far. I only want to express my most sincere appreciation and thanks for your work on making this video.
I am not familiar at all with Canadian tax, but if you have a positive tax number in the bottom right corner, I would categorize that as a Credit to a Sales Tax Payable account (or GST Payable if that's what you call it).
Hi Sarah, glad I found your video tutorial when I'm looking for ways how to record these sorts of transactions. I almost believe that there's no way to record these without the integration of amazon bookkeeping software to accounting software. Thank you so much.
Could you please reply to my message? There are lots of question regarding quickbook for you. Sarah, how can I chat with you for solving my question of quickbook? Because It is not always possible to answer everthing on the comments. Could you please help me ?
I track COGS this way: I first calculate my cost avg by sum the total dollar $ spent on inventory, then divide this by the total individual amount of individual items bought during the year. Example: $100k / 10000 items, = each item $10. I track this using FIFO on an annual basis. I then caculate my total individual items sold by caculculating the total # of indivdual amazon orders + disposals - refunds. I then multiply this # by the cost avg of $10 to determine my COGS. This is the simplest method ive found after selling on amazon for 6 years now. Its not accurate, but id say its >90% accurate. Why is it not accurate? Many of the items I buy from suppliers never arrive, are lost, refunded or disposed. Some of the items I then send to FBA are lost via shipping or by amazon FBA. Many refunds for orders are never actually returned to inventory, and or are concession refunds. Many FBA removals done by me are eventually disposed of by me personally. Ive learned over time trying to track all these anomlies is not worth the time and becomes an absolute hellscape in complexity. Im just worried about the eventually build up of inacuracies over time. Say my caculations has 100 items slip through the cracks yearly. In 5 years this snowballs. I see in your comments you suggest year end count. Ive considered this as well. Its just there can be inventory so many places. In my house, at my mailbox, currently inbound to FBA, currently pending sale/removal/disposal with FBA, inbound purchases from my supplier that has not arrived yet. Can get extremely convulated.
Your method sounds reasonable to me. Maybe you could attempt an inventory count just to true up your numbers from the small inaccuracies that may build over time.
Hi Sarah, I am wondering how to we factor in the cost of goods into this as well? The price of the items when we orginally bought them and other external fees such as monthly softwares used for amazon fba?
Hi Julia, this video covers COGS ua-cam.com/video/Mekj6Re137E/v-deo.html it's part of a playlist for Etsy sellers, but the entire playlist (except the one or two about the Etsy platform) would work for Amazon sellers as well. I tend to use an account called Online Tools, Programs & Subscriptions for the software tools that many online sellers use, but really any accountant that makes sense to you is fine.
So I did this method for the whole year and was excited to have it match up to the 1099 my client just sent me...it doesn't! My numbers in QBO match exactly to the amazon monthly summary reports and it was nice every month that my P&L numbers tied out to the monthly summary report. But then why is the number different on 1099??- Are the monthly summary reports not the same number on the 1099 for each month? What am I missing?
A couple things. Did you look at page 2 of the 1099 where everything is broken down? Plus I found this year I neeed to break out the shipping credit refunds and promotional rebate refunds, instead of netting them. Third, Amazon sometimes amends a monthly summary, you may need to rerun it. Fourth, Amazon includes sales tax in the 1099 that is not income to the client.
Just sharing my experience - I also did this method for whole year, Interesting -to match P&L total income with unadjusted gross sales on 1099K - ( add sales tax, refunds and subtract other credits to total income reported in P&L (these are not listed on 1099k from ) then it matches .
@@SmallBusinessSarah Thanks - I didn't realize there was a page 2 on the 1099 - this solves it perfectly. I see my numbers are right on my P&L when I look at those columns - and then now i understand how they add and subtract the other numbers now to reflect the total on the 1099. And yes - I see what you mean on the promotional rebate refunds and credits - I also netted them so the numbers seemed off at first - but once I opened up the reports I see the 1099 is just using the credits line on the shipping and promotional and not the refund part
@@katiolson688 yep, you got it. In past years I don't remember the shipping and promotional rebates, being broken out separately, so that's why I don't show it in the video. But going forward I will show those amounts gross and not net. Gotta love page 2 of the 1099. I wish all companies provided such a detailed break out.
Hi Sarah, thank you for your tutorial, I did download your chart of account. My question that do I need to create for : product, shipping and gift wrap taxes collected, Product, shipping and gift wrap taxes refunded; Amazon Obligated Tax Withheld? My second question that how should i record the my business shipping cost (from Freight forwarder, sample, cost interst fee exchange...etc everything cost product from china to amz)?
I'm not exactly sure what your asking in your first question. Second question, the cost of Shipping your products from China to Amazon should be categorized to a Cost of Goods Sold account.
Is anyone else has the issue of not all transactions were transferred, and choosing a customer year-end-date doesn't really seem to matter, other transactions get included, even from the previous year?
Hello thank u for the video, so are doing jan 2024 and we have the balances on 12/31/2023 as opening and 1/31/2024 , but our balance is still not matching with amazon receivable in seller central? What could be the reasons for that? One more question Do we need to make the entries of loan advance and the loan payments in quick books if they are not showing in bank feed? Will Amazon loan payments have any effect on our journal entry? Your answers will be appreciated.❤
I am not familiar with the amazon receivable report in seller central, not sure if it will help us with beginning balance information or not. Loan transactions are usually shown in the lower left corner of the summary, and should be accounted for in the journal entry.
Sorry, one last question, you said to combine credits and refunds. For example, Shipping credits 11.81 and lets say there was a shipping refund of -5.99, which would add up to $17.80. Or did you mean subtract the shipping credits from the shipping refunds? and then would we list it on the credit or debit side? Please help
I meant to net the two, but actually, because of the way the 1099 is set up, I now do a separate line item for the credits and the refunds. I do saperate lines for shipping credits and refunds, promotional rebates and refunds, and gift wrap credit and refunds.
Hi Sarah, I know in this video you are recording "Amazon Holding" as money and deposits from Amazon, but what about when I connect my bank account and it shows those deposits too, wouldn't that count them twice?
Hi Sarah I hope you are doing great I have some questions to ask if you have some spare time please answer the following questions 1) How do you update for inventory and cogs 2) Can I use Amazon Receivable A/c instead of Amazon Holding Bank A/c ?
You can use the receivable account type, I just don't like how the receivable register works in QB compared to the checking register. Most of my clients are cash basis, but for some I do post a month end journal entry to account for inventory on hand.
Hi Sarah, this video is super helpful! I did get confused when I tried to replicate the journal entry with my information. I am not sure how to handle a situation where my monthly summary is not net positive. The exact scenario I am dealing with is that I have a total debit of -$82.58 in the expense section and no income for this particular month. Then in the transfers section of the summary I have a credit of $39.99 for "Charges to credit card and other debt recovery". In my journal entry I entered a debit of $82.58 under "Amazon Selling Fees" but then do I still add "Amazon Holding" to this journal entry? Do I need to do anything with the credit of $39.99 in my transfer section as described above. Can you please assist in explaining this? thank you!
In the bank feed, categorize the $39.99 also to Amazon Holding. Do the journal entry as normal, but your Amazon Holding amount to balance the entry will be a Credit. Without seeing it, I think that will get you where you need to be, but look at the Amazon Holding register and make sure it makes sense.
The ending balance in Amazon Holding, does represent the amount of money Amazon owes you, so yes the ending value is basically like an Accounts Receivable. I don't use an Accounts Receivable account type because the register for that account type is weird in QB!
In your example at the end with the Amazon Holding account. You came up with $1,110.15. Is there anyway to check that amount in the Amazon Software? I could only find the "Amazon Reserve" balance on a statement by statement basis which doesn't line up with month end.
