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A Comprehensive Guide to Amazon Accounting in 2025

Selling on Amazon has evolved dramatically, and so have the intricacies of accounting for your online business.
Whether you’re a seasoned seller or just starting out, navigating the financial landscape can feel daunting, especially given the ever-changing regulations and complex tax laws.
But fear not! doola Bookkeeping empowers your business with the knowledge that will keep you ahead of the curve.
From mastering inventory management and sales tax compliance to leveraging advanced tools that streamline your bookkeeping process, we’ve got you covered.
In this comprehensive guide to Amazon accounting, we’ll break down everything you need to know about Amazon accounting—tailored specifically for today’s dynamic marketplace.
Dive in as we unravel the essential strategies and best practices every Amazon seller must embrace to thrive financially!
What Is Amazon Accounting?
While you don’t require a specific accounting process for your Amazon business, there are some important differences between ecommerce accounting and standard accounting.
In simpler terms, Amazon accounting involves tracking all sales, expenses, returns, fees, taxes, and other financial activities related to your business on Amazon.
For this, you must choose between cash-basis accounting and accrual accounting. The first approach records transactions as and when money enters or leaves a bank account.
On the other hand, the accrual method records transactions as and when they happen, as opposed to when money actually lands in the account.
In summary, Amazon accounting involves keeping accurate records of all financial transactions and activities related to selling products on the platform. This includes monitoring sales performance, tracking inventory and COGS, managing expenses, and ensuring compliance with tax regulations.
By maintaining proper and organized accounting practices on Amazon, sellers can run successful businesses and avoid any future legal or financial issues.
Accounting Challenges Amazon Sellers Face in 2025
With its large-scale and ever-changing policies, selling on Amazon can present several accounting challenges for sellers.
⚠️ Inventory
One of the most significant challenges that Amazon sellers will face in 2025 is accurately tracking inventory.
Many sellers opt to sell through the Amazon FBA (Fulfillment by Amazon) program, which means that their inventory is stored in Amazon’s warehouses.
This means you have less control over their inventory and may face difficulties in keeping track of stock levels.
While Amazon provides tools to help monitor inventory levels, these tools may not always be sufficient for some sellers’ needs.
That’s why we recommend using tools specifically designed for ecommerce businesses or working with an accountant who can ensure accurate recording and tracking of inventory levels.
⚠️ Sales Tax
One of the most significant challenges that Amazon sellers face is navigating sales tax compliance across different states and jurisdictions.
Today, over 40 states have economic nexus laws for all online retailers. Sellers can calculate their tax obligations based on the number of sales or transactions they process in each state.
While Amazon automatically collects and remits taxes, sellers are at risk of making accounting problems related to sales tax, especially during returns and refunds.
This problem becomes even more complicated for multichannel sellers who are selling on more than an Amazon store.
Additionally, Amazon’s FBA program adds another layer of complexity, as inventory may be stored in multiple warehouses in different states.
To address this challenge, Amazon sellers must seek advice from an accountant or use automated software solutions to streamline the process of managing sales tax compliance.
⚠️ Refunds
While it is a simple process, managing refunds on Amazon can be challenging for sellers.
A simple mistake or discrepancy in refund calculations can lead to financial losses or audits from tax authorities.
Another challenge related to refunds is sales tax compliance. Typically, when an item is sold, the company collects sales tax from the buyer and remits it directly to state governments.
However, when a product is returned and refunded by the seller, sales tax regulations dictate that they must issue a credit memo or invoice reflecting any taxes collected from buyers.
This process can be streamlined by having dedicated bookkeepers oversee these transactions or setting up automated bookkeeping systems.
⚠️ Supplier Management
Effective supplier management is crucial for any business, and Amazon sellers are no exception.
Sellers may face challenges in managing payments to suppliers, tracking expenses related to purchases, and reconciling with supplier invoices.
To overcome this challenge, detailed records of all supplier transactions and a streamlined process for recording and categorizing expenses are essential.
Working with an accountant or using accounting software can also help track supplier payments and streamline the expense management process.
⚠️ Multi-Currency Transactions
With a global customer base, many Amazon marketplace sales occur in foreign currencies, creating additional accounting complexities.
Sellers may face challenges in accurately recording and tracking foreign currency transactions, managing exchange rate fluctuations, and reconciling bank accounts.
Using accounting software that can handle multiple currencies or working with an accountant who has experience in international transactions can help navigate this challenge effectively.
Essential Accounting Tools for Amazon Sellers
There are a variety of essential tools and resources available to help you manage your Amazon business’s accounting efficiently.
Having these essential accounting tools at your disposal will enable you to manage your Amazon business finances efficiently and clearly understand its profitability.
Choose the right tools for your business’s specific needs, and don’t hesitate to seek professional help when needed for optimal results.
1. Online Bookkeeping Software
Online bookkeeping software like doola offers a range of features, such as automatic syncing with your bank accounts, expense tracking, sales tax calculation, and profit and loss reporting.
Using online bookkeeping software allows you to monitor your financial health in real-time and simplify tasks like tax preparation.
Furthermore, many of these platforms offer integrations with other ecommerce tools specifically designed for Amazon sellers.
2. Inventory Management Software
It is crucial to have an efficient inventory management system in place to accurately track the cost of goods sold (COGS) for each product in your inventory.
This will not only help you keep track of which items are selling well but also ensure that you have enough stock on hand to meet customer demand.
These tools can also provide valuable insights into metrics such as turnover rate and slow-moving products, which can help streamline purchasing decisions.
3. Sales Tax Automation Tools
Managing sales tax can be one of the more complex areas of Amazon’s accounting due to different state regulations and jurisdictional laws.
