2024 Update - How to do your Amazon Bookkeeping in QuickBooks Online without an App or Integration

[@susanbendinelli1625]

You are awesome! I've put more hours than I care to admit into trying to figure this out on my own. You are so generous and helpful.

[@SmallBusinessSarah]

Glad you found it helpful!

[@shd484]

Thank you for the great videos, Sarah! It really helps me alot!!! I do have 2 questions both related to taxes, 1) I am Canada, and on the monthly report, there is always a credit balance, so I need to create a new chart of account "Tax Payable" to record it, right? 2) what about the Amazon Sellers Fee taxes (the tax Amazon charges for providing services to sellers), how to bookkeep it? Sincerely!

[@RebeccaIshum]

This was such a great step-by-step video! Thank you for taking the time to be so specific with the exact steps on how to do this. I found the old version through a google search, saw your comment to hop over to this updated video, and quickly subscribed because your help is invaluable! Many, many thanks!

[@SmallBusinessSarah]

So glad it was helpful and that you found the new video!

[@alejandrejr.budomo3432]

This is great tutorial. May I ask what are the accounting entries if on the ''transfers'' section there is a ''transfer to bank account (debit) of -20'' and also a ''charge to credit card and other debt recovery of 50 (credit side)''? Thank you.

[@DenisiaZambrano]

I got stuck here too. Was going to let quickbook put the number in to get the journal entry balanced!

[@SmallBusinessSarah]

I think the video at 11:11 may help you a bit there. Those items in the transfer section relate to how Amazon deposited to your bank account or charged your credit card. So when you see those transactions in your bank or credit card feed, you should also categorize them to Amazon Holding. They shouldn't effect your journal entry. However, if you have an Amazon loan in the transfer section, they may have an impact on your entry.

[@wajahatrana439]

So we have no opening balance as we are cleaning the books, starting jan 24 . Our income minus expenses is less than the transfers making our receivable in negative? Why is that? Is it due to lack of opening? Or some other reason. No 2 do we need to make any loan entries in journal entry if it is not showing in bank feed?

[@SmallBusinessSarah]

The balance to Amazon Holding can fall in either the debit or credit column. Often if expenses are greater than income Amazon will charge the bank or credit card to get things back to zero and out of the negatives. If that happens, it will be reflected in the left lower box. That transaction when it hits the bank feed should also be categorized to Amazon Holding.

[@ToriA-i7mA]

Hi Sarah, thanks for the thorough explanation. How does this work with the QBO Amazon connector? Which of the steps you show will apply? There's no additional cost for one marketplace connector with QBO so I'm guessing a lot of us are using the connector.

[@SmallBusinessSarah]

I don't use the QBO Amazon Connector. Often those integrations are missing key parts, or don't present the information in the Profit & Loss report that allow for easy tie out to the 1099 at year-end. So for Amazon, I skip any integrations, and just use the method described here.

[@GigeeterJeeter]

Hi Sarah, the 2 payments we received from Amazon $1708.38 + $2095.20 that we posted in the beginning that are showing in the Payment column in the Amazon Holding account (kinda confusing since they are really deposits not payments), how do I transfer them to my regular checking account so I can use that money to pay bills? If I transfer them out of the Holding, the BS balance will be off since they are part of the total calculation and I won’t know how much Amazon is actually holding back from me.

[@SmallBusinessSarah]

There isn't a transfer that needs to be made. The money is already in your checking account. Each transaction has two sides. For example, let's say interest income is deposited into your checking. The money stays in checking, but we would categorize it to Interest Income. With Amazon Holding, the money is there in checking and it stays there, but we are just categorizing it to Amazon Holding, and then using the JE to break out the revenue and expense portions. Complete your monthly journal entry, and look in your check register, maybe that will help you understand what is going on.

[@GigeeterJeeter]

@@SmallBusinessSarah This is very confusing. Amazon Holding is money Amazon is holding back from us, hence it is NOT in our checking account. Is your Amazon Holding account holding both the money Amazon has released to us and money Amazon is still holding?

[@96hamoud]

This was very helpful, but may I ask how inventory will be adjusted with sales going as one line per month. Thanks

[@SmallBusinessSarah]

I don't adjust inventory in QuickBooks. I keep things on the Cash Basis. So inventory purchased is categorized directly to COGS.

