What bookkeeping mistakes do Amazon sellers commonly make?
The biggest mistake is treating Amazon deposits as your revenue. Amazon deposits money every two weeks after deducting referral fees, FBA fees, storage fees, advertising costs, and various other charges. If you record the deposit as revenue, you’re understating your actual sales and hiding how much Amazon takes. Your true revenue is the gross sales amount before any fees. Those fees are expenses that need to be tracked separately so you can see where your money is going.
Not reconciling Amazon settlement reports creates a mess that compounds over time. Each settlement includes sales, refunds, fees, reimbursements, and adjustments. Simply matching the deposit to a “sales” account ignores all the detail you need to understand profitability. You should be breaking down each settlement and categorizing the components properly. This takes effort, but skipping it means your financial statements are essentially fiction.
Many sellers miss FBA inventory adjustments and reimbursements entirely. Amazon loses and damages inventory regularly. They issue reimbursements, but if you’re not tracking these, you don’t know if you’ve been made whole. Some sellers are owed thousands in reimbursements they never claimed because they weren’t watching. These adjustments also affect your inventory records and cost of goods sold calculations.
Sales tax nexus trips up almost every growing Amazon seller. When Amazon stores your inventory in their warehouses across multiple states, you may have sales tax obligations in those states. FBA sellers often have nexus in 20 or more states without realizing it. Ignoring this creates liability that doesn’t go away and gets more expensive the longer you wait to address it. Sales tax compliance for multi-state sellers requires proper registration and filing in each state where you have nexus.
Not tracking cost of goods sold by product makes it impossible to know which items are actually profitable. A product with strong sales might be losing money once you factor in landed costs, Amazon fees, returns, and advertising spend. Without product-level COGS tracking, you can’t make informed decisions about what to stock, what to discontinue, and where to focus your efforts.
Waiting until tax time to organize books is expensive. Amazon generates thousands of transactions annually. Reconstructing a year of settlements, reconciling inventory, and figuring out fees after the fact takes far longer than maintaining books monthly. Andover, MA advisory services for e-commerce businesses typically include ongoing reconciliation specifically because catch-up work costs more and produces less accurate results than staying current throughout the year.
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More Questions
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