There is no report in Amazon that I have found that will show you what your balance is at any given point in time. This would be great if Amazon would add this feature! What you can do, is the bi-weekly report that Amazon does have with the reserve amount indicated, when that report matches up with month-end you can double-check. You should spot-on or very very close with this method.
Hi Sarah! Your videos are insanely helpful for getting started with QBO. Would you recommend this manual entry method over the option to sync Amazon directly to QBO as a sales channel? (and same question for the option to sync Shopify as a sales channel?) Trying to decide which route to pursue, which will be cleaner/easier/etc. I will definitely follow this method for Etsy, as the sync with etsy app for some reason isn't working in my account.
I would recommend my method over linking directly. I had a client link directly, and non of the information brought over made sense or would allow the business owner to tie to the 1099 at year-end. Especially if you don't know what SHOULD be happening in your bookkeeping when you use an integration, then I recommend skipping the integration and just doing my manual entry because it's so easy!
Very awesome video! Thanks for your help! I have two questions. I appreciate it if you can tell me where the number Amazon Sales $3355.45 can be found in the Amazon report and which numbers add together get the total Amazon other selling fees $808.72 in the journal entry.
Started LLC in Arizona and Dissolved LLC in Louisiana.. What would I do in this instance for bookkeeping and accounting? It is a new EIN as well so will I have to start a new Quickbook account? How can I pull stuff to new LLC? I have Inventory Assets at Amazon, Owner investments, COGs, Misc expense, Money in Amazon Hold.
Thank you for this! Question though, for my first month, I have a charge to credit card only for the 39.99 fee. Would that just be a debit in FBA Sale income? Where would that go? And then for another month, there is a charge to credit card again identical for the FBA inventory inbound and service fee: do I record that twice? Thanks in advance.
If the only activity you had in a month was the $39.99, then you could just categorize it directly to an Amazon Fee expense in the bank feed. Often you will see that charge on your monthly summary in the fee section and then in the lower left transfers section. In those instances, record the journal entry as usual, then when the $39.99 is charged to your bank account or credit card, categorize it to Amazon Holding as you would a deposit.
What about the "Transfers" section in bottom left? How do you book entry for deposits from Amazon? Dr. Cash Cr. Amazon Holding? and what about the charges to credit card? Do you also run that through Amazon Holding - i.e. Dr. Amazon Holding, Cr. Accounts Payable/Cash?? Thanks so much!!
The transfers section is the total deposits to checking from Amazon. We already categorized those to Amazon Holding from the bank feed. And yes, if Amazon charges your credit card (also outlined in the transfers section) categorize that to Amazon Holding as well.
Hi Sarah, This is great information that I've been using it for several years. So thank you so much! However, I see that Amazon has changed their navigation for the reports, so I'm having trouble finding this same report to use for monthly journal entries. Can you please let me know where to find this report now with the Amazon's New navigation? THANKS SO MUCH!!
Hi Michelle, I know we connected outside of UA-cam, just wanted to share for others looking for this info in the comments. Now the report is found under Payments, Report Repository.
Thank you for your excellent video. Question: I have an existing self-employed quickbooks account for my consulting business, and want to bring my amazon side-business into my S-Corp. Would you advise to bring my amazon biz data into the existing account, or cre ate a separate account?
It depends on legally if they are one business or tow. If you have one S-Corp that is the umbrella for both the consulting and Amazon business, then use on QB account. If you set them up as separate legal entities, then I would use two separate QB and two separate checking accounts, etc. By the Way, you won't really be able to do this Amazon method with QuickBooks Self-employed. You will need Simple Start instead. Here is my affiliate link for that: www.SmallBusinessSarah.com/quickbooks
Please describe more about amazon holding?? And why 1099K foam is not Tally with monthly summary of seller acount reports... And doesn't matches books.
Thank you for this video, it is so helpful! Could you please clarify in the months where expenses exceed income. When moving the seller repay to Amazon Holding is that a deposit or as an expense? In the Amazon Holding bank register is it under the payments or deposit?
Sorry for such a basic question, however, just learning. I'd like to know how to categorize an refund in QB correctly. Say I purchase items from Sams club to sell on Amazon. In QB I've been placing the purchased items under the category of "inventory assets." However, after doing some research I decided to take some of the items back and get a refund. I see the refund on my bank statement and it is now a deposit. Easy stuff. However, when I record the deposit in QB I place the deposit under the account "inventory asset." Is this correct? Should I just categorize it as a "refund?" Does it matter? Looking for some guidance. Thanks in advance.
Hello @smallbusinesssarah I have been looking for this exact video!! I have a question, I have been categorizing the transactions that have been automatically inputted by the bank into QBO. Needless to say my QBO reports and Amazon reports are completely off. Could I go back and enter manual entries for the past months even though they are all reconciled? For example could i go back and enter every month for 2022 using the amazon reports or will that throw me out of balance? Thank you and look forward to getting into more of your content.
You can go back and add the journal entries, but you would need to undo all the Amazon deposits into checking because you probably categorized them straight to sales. If you do that, next time you go to reconcile your checking account, QB will give you this error message saying you are not ready to reconcile. You can ignore that message! and reconcile checking as usual.
I have not attempted to track actual Cost of Goods Sold in real time, instead, I do bookkeeping on the cash basis, and just record all purchases of items for resale or raw materials directly to Cost of Goods Sold.
Hi Sarah! One more question - do any additional steps need to happen for this method at the end of the year? The December journal entry will reflect sales/expenses that are not paid out by Amazon and popping up in the bank feed until the following year.. is that okay?
Yep, that's fine. The 1099 you receive from Amazon is based on when you made the sale, not when you get the money. This method is accounting for things in the same way. But there's no extra step you need to do at year-end, just handle each month the same way.
This is how I handle that. It gets the figures close, and then I can adjust at the end of the year when I receive 1099s. Each Amazon country "shop" has it's own summary report. So for the shop in a different currency, I pull up the summary report as usual and look at the amount transferred to my bank account in the lower left corner. That amount will be in the foreign currency. I compare that amount to the actual amount I received in my bank account, in my native currency. I use this information to calculate an average exchange rate for the month. Then I apply that exchange rate to each line of the amazon summary report and create my journal entry as usual after applying the exchange rate. As I said, it's not completely precise as it uses an average exchange rate for the month, but it will get you very close. Hope that helps!
Have you found an end of the month ending balance report in Amazon? Usually the ending balance reports in Amazon are weekly and don't often coincide with the end of a month.
Hi Sarah, thank you so much for this video. Is there any chance you could create some eBay videos for journal entry using eBay statements they provide? If you need some data help for you video please let me know I can share with you some statements for the video.
I have actually tried to use the eBay reports to do a similar journal entry, and the reports were not very easy to use. So now, if I have a client selling on eBay, I use A2X to help with their bookkeeping. Here is a link to that video: ua-cam.com/video/xTVwroHFJD0/v-deo.html
Hey Sarah! Your Video Is the best ones I've found Explaining this process! Have you ever had to account for someone who uses a factoring company for their ecommerce invoices?
Is the Amazon holding account the same as amazon reserved balances from A2X? I imported all the categories from A2X already but want to use this method…
If I sell on Ebay, Amazon, and a little bit on Mercari do you have any tips on how to combine or split the info. Can I do all of these amazon accounts and make a similar set for eBay and mercari? Are there any challenges by using the same bank account for all of my credits and debits on all platforms? DO you think I should make a seperate account for each? Will that make it harder or easier?