[@JamieWardHD]

In the comments section of your first video on this subject, you mention that most small businesses (like mine) are on a cash basis of accounting, which does not need to track inventory. Having just setup QuickBooks Online, I noticed that my account defaulted to accrual accounting. Since I’ve just started with QBO, is it safe to go ahead and change that to cash without worry of messing much up? Regarding inventory, like you said, there’s no need to track inventory through out the year with each sale. But I do need to come up with an inventory valuation at the end of the year for tax reasons. I just did that on 12/31/2023 and came up with a number. I made a journal entry with that value as a debit to account Inventory dated 12/31/2023. On line 2 I made the account Opening balance equity. First, did I do that correctly? Second, assuming I have to do the same type of thing at the end of this year, what would that entry look like? I don’t know bookkeeping, but it would seem to me that the next inventory entry would be made differently.

[@SmallBusinessSarah]

It is fine to change the QB default from Accrual to Cash, nothing will be messed up. You don't necessarily have to do an inventory count for tax purposes at year-end. You used to, but the tax laws changed slightly. They are worded in a very confusing way. I would ask your tax preparer if they still feel the need for an inventory value at year-end or not. If you decide to add an inventory balance at year-end, the entry would be DR Inventory CR COGS. This is assuming you were categorizing inventory purchases to COGS throughout the year as I suggest. Then if you make an adjustment at the end of this year, how you make the entry will depend on if you need inventory to go up or down. If you need it to go up, the entry will be the same. If you need it to go down, you will make COGS the Debit and Inventory Asset the Credit. Hope that helps!

[@sprucerose101]

I really appreciate your work here. I am trying to replicate this in Wave accounting, and i am unsure if this will work. When I change the amazon deposit acount to the Amazon Holding, it still needs to be categorized, and I am unsure what I shoud categorize the deposit if it is not correct to categorize as amazon sales. Any input would be appreciated. Thank you very much.

[@SmallBusinessSarah]

I really don't have experience with Wave, so I'm not sure. If it doesn't work the way I describe, maybe the following could be a workaround: You could categorize all Amazon deposits to Amazon Sales, then adjust the sales figure up or down in the journal entry as required to get it where it needs to be, and then the difference in the journal entry would still go to Amazon Holding. It's not quite as clean and easy, but it could work.

[@katesyzdek678]

Thanks for this! When I joined, my client was handling accounting this way, but they have an AMZ Mexico account that closed years ago, yet the A/R was never fully settled. I also want to review the CAD and USA AMZ outstanding balances and ensure the A/R or 'holding account' is accurate up to date. Do you have any advice on how to address these issues? I know amazon doesn't have a report to ensure the outstanding amount by any specific date but do you have a way of tracking this personally?

[@SmallBusinessSarah]

With the AMZ Mexico issue I think you will just need to decide whether to post the adjustment in the prior year, or post an adjustment this year to remove the balance. With CAD and USA Amazon does have a report every two weeks (I forget what they call it) with a balance, it's just that the balance rarely falls at month-end, so you could find that report and go back in time until you find an end date on a month-end date. I will tell you, that I have had several clients stop selling on Amazon, and after everything settles out, Amazon Holding is at zero as it should be. There can of course be minor errors over the months, but I have seen this play out to completion many times with everything balancing as it should.

[@maryannortega7894]

Hi Sarah! Thank you so much for the valuable videos. I have a question: you mentioned that money received from Amazon every 14 days should be tagged as "Amazon Holding". In the P&L statement, where can I find that? I apologize for being new to this and I am trying to learn bookkeeping with QuickBooks. Thank you!

[@SmallBusinessSarah]

Amazon Holding is a Balance Sheet account, not a P&L account. The purpose of Amazon Holding, is just that, to hold the deposits until we split them out amongst their income and fee components. It's the monthly journal entry that puts the right values of the P&L.

[@scannerbrand3006]

This was so helpful. Very easy to follow. I am sharing this with some people in my group. Thank you!

[@SmallBusinessSarah]

Great, thanks!

[@LeveragedAlpha]

Hi Sarah, do you have any videos on how to get started with Quickbooks for Amazon? Feeling a bit lost, and interested in learning how to setup a QuickBooks account etc.

[@SmallBusinessSarah]

This Bookkeeping for Etsy Sellers Playlist (kzbin.info/aero/PL_76A5UKfKQ9wCfTpiHEKPa4-pLcFvieZ) will walk you through setting up QB from the very beginning. Then you can skip the Etsy specific videos and pull from this Amazon Playlist to answer your Amazon specific questions (kzbin.info/aero/PL_76A5UKfKQ__xOimoYrUMoBSu74r65eS)

[@AnneEvans-t7h]

Hi Sarah, your videos have helped me so much! I'm having trouble recording our Amazon Loan, I see the activity in the Transfers section. Should I separate the initial loan and payments in a separate Amazon Loan account on the Balance Sheet? Or should I just put everything to Amazon Holding? Thanks!

