Amazon Seller Bookkeeping: Why Your Deposits Are Not Your Sales

The first time a new Amazon seller looks at their books, they usually make the same mistake. They treat the deposit Amazon sends every two weeks as their revenue. It is not. By the time that money hits your bank, Amazon has already pulled out its fees, your refunds, and your ad spend. The deposit is what is left, not what you sold. Getting this one thing right is what separates books you can trust from books that quietly lie to you.

Your deposit is a net number

Amazon settles your account on a schedule, usually every two weeks, and pays you the net of everything that happened in that period. A seller who moved 10,000 dollars of product might see 6,500 dollars land in the bank. The missing 3,500 did not vanish. It went to fees and costs that are all deductible, but only if you record them. Book just the deposit and you understate your sales and lose every one of those write-offs.

The fix is to gross up. You record the full sales figure as income, then record each cost Amazon took out as its own expense. The settlement report is where those details live.

The fees coming out of your sales

Amazon has a lot of ways to charge you. The common ones are:

• Referral fees, a cut of each sale that usually runs around 8 to 15 percent depending on the category
• FBA fulfillment fees, the per-unit cost to pick, pack, and ship if Amazon handles it
• Storage fees, charged monthly and higher around the holidays
• Advertising, the pay-per-click spend that comes straight off your payout
• Refunds and reimbursements, which move in both directions

Each of these is a normal business expense. The point of good bookkeeping is to capture them in their own buckets so you can see what your marketplace really costs you, not just the lump that got netted out.

Inventory is an asset until it sells

Here is the part that trips up product sellers. The money you spend on inventory is not an expense the day you buy it. It is an asset sitting on your books, and it becomes an expense, your cost of goods sold, only when the item actually sells. Units sitting in an Amazon warehouse are still your inventory even though you cannot see them. Treating a big inventory purchase as an instant deduction can badly distort your profit for the year.

Sales tax and the marketplace rules

Good news on this one. Marketplace facilitator laws now require Amazon to collect and remit sales tax on your behalf in every state that has a sales tax. For sales that go through Amazon, you generally are not the one sending that tax to the states. That does not mean you can ignore sales tax entirely. If you sell on other channels or have nexus in a state, you may still have registration and filing duties, so it is worth confirming your situation with a tax pro.

Making sense of the 1099-K

If you cross the threshold, Amazon files a 1099-K reporting your gross sales. That number will look huge compared to your deposits, because it is the full sales figure before any fees came out. This is exactly why you gross up your books. When you report the gross and then deduct the fees, your return matches the 1099-K and your taxable profit reflects what you actually earned. We go deeper on this in our guide to the 1099-K for online sellers.

How Vuuv helps

Vuuv is built for sellers who are tired of guessing. The Amazon side of Vuuv connects your account and pulls in your sales and fees so the gross-up happens for you instead of by hand in a spreadsheet. You see real profit per period, your inventory and fees stay in the right places, and tax time stops being a scramble to reverse-engineer your own deposits.

This article is general information, not tax advice. Tax rules change and every situation is different. Confirm the details against current IRS guidance or talk to a qualified tax professional before you file.