Using the same bank and credit card accounts for all platforms works just fine. And yes, you are correct that you can just set-up separate revenue and expense accounts in your Chart of Accounts for each platform you sell on. eBay and Mercari won't need nearly the number of breakouts as Amazon! One thing I would say with eBay, I have found their reports difficult to interpret, and difficult to determine one good journal entry to record everything accurately at the end of each month. So for eBay I tend to use A2X to do the heavy lifting on eBay boookkeeping.
Hi Sarah, The video is 3 years ago, Does it work the same for this year? or there are other updates? I am learning quickbooks now. I hope for your response.
It still works now! I am coming out with an updated version soon, but almost everything is exactly the same. Where to find the report is different now, and now I separate out shipping credits for their refunds and promotional rebates from their refunds. But this method is still what I use for all of my Amazon clients.
Hi Sarah, I am trying to find a report at Amazon Seller Central, that shows what has been sold in a period? Would you know how to find a report like that? I need to remove inventory from my books to match what is sitting at the Amazon Warehouses. Thank you!
Well . . . . this part of the process is on the accrual basis, and therefore will tie to your 1099 at year-end. I usually recommend that the rest of your accounting be done on the Cash basis unless you are a huge entity.
Is this for Accrual accounting? Because we use Cash Accounting and having the Sales from the report post as income instead of the deposits doesn't fit into that concept really.
The sales end up being on the accrual basis with this method, but that's okay even if you are using the Cash basis of accounting for everything else. (That's exactly how I do it.) The IRS kind of forces Cash Basis business owners into a modified accrual method because all of the 1099s are done on the accrual basis. So if you use this method for your sales, your figures will tie to the 1099 at year-end, which you must do, and everything else you can keep on the cash basis. I know it's confusing, but hopefully that helps!
I'm not familiar with NARF. But for Amazon Canada and Mexico, I usually estimate a conversion rate from the transfers on the bottom left side of the Amazon summary and the bank deposits. Then I apply that rate to the sales and fees. It's not perfect, but it's close.
Thanks so much for this video! I apologize if this is a dumb question but I'm new to this and starting to sell on Amazon soon. So if I have money in 'Amazon Holding' that has not yet been deposited into my account, what do I do once that money is actually deposited to make sure it's not accounted for twice?
It is a bit hard to explain in words! At the end of the video I try to explain how it all works together, but it can be hard to wrap your head around. But there is no fear of double-counting. The deposits are categorized to Amazon Holding. Then the journal entry posts the sales and fees. It all works together beautifully!
Honestly, I wish i would've came across this 4 months ago. My QB has been a mess and the CPA i have doing is not being helpful at all! Thank you very much! New Subscriber here! Please keep making videos!
Hi Sarah, Glad to find your video, very well explained. Thank you so much. Great Job! As you mentioned below "All purchases of inventory or raw materials you can categorize to Cost of Goods Sold" . Can all purchases be summed into one entry in the monthly Journal entry which you have demonstrated in the video ? Please Advise
How it should work is that your business bank and credit cards are connected to QB. So on the Banking Tab, the transactions from these accounts will feed in. All the transactions that are purchases of raw materials or items for resale, just add the vendor and choose the Cost of Goods Sold category. That's it! Super easy.
I record all inventory purchases directly to COGS rather than try to track inventory in QB. This is just a quicker and easier approach, and usually inventory information is available in other places, like your seller dashboard.
Thanks much for the video, very helpful! When checking my P&L against my 1099 though, I noticed that Amazon includes collected taxes in their gross even though they're remitting it for me. Should I track this in the journal entry as well or what do you recommend? Thanks again!
I don't recommend tracking that in your journal entry because you never actually receive that sales tax. It will just make your numbers look weird if you have that amount on your P&L. Instead, deduct the sales tax portion included on the 1099 when you do your taxes.
Yes, although I haven't seen that before, so I wonder if something different is going on with your account. Every client I have ever worked with only gets payouts about every two weeks from Amazon.
I set it up as a bank account because the bank account registers are easier to work with than receivable registers in QB. But in essence, after the journal entry each month, the ending balance represents a receivable.
Thank you for the video! Very helpful. I'm trying to figure out my profit and I apologize if I sound very ignorant. But on the PnL sheet is there a place for the Inventory Cost?
Hi Tony, all purchases of inventory or raw materials you can categorize to Cost of Goods Sold, which will show up on your P&L right below your income, but before your other expenses.
Great video. Interesting idea to create an Amazon holding account! This is the closest method I have seen to tie to Amazon's 1099. However, Amazon does include sales tax collected in their 1099 and this 2020 video did not. It is now 2022. Do you have a recommendation on how to include sales tax collected into gross revenues and subtract it somewhere else?
Here is my video on tying out to the 1099: ua-cam.com/video/0Ze8mduCDHk/v-deo.html.Basically, you do have to use the 1099 figure that includes sales tax, but then on your tax return you need to include an equal expense deduction of the sales tax. Or if you prefer, go ahead and add the sales tax figure to your JE, but just make sure you add an equal expense. The accountant in me cringes at including sales tax as income (and the related expense), but I realize that may just make it easier for a tax preparer or business owner to understand at tax time.
Do we have to add the Amazon Holding line at the end? I find that my sales amount are incorrect when I do this because I already categorize the payments I receive from Amazon as amazon sales when they come in.
Well, that's where you're going wrong with this method. Your deposits from Amazon in your checking account should be categorized to Amazon Holding. The journal entry is what adds your sales figures and expenses.
I assume your bank account is CAD? Using the transfer section of the Amazon summary, I would calculate an average conversion rate for the month, what Amazon transferred in USD vs. what you received in CAD. Then apply that rate to all of the line items in the summary. This will get you pretty close!
spent way to much time in zoom meetings and phone calls with QBO and amazon with no real answer. Thank you for putting this video together and creating a solution
Are they for sure showing up in your Chart of Accounts? Maybe the CSV file didn't upload properly. You can access the chart of accounts from the menus on the left and make sure the accounts you need are there.
Sarah: Your book and videos are very helpful. Do you have any video tutorial on eBay, Shopify and Walmart online stores? Do you have a list of normalized items in income and expense across Amazon, eBay, Shopify and Walmart online stores? Thanks.
Here is my video on Shopify: ua-cam.com/video/DPFV6WVrfnA/v-deo.html In the description is a link to the Shopify Chart of Account video as well. I plan to do a video on eBay, but haven't got to that yet.
I categorize all inventory purchases directly to COGS. Then, at the end of the month if you want to adjust for an ending inventory balance you can, but it's not absolutely necessary. It becomes very very cumbersome to try and track individual inventory items within QB for an Amazon business. (Unless you are buying in bulk and consistently selling only one or two products.)
Can we use these profit and loss reports to remit our personal tax to IRS ? and how do you know you net monthly income. You didnt put any entry of COGS ?
The P&L report provides the numbers you need to report to the IRS. This video just shows the Amazon income piece. For small business owners I tend to recommend the Cash basis of accounting, where purchases of inventory are recorded directly to COGS.
I do create separate income and expense accounts for each marketplace. Here's how I answered another question about different currencies and Amazon: "This is how I handle that. It gets the figures close, and then I can adjust at the end of the year when I receive 1099s. Each Amazon country "shop" has it's own summary report. So for the shop in a different currency, I pull up the summary report as usual and look at the amount transferred to my bank account in the lower left corner. That amount will be in the foreign currency. I compare that amount to the actual amount I received in my bank account, in my native currency. I use this information to calculate an average exchange rate for the month. Then I apply that exchange rate to each line of the amazon summary report and create my journal entry as usual after applying the exchange rate. As I said, it's not completely precise as it uses an average exchange rate for the month, but it will get you very close. Hope that helps!"
