Amazon Bookkeeping Tutorial: Record your Other Expenses and Inventory Purchases

[@frankf8277]

Great set of videos for amazon you put together I have been watching them all and trying to learn it. I have two questions if you don't mind answering. 1: I sell on amazon but recently used my business card that's connected to QB for my amazon account to buy some product that I was going to sell either on eBay, offer up (in person), or like Mercari. The money I get I make from those sells I was going to transfer it from my personal checking to my amzn business account, so would that deposit go under amazon holding or another category since the deposit is coming from COGS from an outside source other than amzn.? 2: last question is I made a payment on the same business card using my personal checking account, would that transaction be owners contribution or record it as a credit card payment?

[@SmallBusinessSarah]

Question 1: If you transfer your proceeds into business checking, categorize those to an income account of your choice; Sales, eBay sales, Mercari sales, whatever you want to call it. 2 - In the credit card bank feed you'll see the payment on the card from your personal account, categorize that as Owner's Investment/Contribution. It simultaneously both an Owner Investment and a credit card payment.

[@PKY2014]

Such a fantastic video! I have one question that I'm hoping you can answer.. How would I categorize discounted gift cards that I purchase to buy goods that I am selling?

[@SmallBusinessSarah]

Hmmm. I think there are two ways you can go with this. The easiest/fastest way would just be to record the purchases of the gift cards directly to COGS. As long as you eventually use those gift cards to purchase inventory, then it will all work out. Probably a better way to record them is to create an asset account of some type. I would probably set it up as a bank account type just because I like the registers for bank accounts in QB. But a prepaid expense account type, or really any asset account type would work. So once you create the account, every time you purchase a gift card, you would categorize the purchase to that account. Then every time you spent your gift card you would record an expense against that asset account, with the other side of the entry being to COGS. If you set up this gift card asset as a bank account, you could use the +New Expense feature to add in these purchases. Some other asset types you may need to use a journal entry.

[@NigerianJollof]

Your videos are extremely helpful! I was going to pay a bookkeeper to manage my accounts but with your tutorials I find that I can manage it on my own. Thank you SO very much! Question, sometimes my credit card payments are showing up as 'transfer to amex bbc' (that is the name of the account) in the category or match column. But other times they are showing up as credit card payments. Does it matter how I categorize them? Or should i update the transfer to record as payment?

[@SmallBusinessSarah]

It doesn't matter. But either way, transfer or credit card payment, you need to make sure it Matches on the other side. Otherwise, you will get duplicate results in your registers, and your balances will all be off. If you Match with the credit card payment option, the related transaction on the other side automatically disappears. If you use the Transfer option, make sure it has a green Match before you add it on the other side.

[@NigerianJollof]

@@SmallBusinessSarahThank you! How do i find the match if it is not automatically noted that there is a match?

[@SmallBusinessSarah]

There is a find match feature you can use. Or just undo and try again. Or try transfer instead of credit card payment, or vice versa. Or try the match from the other side. You should eventually get a match to be recognized!

[@baldielake3738]

Thank you so much for your time to do these valuable videos. Just a question: Is quickbook online simple start it the best for small business without employees?

[@SmallBusinessSarah]

I think so. Simple Start can handle a lot before you need to upgrade.

[@shaylachalker]

This is such a great video. Do you have a list of other expenses that you share? It is hard to know how to categories things somethings as you mentioned that the schedule c is difficult sometimes.

[@SmallBusinessSarah]

The Schedule C was designed ages ago for traditional businesses. Many of the categories don't apply to online business owners, so lots of bookkeeping line items get mushed together into just a couple of categories on the Schedule C. Create the expense categories in your bookkeeping that will help you understand how you are spending your money. Don't create the categories to match the Schedule C. Bookkeeping is a tool to help you understand your business, so use expense account names that make sense to you. For example if you don't like the term Office Supplies, you prefer Home Office Tools (or whatever!) use what makes sense to you! The name doesn't matter.

[@melanierosepepito4146]

Great Video. How about credit card refund because the item paid to the supplier is not available. How to categorized and what chart of account to use? Also late payment charges and reversal. How to account?

[@SmallBusinessSarah]

Whatever expense account you used for the original purchase, categorize the refund to the same expense account. Late payment fees on the credit card you can categorize to Bank Charges & Fees. I'm not sure what type of reversal you're referring to. If you mean like a fraudulent charge that was then removed I would choose the Bank Charges & Fees account, and just put both the fraudulent charge and the reversal to that same expense account so that they are a wash.

[@lovelaughandgathertogether]

Thank you for this. I am interested in how to put in a refund for product you purchased to resell. For instance I bought from ThredUp and had to return an item for being damaged. Would we create an income account for that or reduce the COGS GL?

[@SmallBusinessSarah]

You would reduce the COGS if that was the original expense account you used. So whatever expense account was used initially, when you get the refund, post the refund to the same account.

[@lovelaughandgathertogether]

Thank you@@SmallBusinessSarah

[@avelindis9474]

I calculate cash back from sites like Rakuten into my buy cost so I also categorize that as cogs

[@baldielake3738]

I was looking for a software for my Amazon book business with the envelope type/ budget software that shows how much you spend and have in each envelopes plus highlight the tax year and mileage?

[@SmallBusinessSarah]

You could use Relay for your bank account to get the envelope type system, www.SmallBusinessSarah.com/relay. And then link all your bank accounts to QBO. QBO does have good reporting and the app allows you to track business mileage.

[@k15prince]

Hi Sarah, for Amz seller, you categorize Tapes and Boxes and Wrap Paper and Thermal labels into Expense or COS?

[@SmallBusinessSarah]

I would probably choose an expense account like Shipping Supplies for those items.

[@yongjieni1460]

I am a new fba seller from mid 2023. I use QB for book keeping but i didnt do in this monthly way. As I dont have that many transactions. Can I download the whole year payment summary to do one single Jounral Entry, and follow the steps to conclude my books for 2023?

[@SmallBusinessSarah]

Yes! That would work just fine!

[@millennialmoneymom]

great video!

[@SmallBusinessSarah]

Thanks!

[@judegomes5179]

suppose my sales are $100 in January and my purchase inventory amount is $150. if i show inventory purchase as cost of goods sold then the loss will be $50 in the profit and loss report. But it should not be loss. how do you handle this situation?

[@cayminellspermann7926]

You can record the purchased inventory amount as Inventory Assets. Then when you sell, credit the $ amount Inventory Assets and debit the $ cost of goods sold. So $150 --> Inventory Assets Then at at date of sale Credit $100 --> Inventory Assets Debit $100 --> COGS Final Balance Sheet $50 in Inventory Assets $100 in COGS $100 in Sales

[@SmallBusinessSarah]

You are absolutely right that with the cash basis of accounting, at any point in time, the results may appear skewed. However, over the course of several months, the results even out. The cash basis is the easiest/quickest way to do your bookkeeping, and it's intended for smaller sellers. Often people are using an outside program to track their inventory on hand, and a monthly adjustment can be made between inventory asset and COGS. My point is, you don't necessarily have to move costs between inventory asset and COGS on a per transaction basis. And often, adding individual inventory items to QB is not necessary and takes a lot of administrative time. My solution may not be right for every business.