Using a sales tax automation tool can help you avoid errors or penalties related to sales tax collection and filing with various states.
You can also use your online bookkeeping software to calculate accurate taxes based on each transaction’s location or use their automated filing features.
4. Dedicated Bookkeeping and Accounting Services
As your Amazon business grows, managing your accounting processes can become more time-consuming.
In such cases, you need to hire bookkeeping or accounting services so you can focus on other essential aspects of running your business.
doola offers dedicated accountants with ecommerce experience who can assist with financial record-keeping and provide valuable insights into your business’s financial health.
We can also help with tax planning and preparation to ensure you stay compliant and minimize tax liabilities.
Guide to Amazon Accounting in 2025
As an Amazon seller, it is crucial to have a thorough understanding of how Amazon accounting works to run your business successfully and avoid potential financial mishaps.
This guide provides all the information you need to know about Amazon accounting.
1. Tracking Sales Revenue
Tracking your revenue by recording your total income from selling your products on Amazon within a specific timeframe will help you understand how much money you make.
However, if you sell across borders and in different currencies, you need to track each marketplace separately for accounting purposes.
Amazon also deducts fees before disbursing payments, so you must account for your gross sales and Amazon fees separately.
2. Expense Tracking
As a business owner on Amazon, it is crucial to keep track of all your expenses that are necessary for running your business.
For accurate accounting, you must track all your expenses related to selling on Amazon, such as referral, FBA, storage, packing, shipping, and subscription fees, as COGS (Cost of Goods Sold).
Apart from these, you need to track supplier costs as ordinary expenses and advertising and marketing costs as marketing expenses.
Make sure you have proper documentation for each expense, as these can be deducted from your revenue when calculating profit.
3. COGS
COGS is the cost of sourcing and distributing the products you sell on Amazon within a specific period.
You can calculate COGS using the total value of your inventory + cost of additional product purchased—the total value of your inventory on hand at the end of the period.
This includes direct costs associated with the products you sell on Amazon, such as purchasing or manufacturing the goods, shipping inventory from suppliers, and your Amazon fulfillment fees.
It will also help you differentiate between gross sales and net sales, as only net sales are subject to taxation.
4. Reimbursements & Settlements
Amazon reimburses sellers for lost or damaged inventory, which you must track and record accurately in your bookkeeping process.
Likewise, a settlement is a periodic deposit made by Amazon into your bank account, which includes the net sales proceeds after deducting any fees, expenses, and refunds.
Understanding Amazon reimbursements and settlements is critical to maintaining accurate financial records for accounting purposes.
Understanding these key components of Amazon accounting will enable you to maintain accurate financial records and make better business decisions.
By effectively managing your sales, expenses, and fees associated with selling on Amazon, you can optimize your profits and continue growing your business in 2025 and beyond.
Tax Compliance Tips for Amazon Sellers in 2025
The rules and regulations surrounding taxes can be complex and ever-changing for Amazon sellers, making it crucial for them to stay informed and compliant.
Now is the time to start preparing for any new changes that may affect your tax compliance as an Amazon seller.
Here are some helpful tips to ensure you stay in compliance with tax laws while selling on Amazon:
📌 Understand Your Tax Obligations
The first step in being compliant with taxes as an Amazon seller is understanding your obligations.
This includes sales tax, income tax, and other state-specific taxes, such as nexus laws, which may vary from state to state.
📌 Keep Accurate Records
Maintaining accurate records of all your online sales transactions is crucial for proper tax compliance.
This includes keeping track of all receipts, invoices, shipping labels, and other documentation related to your Amazon sales.
📌 Deduct Eligible Business Expenses
As a business owner, you are entitled to deduct certain expenses related to running your business from your taxable income.
These can include inventory costs, shipping fees, advertising expenses, and more.
📌 Utilize Tax Software or Hire a Professional
With the constantly changing landscape of ecommerce taxation, using reputable tax software or hiring a professional may be beneficial in ensuring accuracy and efficiency in filing taxes.
📌 File Taxes On Time
File your taxes on time or seek extensions if necessary to avoid penalties. It’s also advisable not to wait until the last minute when dealing with potentially complex ecommerce taxation matters.
📌 Utilize Amazon’s Tax Tools
Amazon offers various tools and resources to assist sellers in tax compliance, such as the Sales Tax Calculation Service and Tax Document Library.
By understanding your obligations, keeping accurate records, and utilizing available resources, you can ensure that you are following the necessary regulations and avoiding any potential penalties or legal issues.
A to Z of Amazon Accounting With doola Bookkeeping
When it comes to running a successful business on Amazon, it is essential to have a streamlined and effective accounting system in place.
To help you navigate through all the complexities of Amazon accounting, we have introduced doola Bookkeeping.
With our bookkeeping software, all your transactions are automatically imported into one central dashboard. This eliminates the need for manual data entry and reduces the chances of errors.
Our software also provides real-time insights into your financials, giving you a clear overview of your profits and losses as well as cash flow.
You can easily generate reports such as income statements, balance sheets, and profit & loss statements with just a few clicks, which is crucial for making informed decisions and preparing taxes.
If you prefer having a professional handle your bookkeeping tasks, doola also offers dedicated bookkeeping services.
These experts are well-versed in Amazon accounting and can help you accurately manage your finances while providing valuable insights into improving profitability.
We take care of everything, such as reconciling bank statements, categorizing transactions, handling tax filings, and ensuring compliance.
With our expertise in Amazon accounting combined with our advanced technology solutions, you can have peace of mind knowing that everything is taken care of accurately and efficiently.
Book a demo today to take your Amazon accounting game to the next level!