I haven't personally downloaded a Mexican or Canadian report, but my clients have been able to provide them, so not sure on that one. Here is how I handle converting those reports to USD. I would only recommend this is you are a small business, I'm sure there is a very technical and complicated way to do this, but what I do is rather easy and quick for the small business. I take the Canadian (or Mexican pesos as the case may be) dollars transferred per the summary and I compare that to the deposits from Amazon Canada for the month. I figure out the average exchange rate for the month based upon those figures. Then I apply that exchange rate to all the line items on the monthly summary.
I record all purchases of items for resale directly to Cost of Goods sold. Here is a video with some further discussion: ua-cam.com/video/6jdIWNSnRpg/v-deo.html
What if one of my months will not load. I have hit refresh for february multiple times and tried to regenerate it but it still says in progress. Has this ever happened to you before? is there a work around?
Hello, she explains the charts of accounts in the link I pasted or found in her description. There is a .csv file she provides that setup the chart of accounts in Quickbooks that incudes the amazon holding. ua-cam.com/video/QCmUNOW3g90/v-deo.html
The IRS knows. You need to add an expense on your Schedule C equal to the amount of sales tax so that you don't pay taxes on the amount of sales tax that Amazon collected and remitted.
No, that's why the transactions are categorized to a holding account. Then the journal entry parses out the deposits into their revenue and expense components.
Last I checked, Amazon doesn't have a report you can run at month end to show the balance as of a certain date. Wish they did! If you find something like that, let me know! Best you can do is sometimes the weekly report they do will fall at month end, and then, by all means reconcile!
**New updated video** ua-cam.com/video/QnZlGKHmZyM/v-deo.htmlsi=Kv7nSaH5OcAV4U1K
By far the most useful quickbooks and amazon seller central tutorial I have ever come across on either platform!!! It's upsetting how bad the question and answer sections are on both quickbooks and amazon seller central about every topic. Thank You!!!
Glad it was helpful!
This is by far the best video on UA-cam for doing Amazon accounting in Quickbooks without any integration. You made it so easy. Thank you so much for creating this video and your other video with the chart of accounts. It has been a struggle for over a year now. I was able to adapt it to Quickbooks for Desktop (Mac 2019) and ended up creating an account for each item on the date range report by Income or Expense. I then grouped them by the account names you show in your video. Each statement is so easy to enter because my chart of accounts now match exactly to the date range report and my expectation is the groups will match the 1099. :-) You are a rock star!!!
Glad it was helpful!
Thank you Sarah, wondered how to handle exchange rates with this. I have created the Amazon Holding Account in USD; and been able to record the transfer's to the CAD bank account. My issue is record the income and expenses and tax which have to be recorded in CAD,
I use the transfers section to determine an average exchange rate for the month. Once I have calculated the average exchange rate, I apply that to each income or expense line.
Thank you Sarah, excellent video and just want I was looking for. I do have a question though. I have entered my Amazon statements from April and May following your instructions and my Amazon Holding account is negative $800+. Is this correct, it seems wrong to me!
Amazon Holding will go negative during the month, and then should be positive once you post the monthly journal entry. If it is negative after you post the journal entry, then something has gone wrong. Possibly a beginning balance issue?
Hi Sarah, Excellent work explaining the holding balance. I am one year in into selling and this will be my first year filling. I just started using QuickBooks online also. However, last year I maintained a spreadsheet of all my accounting and strictly used my business account for expenses and incomes. The problem is that the amount in my checking account, as deposited by Amazon, and the amount on 1099K and the amount on statement summary for the whole year do not match. I cannot reconcile them.
Did you watch this video: ua-cam.com/video/0Ze8mduCDHk/v-deo.html
@@SmallBusinessSarah Yes, this is the video that I watched.
May I consult you on this difference, do you offer such a service?
Hi Sarah, which plan would you recommend?
Do you mean for QB? Usually Simple Start is sufficient for small business owners.
Hello Sarah. I have a question about the Journal Entry.
What if I am paying my Amazon Ads with my credit card? Should I include them when I do the Journal Entry from the Monthly amazon report or should I ignore the Cost of advertising and just register the credit card payment so that it is not duplicated?
Please let me know your thoughts and thanks so much for your time, support and amazing videos!
From what I can tell, Ads can be charged either through the summary report, billed separately, or both! Maybe this is due to different Ad types? Not sure. If Ad expense appears in your summary, then include it in your JE. If Ads are charged separately then go ahead and categorize them directly to an Advertising Expense account, and do not include them in your journal entry.
@@SmallBusinessSarah Ok, it is clear now, you are the best. thanks so much!
Hello Sarah, thanks for the tutorial. I do have a question. If you take the income and subtract out the expenses, the amount does not equal the payment amount. Is the difference the amount that is relegated to your reserve?
Yes, Amazon holds money for quite awhile before they distribute it to you, so there is always a beginning and ending balance, which is why we need the Amazon Bank/Holding account to handle that easily.
Still trying to figure out how to replicate this in waveapps. Replicating the monthly income/expense report is fine. However, im stuck @ the part where you catagorize the amazon deposits posted to your bank as "amazon holding". I created a bank in waveapps, "amazon holding" and for all the amazon deposits posted to my business checking, I switch the account to "amazon holding". I can choose "withdraw" or "deposist". I picked "deposit". It also asks for the income catagory but dont know what to select.
I don't use Wave as it tends not be flexible. Not sure how to help you here!
You are way way way way way better than 5 minute bookkeeping , even i am doing a stupid thing that i am comparing you with that , You are the only one!!
Thanks so much!
Thank you! I have struggled with this for so long! And you created a video for free? You are so generous!
Happy to help!
Thank you. Thank you. Thank you.
I've been trading on Amazon for six months and really struggled to find this info.
Glad it was helpful!
Hey Sarah, absolutely fantastic content. You've nailed it! This is exactly what's missing from our day to day life. Great job! No seriously.
Glad it was helpful!
Hi Sarah, thank you for creating these FBA accounting videos. I downloaded the monthly payment summaries as you described and compared them to the 1099-K from Amazon and some of the numbers still do not match. I have 7 months where the numbers match exactly, 4 months where the Product sales are slightly off and everything else matches, and 1 month where none of the numbers match? Do you have any ideas where the discrepancies are from? I don't understand why Amazon's monthly payment summary reports don't match up the monthly line items on the 1099-K. Should I just use the numbers from the 1099K instead?
I agree, it seems like the 1099 should match their own summaries! Sometimes it can just be a timing difference. I wouldn't make adjustments month by month, but just make a total adjustment at year-end to tie out to the 1099. It probably won't be a significant adjustment that has to be made.
Question for you RE: Sales Tax.
1.)If there's a difference of Sales Tax collected and withheld on the monthly statement, what type of Chart of Account do I need to setup in QBO?
2.) Do I create a Sales Tax Expense or Sales Tax Income account? For some reason I had some small difference for 4 months of the year between sales tax collected and withheld that I need to figure out what to do with.
Thank youuu for your help!!!!
Sales tax is not an income and nor expense... It is laiblity and asset at the same time so we must treat it into balance sheet
You would create a Sales Tax Payable account, which is a liability account type.
Just Subscribed! Thank you for making this video. This is the first Amazon QB video I have found that makes it simple. Every other video seems to make it as complicated as possible. Great job on the video!
Glad it was helpful!
Thank you so much Sarah. What a fantastic video. Clear and simple to follow. I was a button-click away from purchasing software I didn't actually need. God bless your generosity, and keep up the good work.
Glad I saved you some money! There are integrations for Amazon, but once you get the hang of it, this entry is pretty fast, plus it's super accurate!