[@SmallBusinessSarah]

Yes, you should separate out the loan into a separate account on the Balance Sheet.

[@WestCoastDIYMama]

Watching your videos on repeat! I was just wondering when you have a negative balance on Amazon and it was taken from a personal credit card does that amount owing get categorized as Credit Card (Payable to Self) at 11:11 in the video you say whether it's Transfer to Bank Account balance (positive number) or if it's Charges to credit card and other debt recovery (negative number) whichever amount should be categorized to Amazon holding. To summmarize would I add the negative fund to the Amazon Holding Account and then categorize it to the Account (Credit Card Payable to Self)? Please let me know if I'm on the right track. Hope I articulated this correctly so it's not confusing. Thanks always for your knowledge!

[@SmallBusinessSarah]

If you did set up a Payable to Yourself account, and you had uploaded a CSV file of transactions to categorize, then when you record that transaction the other side would be Amazon Holding. OR if you are using a credit card Payable to Yourself account, you could use +New, Expense. The account the payment is coming from would be the "Credit card", and the account to categorize the transaction to would be Amazon Holding.

[@WestCoastDIYMama]

@@SmallBusinessSarah perfect! Thanks so much :)

[@CouragetoCreate-qg5sg]

Thank you for this video! At this point Amazon hasn't sent me a payment yet. Our selling fees and advertising expenses exceed our sales. So just to clarify... when Amazon charges my credit card for that credit card charge transaction in QB the Account would be the credit card, and the category would be Amazon Holding?

[@SmallBusinessSarah]

Yes, do the journal entry as usual, even if your fees exceed your revenue. With a negative balance like that, Amazon is most likely going to charge you to get you back up to zero. Should be indicated in the lower left transfers section. That charge should also be categorized to Amazon Holding. Take a look at your Amazon Holding register when you are all done to see if it makes sense.

[@k15prince]

Hi Sarah, the video is great and I have learned a lot. I also have a question: in case in your Journal Entry, Expense > Income, your amazon holding value will be in the Credit column so in Bank register it will appear in the Deposit column as a Negative value, is it ? In case AMz charge my credit card an Amount for that loss, that amount will be categorized as Amazon holding in the Payment column in Bank Register (similar to the AMZ payout), is it?

[@SmallBusinessSarah]

Yes, you've got it

[@selimduman1751]

Hi Sarah, thank you for this amazing content!! I have one question. Do we need to adjust amazon holdings at very beginning? Because our unavailable balance doesn't match to the amount at amazon statement?

[@SmallBusinessSarah]

You may need to adjust your beginning Amazon Holding balance if you were previously selling on Amazon, but you only recently set-up bookkeeping. However, it can be difficult to pinpoint what that balance should be at any given point in time, and you may need to make an estimate.

[@AngelaBrown-z1z]

What can you do when your monthly statements do not match the monthly break out chart on your 1099? I have downloaded the monthly summaries to include invoiced and standards orders. I also did just standard orders and that one does not match the 1099 either.

[@SmallBusinessSarah]

This video may help: kzbin.info/www/bejne/ZovIaaCaqqh3fs0 If your differences are small, I would just post a small journal entry to make them agree.

[@ricardolozanocolin7380]

Thank you for this video, It's great. Can QBO connect multiples accounts of amazon seller?

[@SmallBusinessSarah]

Yes, you could add multiple amazon accounts. Just create separate income and expense accounts for each.

[@lkrimer0123]

Amazing video, thanks a lot! Now how can I record cost of goods sold, reduce inventory etc? )

[@SmallBusinessSarah]

I recommend using the Cash method of accounting and categorizing straight to COGS. kzbin.info/www/bejne/gJvFh5-XapVjoJY

[@lkrimer0123]

Thank you, will watch. But I use accrual method... @@SmallBusinessSarah

[@iyianamines]

Thank you, I noticed while my income and expenses match Amazon seller report, the holding amount does not. Is there something that can be done to trouble shoot this?

[@SmallBusinessSarah]

There is no report from Amazon that will show you how much money you have sitting at Amazon at month end (the balance in the holding account). I wish there was! So there is nothing to tie to unfortunately.