Thanks you so much for going through this step by step! I was really struggling with my new Amazon business accounting but can’t afford an accountant yet. If possible, would love more videos on the expense side or bank reconciliation, or a list of “do this 1/wk, this 1/ month, etc’
I have a couple playlists of bookkeeping start to finish. One for bloggers one for Etsy sellers. Most of the information in those videos will apply to Amazon sellers too. I like your idea about a video on what to do each week/month, etc.
One of the best Amazon accounting Videos I have seen so far. I only want to express my most sincere appreciation and thanks for your work on making this video.
You're very welcome!
as a canadian seller that collects and submits gst/hst, where do i make the entries for that in QuickBooks journal entries.
I am not familiar at all with Canadian tax, but if you have a positive tax number in the bottom right corner, I would categorize that as a Credit to a Sales Tax Payable account (or GST Payable if that's what you call it).
Hi Sarah, glad I found your video tutorial when I'm looking for ways how to record these sorts of transactions. I almost believe that there's no way to record these without the integration of amazon bookkeeping software to accounting software. Thank you so much.
Could you please reply to my message? There are lots of question regarding quickbook for you. Sarah, how can I chat with you for solving my question of quickbook? Because It is not always possible to answer everthing on the comments. Could you please help me ?
I track COGS this way:
I first calculate my cost avg by sum the total dollar $ spent on inventory, then divide this by the total individual amount of individual items bought during the year. Example: $100k / 10000 items, = each item $10. I track this using FIFO on an annual basis.
I then caculate my total individual items sold by caculculating the total # of indivdual amazon orders + disposals - refunds. I then multiply this # by the cost avg of $10 to determine my COGS.
This is the simplest method ive found after selling on amazon for 6 years now. Its not accurate, but id say its >90% accurate. Why is it not accurate? Many of the items I buy from suppliers never arrive, are lost, refunded or disposed. Some of the items I then send to FBA are lost via shipping or by amazon FBA. Many refunds for orders are never actually returned to inventory, and or are concession refunds. Many FBA removals done by me are eventually disposed of by me personally.
Ive learned over time trying to track all these anomlies is not worth the time and becomes an absolute hellscape in complexity. Im just worried about the eventually build up of inacuracies over time. Say my caculations has 100 items slip through the cracks yearly. In 5 years this snowballs.
I see in your comments you suggest year end count. Ive considered this as well. Its just there can be inventory so many places. In my house, at my mailbox, currently inbound to FBA, currently pending sale/removal/disposal with FBA, inbound purchases from my supplier that has not arrived yet. Can get extremely convulated.
Your method sounds reasonable to me. Maybe you could attempt an inventory count just to true up your numbers from the small inaccuracies that may build over time.
Thank you so much for this. Even though my client doesn't use QB, I am able to adapt this. You are very clear and concise, Thanks. God bless.
Glad it was helpful!
Hi Sarah, I am wondering how to we factor in the cost of goods into this as well? The price of the items when we orginally bought them and other external fees such as monthly softwares used for amazon fba?
Hi Julia, this video covers COGS ua-cam.com/video/Mekj6Re137E/v-deo.html it's part of a playlist for Etsy sellers, but the entire playlist (except the one or two about the Etsy platform) would work for Amazon sellers as well. I tend to use an account called Online Tools, Programs & Subscriptions for the software tools that many online sellers use, but really any accountant that makes sense to you is fine.
@@SmallBusinessSarah thank you so much!
So I did this method for the whole year and was excited to have it match up to the 1099 my client just sent me...it doesn't! My numbers in QBO match exactly to the amazon monthly summary reports and it was nice every month that my P&L numbers tied out to the monthly summary report. But then why is the number different on 1099??- Are the monthly summary reports not the same number on the 1099 for each month? What am I missing?
A couple things. Did you look at page 2 of the 1099 where everything is broken down? Plus I found this year I neeed to break out the shipping credit refunds and promotional rebate refunds, instead of netting them. Third, Amazon sometimes amends a monthly summary, you may need to rerun it. Fourth, Amazon includes sales tax in the 1099 that is not income to the client.
Just sharing my experience - I also did this method for whole year, Interesting -to match P&L total income with unadjusted gross sales on 1099K - ( add sales tax, refunds and subtract other credits to total income reported in P&L (these are not listed on 1099k from ) then it matches .
@@SmallBusinessSarah Thanks - I didn't realize there was a page 2 on the 1099 - this solves it perfectly. I see my numbers are right on my P&L when I look at those columns - and then now i understand how they add and subtract the other numbers now to reflect the total on the 1099. And yes - I see what you mean on the promotional rebate refunds and credits - I also netted them so the numbers seemed off at first - but once I opened up the reports I see the 1099 is just using the credits line on the shipping and promotional and not the refund part
@@teenup72 Yes this makes sense - I also didn't realize there was a page 2 on the 1099 and it also helps me figure out the calculations
@@katiolson688 yep, you got it. In past years I don't remember the shipping and promotional rebates, being broken out separately, so that's why I don't show it in the video. But going forward I will show those amounts gross and not net. Gotta love page 2 of the 1099. I wish all companies provided such a detailed break out.
Hi Sarah, thank you for your tutorial, I did download your chart of account. My question that do I need to create for : product, shipping and gift wrap taxes collected, Product, shipping and gift wrap taxes refunded; Amazon Obligated Tax Withheld? My second question that how should i record the my business shipping cost (from Freight forwarder, sample, cost interst fee exchange...etc everything cost product from china to amz)?
I'm not exactly sure what your asking in your first question. Second question, the cost of Shipping your products from China to Amazon should be categorized to a Cost of Goods Sold account.
ungatehub.com - we take care of questions about opening categories, brands, asins on Amazon.
Is anyone else has the issue of not all transactions were transferred, and choosing a customer year-end-date doesn't really seem to matter, other transactions get included, even from the previous year?
Hello thank u for the video, so are doing jan 2024 and we have the balances on 12/31/2023 as opening and 1/31/2024 , but our balance is still not matching with amazon receivable in seller central? What could be the reasons for that?
One more question Do we need to make the entries of loan advance and the loan payments in quick books if they are not showing in bank feed? Will Amazon loan payments have any effect on our journal entry? Your answers will be appreciated.❤
I am not familiar with the amazon receivable report in seller central, not sure if it will help us with beginning balance information or not. Loan transactions are usually shown in the lower left corner of the summary, and should be accounted for in the journal entry.
Hi, just to confirm, is this the only Journal Entry we have to record on our Accounting Software?
That's the only entry you will need for Amazon.
Sorry, one last question, you said to combine credits and refunds. For example, Shipping credits 11.81 and lets say there was a shipping refund of -5.99, which would add up to $17.80. Or did you mean subtract the shipping credits from the shipping refunds? and then would we list it on the credit or debit side? Please help
I meant to net the two, but actually, because of the way the 1099 is set up, I now do a separate line item for the credits and the refunds. I do saperate lines for shipping credits and refunds, promotional rebates and refunds, and gift wrap credit and refunds.
Hi Sarah, I know in this video you are recording "Amazon Holding" as money and deposits from Amazon, but what about when I connect my bank account and it shows those deposits too, wouldn't that count them twice?
Deposits from the bank feed also go to Amazon Holding, but they are in opposite directions. Do a full month, you will see how it all works together.
Hi Sarah I hope you are doing great I have some questions to ask if you have some spare time please answer the following questions 1) How do you update for inventory and cogs
2) Can I use Amazon Receivable A/c instead of Amazon Holding Bank A/c ?
You can use the receivable account type, I just don't like how the receivable register works in QB compared to the checking register. Most of my clients are cash basis, but for some I do post a month end journal entry to account for inventory on hand.
Hi Sarah, this video is super helpful! I did get confused when I tried to replicate the journal entry with my information. I am not sure how to handle a situation where my monthly summary is not net positive. The exact scenario I am dealing with is that I have a total debit of -$82.58 in the expense section and no income for this particular month. Then in the transfers section of the summary I have a credit of $39.99 for "Charges to credit card and other debt recovery". In my journal entry I entered a debit of $82.58 under "Amazon Selling Fees" but then do I still add "Amazon Holding" to this journal entry? Do I need to do anything with the credit of $39.99 in my transfer section as described above. Can you please assist in explaining this? thank you!
In the bank feed, categorize the $39.99 also to Amazon Holding. Do the journal entry as normal, but your Amazon Holding amount to balance the entry will be a Credit. Without seeing it, I think that will get you where you need to be, but look at the Amazon Holding register and make sure it makes sense.
Thank you for this video. I just a question. Is Amazon holding the same as Accounts Receivable?
The ending balance in Amazon Holding, does represent the amount of money Amazon owes you, so yes the ending value is basically like an Accounts Receivable. I don't use an Accounts Receivable account type because the register for that account type is weird in QB!
In your example at the end with the Amazon Holding account. You came up with $1,110.15. Is there anyway to check that amount in the Amazon Software? I could only find the "Amazon Reserve" balance on a statement by statement basis which doesn't line up with month end.
There is no report in Amazon that I have found that will show you what your balance is at any given point in time. This would be great if Amazon would add this feature! What you can do, is the bi-weekly report that Amazon does have with the reserve amount indicated, when that report matches up with month-end you can double-check. You should spot-on or very very close with this method.
Hi Sarah! Your videos are insanely helpful for getting started with QBO. Would you recommend this manual entry method over the option to sync Amazon directly to QBO as a sales channel? (and same question for the option to sync Shopify as a sales channel?) Trying to decide which route to pursue, which will be cleaner/easier/etc. I will definitely follow this method for Etsy, as the sync with etsy app for some reason isn't working in my account.
I would recommend my method over linking directly. I had a client link directly, and non of the information brought over made sense or would allow the business owner to tie to the 1099 at year-end. Especially if you don't know what SHOULD be happening in your bookkeeping when you use an integration, then I recommend skipping the integration and just doing my manual entry because it's so easy!
Very awesome video! Thanks for your help! I have two questions. I appreciate it if you can tell me where the number Amazon Sales $3355.45 can be found in the Amazon report and which numbers add together get the total Amazon other selling fees $808.72 in the journal entry.
$3,355.45 is the sum of the non-FBA and FBA product sales. $808.72 is the sum of all the fees except shipping and advertising.
Started LLC in Arizona and Dissolved LLC in Louisiana.. What would I do in this instance for bookkeeping and accounting? It is a new EIN as well so will I have to start a new Quickbook account? How can I pull stuff to new LLC? I have Inventory Assets at Amazon, Owner investments, COGs, Misc expense, Money in Amazon Hold.
I was checking to see if anyone had a idea
Thank you for this! Question though, for my first month, I have a charge to credit card only for the 39.99 fee. Would that just be a debit in FBA Sale income? Where would that go? And then for another month, there is a charge to credit card again identical for the FBA inventory inbound and service fee: do I record that twice? Thanks in advance.
If the only activity you had in a month was the $39.99, then you could just categorize it directly to an Amazon Fee expense in the bank feed. Often you will see that charge on your monthly summary in the fee section and then in the lower left transfers section. In those instances, record the journal entry as usual, then when the $39.99 is charged to your bank account or credit card, categorize it to Amazon Holding as you would a deposit.
What about the "Transfers" section in bottom left? How do you book entry for deposits from Amazon? Dr. Cash Cr. Amazon Holding? and what about the charges to credit card? Do you also run that through Amazon Holding - i.e. Dr. Amazon Holding, Cr. Accounts Payable/Cash?? Thanks so much!!
The transfers section is the total deposits to checking from Amazon. We already categorized those to Amazon Holding from the bank feed. And yes, if Amazon charges your credit card (also outlined in the transfers section) categorize that to Amazon Holding as well.
Hi Sarah, This is great information that I've been using it for several years. So thank you so much! However, I see that Amazon has changed their navigation for the reports, so I'm having trouble finding this same report to use for monthly journal entries. Can you please let me know where to find this report now with the Amazon's New navigation? THANKS SO MUCH!!
Hi Michelle, I know we connected outside of UA-cam, just wanted to share for others looking for this info in the comments. Now the report is found under Payments, Report Repository.
Thank you for your excellent video. Question: I have an existing self-employed quickbooks account for my consulting business, and want to bring my amazon side-business into my S-Corp. Would you advise to bring my amazon biz data into the existing account, or cre
ate a separate account?
It depends on legally if they are one business or tow. If you have one S-Corp that is the umbrella for both the consulting and Amazon business, then use on QB account. If you set them up as separate legal entities, then I would use two separate QB and two separate checking accounts, etc. By the Way, you won't really be able to do this Amazon method with QuickBooks Self-employed. You will need Simple Start instead. Here is my affiliate link for that: www.SmallBusinessSarah.com/quickbooks
Please describe more about amazon holding?? And why 1099K foam is not Tally with monthly summary of seller acount reports... And doesn't matches books.
Take a look at page 2 of the Amazon 1099. The Amazon 1099 includes sales tax that is not income to you. Page 2 breaks out that amount.
Thank you for this video, it is so helpful! Could you please clarify in the months where expenses exceed income. When moving the seller repay to Amazon Holding is that a deposit or as an expense? In the Amazon Holding bank register is it under the payments or deposit?
In the Amazon Holding register it will show up in the Deposit column.
Sorry for such a basic question, however, just learning. I'd like to know how to categorize an refund in QB correctly. Say I purchase items from Sams club to sell on Amazon. In QB I've been placing the purchased items under the category of "inventory assets." However, after doing some research I decided to take some of the items back and get a refund. I see the refund on my bank statement and it is now a deposit. Easy stuff. However, when I record the deposit in QB I place the deposit under the account "inventory asset." Is this correct? Should I just categorize it as a "refund?" Does it matter? Looking for some guidance. Thanks in advance.
You did that correctly. Categorize refunds to the same category you used for the original expense.
Hello @smallbusinesssarah I have been looking for this exact video!! I have a question, I have been categorizing the transactions that have been automatically inputted by the bank into QBO. Needless to say my QBO reports and Amazon reports are completely off. Could I go back and enter manual entries for the past months even though they are all reconciled? For example could i go back and enter every month for 2022 using the amazon reports or will that throw me out of balance? Thank you and look forward to getting into more of your content.
You can go back and add the journal entries, but you would need to undo all the Amazon deposits into checking because you probably categorized them straight to sales. If you do that, next time you go to reconcile your checking account, QB will give you this error message saying you are not ready to reconcile. You can ignore that message! and reconcile checking as usual.
Can you point me towards a video/resource to learn how to track COGS for these sales on a monthly basis? Thanks for your video. Very straightforward!
I have not attempted to track actual Cost of Goods Sold in real time, instead, I do bookkeeping on the cash basis, and just record all purchases of items for resale or raw materials directly to Cost of Goods Sold.
Hello, thank you very useful video. Do you have a video for finding out and recording COGS from Amazon seller to QB? thank you.
For small sellers I recommend just recording purchases of items for resale directly to COGS. ua-cam.com/video/NoCOga8NAvo/v-deo.html
Hi Sarah! One more question - do any additional steps need to happen for this method at the end of the year? The December journal entry will reflect sales/expenses that are not paid out by Amazon and popping up in the bank feed until the following year.. is that okay?