[@WarehouseHinfo]

Great video Thanks! Quick question. You said not to worry about taxes, but Amazon includes the taxes they collect on the 1099 as part of their gross sales calculation. They explain this on page 2 of the 1099. In other words, they report it to the feds as income! I've seen others say that they classify these as a Schedule C expense on their tax return to offset the fact it was part of the 1099. That's all good, but the issue is my Quickbooks total Amazon sales (including shipping credits, gift wrap credits, and promo fees) which is slightly lower than my Schedule C is showing. The difference is clearly with the Tax not being reported anywhere in Quickbooks. Thoughts?

[@SmallBusinessSarah]

You will have to report the full 1099 amount on your taxes, but I agree, you then take the sales tax as a deduction on the Schedule C. You certainly could add a sales tax income account and a related sales tax expense account to your journal entry and bookkeeping if you would like to. I just don't prefer to handle it that way as the sales tax isn't technically income to you. In the accounting world, sales tax is never ever income! It is frustrating because what is included on the 1099 varies between platforms. For example, Amazon includes the sales tax, but Etsy does not. So that's why I stick with a more standard accounting approach to me bookkeeping, which means that sales tax is not recorded as income. But like I said, feel free to add the in and the out to your journal entry if that is what you prefer.

[@WarehouseHinfo]

@@SmallBusinessSarah Thank you! I really appreciate the fast response. The joys of Amazon selling. 🙂

[@Simon6713]

I've been using A2X for Amazon and Ebay since 2020. I've been trying to cut expenses, but learning how to do this manually is duanting and I'm not sure it's worth the $80/mo I will save to do it myself. One of my biggest questions is how I would redo my chart of accounts. Is this something you could help me with? Thanks!

[@SmallBusinessSarah]

Thanks for the question and for reaching out via my bookkeeping agency, Evergold Accounting. To answer your question for you and others, I do recommend keeping A2X for eBay. For Amazon, once you transition away from A2X, and you learn the ropes, the time it should take you each month should be minimal. The transition definitely could be tricky. I would just add all the additional Amazon accounts you need to the Chart of Accounts. You can go back later and make accounts you don't need any longer inactive. Then, I would pick a firm cut off date, probably a month end. Some of the A2X entries will overlap the months, so you will need to then adjust your journal entry the next month for any of that overlap. Then after that you should be good!

[@Simon6713]

@@SmallBusinessSarah I was thinking of going back to 1/1/24.

[@JM_online]

How do you account for the amount of inventory you send to Amazon?

[@SmallBusinessSarah]

I record all purchases of inventory directly to Cost of Goods Sold.

[@j-gq5ty]

Hello Sarah, thanks for the video. I wonder is it a better practice to do journal entry for each product sale rather than just the big report in the year end? but in each product sold there are alot of transaction involve, will you do a tutorial video for this? thank you

[@SmallBusinessSarah]

Technically you could do a JE for each product sold, but that would only work when your shop sales are small. As you grow you may have hundreds or thousands of sales each month, it just wouldn't be practical to enter in the information for each sale manually. That's why I use the monthly journal entry method to make the bookkeeping accurate, yet fast.

[@j-gq5ty]

@@SmallBusinessSarah thanks Sarah, it make sense, i been catching up my 2023 accounts and only january 1 to 15 took me days, however i am able to record every order ID but this information seems not useful 😭 as you said probably the monthly entries is much more viable. i split each product into their own sales account to help me undertstand which product is performing, do you think this way is a good practice? also do you mind giving me some advice or hint how do I journal entry returns? i never able to get it balance, thanks in advance

[@SmallBusinessSarah]

I would use other reports in Amazon to see how individual products are selling, rather than try to do that in QB. But that's my personal opinion. The journal entry method covers how to record refunds that show up in the summary.

[@j-gq5ty]

@@SmallBusinessSarah thanks Sarah, I just completed my books, i separated each product as own inventory in assets, same for sales and returns, so i was able to see how each product perform. thanks for all your advice

[@rbaker3167]

Hey Sarah, you have been a great help with your videos! I have a question on the "Shipping Credit Refunds" column. It is listed as a positive number were as my other debits are a negative number so when I put the shipping credit refund number in, it makes it not match the bottom number for the debits column. Does that matter or should I change it to a negative number to make it match? Hopefully that makes sense.