Yep, that's fine. The 1099 you receive from Amazon is based on when you made the sale, not when you get the money. This method is accounting for things in the same way. But there's no extra step you need to do at year-end, just handle each month the same way.
Thank you Sara for this info.
If I sell on different amazon marketplace for example amazon US and UK how about currency sell globally
This is how I handle that. It gets the figures close, and then I can adjust at the end of the year when I receive 1099s. Each Amazon country "shop" has it's own summary report. So for the shop in a different currency, I pull up the summary report as usual and look at the amount transferred to my bank account in the lower left corner. That amount will be in the foreign currency. I compare that amount to the actual amount I received in my bank account, in my native currency. I use this information to calculate an average exchange rate for the month. Then I apply that exchange rate to each line of the amazon summary report and create my journal entry as usual after applying the exchange rate. As I said, it's not completely precise as it uses an average exchange rate for the month, but it will get you very close. Hope that helps!
Have you tried using the "Commerce" tab inside the quickbooks online subscription?
I haven't tried it yet. If you do, let me know how it goes!
What if your closing balance on Amazon is way off from your Amazon Holding account in quickbooks after inputing these numbers?
Have you found an end of the month ending balance report in Amazon? Usually the ending balance reports in Amazon are weekly and don't often coincide with the end of a month.
Hi Sarah, thank you so much for this video. Is there any chance you could create some eBay videos for journal entry using eBay statements they provide? If you need some data help for you video please let me know I can share with you some statements for the video.
I have actually tried to use the eBay reports to do a similar journal entry, and the reports were not very easy to use. So now, if I have a client selling on eBay, I use A2X to help with their bookkeeping. Here is a link to that video: ua-cam.com/video/xTVwroHFJD0/v-deo.html
Awesome video! I will definitely be subscribing. I had a questions about generating the reports now in 2022. Is it still under the payments tab?
I'm still seeing it under Reports, Payments, Date Range Reports. But it does all look a little bit different!
Hey Sarah!
Your Video Is the best ones I've found Explaining this process! Have you ever had to account for someone who uses a factoring company for their ecommerce invoices?
No! I have not dealt with factoring!
Is the Amazon holding account the same as amazon reserved balances from A2X? I imported all the categories from A2X already but want to use this method…
It might be. You can use it if it's a bank account type, if not, I would create the Amazon Holding account from scratch.
If I sell on Ebay, Amazon, and a little bit on Mercari do you have any tips on how to combine or split the info. Can I do all of these amazon accounts and make a similar set for eBay and mercari? Are there any challenges by using the same bank account for all of my credits and debits on all platforms? DO you think I should make a seperate account for each? Will that make it harder or easier?
Using the same bank and credit card accounts for all platforms works just fine. And yes, you are correct that you can just set-up separate revenue and expense accounts in your Chart of Accounts for each platform you sell on. eBay and Mercari won't need nearly the number of breakouts as Amazon! One thing I would say with eBay, I have found their reports difficult to interpret, and difficult to determine one good journal entry to record everything accurately at the end of each month. So for eBay I tend to use A2X to do the heavy lifting on eBay boookkeeping.
Hi Sarah,
The video is 3 years ago, Does it work the same for this year? or there are other updates?
I am learning quickbooks now.
I hope for your response.
It still works now! I am coming out with an updated version soon, but almost everything is exactly the same. Where to find the report is different now, and now I separate out shipping credits for their refunds and promotional rebates from their refunds. But this method is still what I use for all of my Amazon clients.
Hi Sarah, I am trying to find a report at Amazon Seller Central, that shows what has been sold in a period? Would you know how to find a report like that? I need to remove inventory from my books to match what is sitting at the Amazon Warehouses. Thank you!
Hi Kelly, I'm not sure. It's been a bit since I've dug around behind the scenes in Amazon Seller Central.
Hello Sarah, this is a great video! Please confirm whether this is cash basis or accrual basis accounting. Thank you!
Well . . . . this part of the process is on the accrual basis, and therefore will tie to your 1099 at year-end. I usually recommend that the rest of your accounting be done on the Cash basis unless you are a huge entity.
I created my Amazon holding account, shows up on my charter but when I go into my amazon payment it doesn't show up under categorize. Any idea why?
I would just exit QuickBooks and get back in. Could just be a weird temporary quirk.
Is this for Accrual accounting? Because we use Cash Accounting and having the Sales from the report post as income instead of the deposits doesn't fit into that concept really.
The sales end up being on the accrual basis with this method, but that's okay even if you are using the Cash basis of accounting for everything else. (That's exactly how I do it.) The IRS kind of forces Cash Basis business owners into a modified accrual method because all of the 1099s are done on the accrual basis. So if you use this method for your sales, your figures will tie to the 1099 at year-end, which you must do, and everything else you can keep on the cash basis. I know it's confusing, but hopefully that helps!
Hi Sarah, how do you record the sales for Canada and Mexico if you are participating in NARF?
I'm not familiar with NARF. But for Amazon Canada and Mexico, I usually estimate a conversion rate from the transfers on the bottom left side of the Amazon summary and the bank deposits. Then I apply that rate to the sales and fees. It's not perfect, but it's close.
Thanks so much for this video! I apologize if this is a dumb question but I'm new to this and starting to sell on Amazon soon. So if I have money in 'Amazon Holding' that has not yet been deposited into my account, what do I do once that money is actually deposited to make sure it's not accounted for twice?
It is a bit hard to explain in words! At the end of the video I try to explain how it all works together, but it can be hard to wrap your head around. But there is no fear of double-counting. The deposits are categorized to Amazon Holding. Then the journal entry posts the sales and fees. It all works together beautifully!
Honestly, I wish i would've came across this 4 months ago. My QB has been a mess and the CPA i have doing is not being helpful at all! Thank you very much! New Subscriber here! Please keep making videos!
Glad I could help
Sarah has great contents. Were you able to have your book up to date?
Hi Sarah, Glad to find your video, very well explained. Thank you so much. Great Job!
As you mentioned below "All purchases of inventory or raw materials you can categorize to Cost of Goods Sold" . Can all purchases be summed into one entry in the monthly Journal entry which you have demonstrated in the video ? Please Advise
How it should work is that your business bank and credit cards are connected to QB. So on the Banking Tab, the transactions from these accounts will feed in. All the transactions that are purchases of raw materials or items for resale, just add the vendor and choose the Cost of Goods Sold category. That's it! Super easy.
Thanks for your video! It was very informative! What about adding inventory? Does that need to be done in Quickbooks?
I record all inventory purchases directly to COGS rather than try to track inventory in QB. This is just a quicker and easier approach, and usually inventory information is available in other places, like your seller dashboard.
Thanks much for the video, very helpful! When checking my P&L against my 1099 though, I noticed that Amazon includes collected taxes in their gross even though they're remitting it for me. Should I track this in the journal entry as well or what do you recommend? Thanks again!
I don't recommend tracking that in your journal entry because you never actually receive that sales tax. It will just make your numbers look weird if you have that amount on your P&L. Instead, deduct the sales tax portion included on the 1099 when you do your taxes.
I get daily payouts from amazon, would I categorize all these transfers as an Amazon Holding?
Yes, although I haven't seen that before, so I wonder if something different is going on with your account. Every client I have ever worked with only gets payouts about every two weeks from Amazon.
I don't see what account does Amazon Holding account go? I mean is it Account receivable? but I saw you create as a Bank account?
I set it up as a bank account because the bank account registers are easier to work with than receivable registers in QB. But in essence, after the journal entry each month, the ending balance represents a receivable.
Thank you for the video! Very helpful. I'm trying to figure out my profit and I apologize if I sound very ignorant. But on the PnL sheet is there a place for the Inventory Cost?
Hi Tony, all purchases of inventory or raw materials you can categorize to Cost of Goods Sold, which will show up on your P&L right below your income, but before your other expenses.
Great video. Interesting idea to create an Amazon holding account! This is the closest method I have seen to tie to Amazon's 1099. However, Amazon does include sales tax collected in their 1099 and this 2020 video did not. It is now 2022. Do you have a recommendation on how to include sales tax collected into gross revenues and subtract it somewhere else?
Here is my video on tying out to the 1099: ua-cam.com/video/0Ze8mduCDHk/v-deo.html.Basically, you do have to use the 1099 figure that includes sales tax, but then on your tax return you need to include an equal expense deduction of the sales tax. Or if you prefer, go ahead and add the sales tax figure to your JE, but just make sure you add an equal expense. The accountant in me cringes at including sales tax as income (and the related expense), but I realize that may just make it easier for a tax preparer or business owner to understand at tax time.
Hi Sarah my Business checking account I think I renamed as my Tide Business account would that be the same
Whatever you called your business checking account is just fine and would be the same thing as what I call my business checking account.
Do we have to add the Amazon Holding line at the end? I find that my sales amount are incorrect when I do this because I already categorize the payments I receive from Amazon as amazon sales when they come in.
Well, that's where you're going wrong with this method. Your deposits from Amazon in your checking account should be categorized to Amazon Holding. The journal entry is what adds your sales figures and expenses.
My amazon is set up in USD but QB in CAD currency, how can I make the transaction to match?
I assume your bank account is CAD? Using the transfer section of the Amazon summary, I would calculate an average conversion rate for the month, what Amazon transferred in USD vs. what you received in CAD. Then apply that rate to all of the line items in the summary. This will get you pretty close!
spent way to much time in zoom meetings and phone calls with QBO and amazon with no real answer. Thank you for putting this video together and creating a solution
Glad it helped!
I uploaded your CSV file to quick books but they will not show up in the journal entry. Any help?
Are they for sure showing up in your Chart of Accounts? Maybe the CSV file didn't upload properly. You can access the chart of accounts from the menus on the left and make sure the accounts you need are there.
Sarah: Your book and videos are very helpful. Do you have any video tutorial on eBay, Shopify and Walmart online stores? Do you have a list of normalized items in income and expense across Amazon, eBay, Shopify and Walmart online stores? Thanks.
Here is my video on Shopify: ua-cam.com/video/DPFV6WVrfnA/v-deo.html In the description is a link to the Shopify Chart of Account video as well. I plan to do a video on eBay, but haven't got to that yet.
Hi Sarah, Thank you for this video! Do you have a video on how to track inventory, cost of good sold, etc?
I categorize all inventory purchases directly to COGS. Then, at the end of the month if you want to adjust for an ending inventory balance you can, but it's not absolutely necessary. It becomes very very cumbersome to try and track individual inventory items within QB for an Amazon business. (Unless you are buying in bulk and consistently selling only one or two products.)
Can we use these profit and loss reports to remit our personal tax to IRS ? and how do you know you net monthly income. You didnt put any entry of COGS ?
The P&L report provides the numbers you need to report to the IRS. This video just shows the Amazon income piece. For small business owners I tend to recommend the Cash basis of accounting, where purchases of inventory are recorded directly to COGS.
Hi Sarah, Do we need to do a journal entry for each marketplace separately in each currency? Thanks!
I do create separate income and expense accounts for each marketplace. Here's how I answered another question about different currencies and Amazon: "This is how I handle that. It gets the figures close, and then I can adjust at the end of the year when I receive 1099s. Each Amazon country "shop" has it's own summary report. So for the shop in a different currency, I pull up the summary report as usual and look at the amount transferred to my bank account in the lower left corner. That amount will be in the foreign currency. I compare that amount to the actual amount I received in my bank account, in my native currency. I use this information to calculate an average exchange rate for the month. Then I apply that exchange rate to each line of the amazon summary report and create my journal entry as usual after applying the exchange rate. As I said, it's not completely precise as it uses an average exchange rate for the month, but it will get you very close. Hope that helps!"
Great way of explaining things. Thanks for sharing your knowledge. Keep it up!
Glad it was helpful!
Do you have any vids on incorporating Amazon and Ebay into quickbooks?
Sometimes I use A2X for integrations, especially for eBay.
do you know how to download a date range report for Mexico or Canada into English as well as convert to USD?
I haven't personally downloaded a Mexican or Canadian report, but my clients have been able to provide them, so not sure on that one. Here is how I handle converting those reports to USD. I would only recommend this is you are a small business, I'm sure there is a very technical and complicated way to do this, but what I do is rather easy and quick for the small business. I take the Canadian (or Mexican pesos as the case may be) dollars transferred per the summary and I compare that to the deposits from Amazon Canada for the month. I figure out the average exchange rate for the month based upon those figures. Then I apply that exchange rate to all the line items on the monthly summary.
Hi Sarah. What about Cost of Goods sold? I noticed that it was missing from your Profit and Loss.
I record all purchases of items for resale directly to Cost of Goods sold. Here is a video with some further discussion: ua-cam.com/video/6jdIWNSnRpg/v-deo.html
What if one of my months will not load. I have hit refresh for february multiple times and tried to regenerate it but it still says in progress. Has this ever happened to you before? is there a work around?
I assume you mean your Amazon report won't load? I haven't had that happen, not sure what to do except try again later!
Amazing explanation! Thank you. I loved all the screen shots and explanation.
Glad it was helpful!
Hi Sarah, my download does not look like this by far and i cant seem to get past the download portion of your video. :-(
Maybe they have changed it very recently? Not sure. So far the monthly summaries my clients give me each month still look like this.
Thanks for the video! How do you calculate net profit as some amount is kept by Amazon?
Use your Profit & Loss report to determine your overall business profitability.
Hi Sarah, when I go to categorize the income from amazon, amazon holding does not show up at a catergory. Do you know why this might be?
Hello, she explains the charts of accounts in the link I pasted or found in her description. There is a .csv file she provides that setup the chart of accounts in Quickbooks that incudes the amazon holding. ua-cam.com/video/QCmUNOW3g90/v-deo.html
Hi .Can we do this every day ?. Does Amazon give you a daily sale report in the seller central ??
If you have the ability to run this report every day, then certainly, you can do this every day.
So we don’t tell the IRS that Amazon collected and remitted sales tax? Don’t we have to let them know when we file a tax return?
The IRS knows. You need to add an expense on your Schedule C equal to the amount of sales tax so that you don't pay taxes on the amount of sales tax that Amazon collected and remitted.
Once you categorize a transaction and then you also put a journal entry which means you are recording a transaction 2 times
No, that's why the transactions are categorized to a holding account. Then the journal entry parses out the deposits into their revenue and expense components.
your videos are awsome just have a question , does amazon refund fba referal and fba fulfilment fee to seller when a customer makes a sale return?
I'm not sure!
is there a way i can change the currency from dollars to british pounds???
In QB on the Amazon statements?
For some reason my reports do not look like that. They come up in excel and are a hot mess. How did you get such good looking reports?
I think you have to select the dot next to summary when running these.
Should we be reconciling the Amazon Holding account?
Last I checked, Amazon doesn't have a report you can run at month end to show the balance as of a certain date. Wish they did! If you find something like that, let me know! Best you can do is sometimes the weekly report they do will fall at month end, and then, by all means reconcile!