[@SmallBusinessSarah]

Hmmm. That is unusual! I doubt QB will let you enter it as a negative number. I would probably put it in the credit column, as that would be the correct bookkeeping treatment. However, I realize that means your numbers won't quite match with the Amazon summary columns. Fortunately, the shipping credit refunds tend to be small.

[@rbaker3167]

@@SmallBusinessSarah Well, QB does actually let me put it in as a negative number and so it matches up at the bottom. Will this throw anything off?

[@SmallBusinessSarah]

Oh, I'm surprised. The negative number should serve the same function as putting it in the Credit column behind the scenes, except that now your columns should match. So no, I don't think doing it that way will throw anything off, should be fine.

[@rbaker3167]

@@SmallBusinessSarah thank you for your help!

[@Cathyv6]

Thanks for another great video! Any advice on how to estimate a starting balance in Amazon holding? And what account to offset when making the adjustment? I'm starting fresh in 2024 and want it to be as accurate as possible. I also have another question about a shipping refund. I received a check for a damaged item in transit from the post office and I'm not sure if that should go in the holding account? Or is that just a shipping expense credit? Thank you!

[@SmallBusinessSarah]

In Amazon Seller Central there is that bi-weekly graph thing with balance information, and sometimes that will line up close to a year or month end. Or you could just go off of the previous months sales for a ballpark estimate. It can be tough though to estimate. You can put the other side of the entry to Opening Balance Equity. I would put the post office check against shipping expense, or you could give it it's own line item in Other Income. Either way.

[@TheSpud5000]

@@SmallBusinessSarah Thank you for the video it is very helpful. Im new to quickbooks and still learning. The way to find the starting balance is to run a report the same as in the video. but select the start date when you started amazon and the finish date the day before you want to know the account balance. Then subtract the expenses and tranfers from the income. This will give you the amount amazon is holding at that date.

[@diegool8400]

Hi @sarah thanks for this i am doing like the video but dont know why i have in negative my balance in amazon holding at end of month

[@SmallBusinessSarah]

You will have a negative balance in Amazon Holding until you post your journal entry.

[@jannatubaid6948]

Sarah, you're a life saver

[@LeveragedAlpha]

yes i agree with this

[@ArneddaMetzger]

I need a video that shows how to reconcile the amazon clearing account. Do you do a video for that.

[@SmallBusinessSarah]

Unfortunately Amazon doesn't have a report (or I haven't found one) that shows what the balance a seller has with Amazon at any given time. If we had that, we could reconcile QB to what Amazon says. I tend to just look at the Amazon holding register for reasonableness.

[@halalaffirmations]

If all Amazon income goes under the account 'Amazon holding' when do we put it under "Amazon USA" and "Amazon Canada" Income?

[@SmallBusinessSarah]

That's during the journal entry step covered later in the video. Here is a supplemental video about the other selling channels like Canada and Mexico, but you will need to understand all the basics covered in this main video first. kzbin.info/www/bejne/j2HNlaidgJuno9E

[@rhomoo4490]

New sub, really great video

[@SmallBusinessSarah]

Thanks for the sub!

[@igarcia7412]

Thank you!!

[@SmallBusinessSarah]

You're welcome!

[@GigeeterJeeter]

No inventory accounting? This is incomplete without inventory accountability. Inventory affects all financial statements. The BS via inventory valuation. The P&L via COGS expense and Cash Flow via how much money is tied up in inventory.

[@SmallBusinessSarah]

My advice is for small business owners. The IRS allows small business owners to not report inventory, and keep their books on the cash basis of accounting. If you are a larger business, then of course, track inventory! My channel just isn't for you then! My advice is geared towards the small business owner that needs easy and efficient bookkeeping that is still accurate.

[@kaycali4912]

Why are we making Amazon's income a bank and naming it "Amazon holding"?

[@SmallBusinessSarah]

Amazon Holding is literally that, holding account we use until we split the payouts in their gross income and expense portions. We could split each and every payout into their revenue and expense components, but this easier and works with the reports available in Amazon.

[@kaycali4912]

@@SmallBusinessSarah Okay. If I have Amazon affiliate would that be another "bank"?

[@SmallBusinessSarah]

No. For Amazon affiliate income we don't have to go through all of these steps. The Amazon affiliate income that is deposited isn't less fees, so you can just categorize that income straight to an Amazon Affiliate Income account, and you are good to go!

[@kaycali4912]

@@SmallBusinessSarah Okay, so we put Amazon affiliate income under an "income account" but what bank do we put it under? The debit card?