Amazon FBA bookkeeping is more involved than most e-commerce models because Amazon handles fulfillment, collects fees at multiple levels, and stores your inventory in warehouses you didn’t choose. If you don’t track each piece correctly, your profit numbers will be off and tax time becomes a mess.

Start with FBA fee categorization. Amazon charges fulfillment fees, storage fees, referral fees, and sometimes long-term storage fees or removal fees. Each one needs its own line in your chart of accounts. Lumping them all into one “Amazon fees” category makes it impossible to see where your money is going. When storage fees spike during Q4 or referral fees eat into margin on a specific product line, you want to spot that immediately. Your accounting software should break these out so you can track trends month over month.

Inventory accounting is where most FBA sellers fall behind. You’re buying product, shipping it to Amazon, and Amazon is storing and shipping it for you. You need to track your cost of goods sold accurately, which means knowing your landed cost per unit (purchase price plus shipping, duties, and prep costs). California requires businesses to use accrual or cash basis consistently, and for inventory-heavy businesses the IRS generally expects you to track inventory and report COGS properly. If you’re importing products through the Port of Long Beach or LA, those freight and customs costs need to roll into your inventory valuation.

Reimbursements for lost or damaged inventory require their own tracking. Amazon loses and damages products in their warehouses more often than sellers realize. When they reimburse you, that’s not revenue from a sale. It needs to be categorized as reimbursement income or offset against inventory losses. Some sellers miss reimbursements entirely because they don’t audit their e-commerce inventory reports against what Amazon actually owes them.

Sales tax is one area where California FBA sellers catch a break on the bookkeeping side. California treats Amazon as a marketplace facilitator, meaning Amazon collects and remits sales tax on your behalf for sales made through their platform. You still need to register for a California seller’s permit and file returns, but the collection and remittance burden is on Amazon for marketplace sales. Where it gets complicated is if you also sell through your own website or other channels where you are responsible for collecting tax yourself.

Multi-state nexus is the part most FBA sellers overlook. Amazon stores your inventory in warehouses across the country. Having inventory in a state can create sales tax nexus in that state, potentially requiring you to register and file returns there. California is your home state so that’s covered, but you may have obligations in Texas, New Jersey, Pennsylvania, and anywhere else Amazon decides to stock your products. This changes as Amazon moves inventory around, so it’s not a set-it-and-forget-it situation.

Reconcile your Amazon settlement reports to your bank deposits every two weeks. Amazon doesn’t deposit the full sale price. They take out fees, refunds, and adjustments before sending you a net deposit. If you only look at bank deposits, you’re missing the full picture of gross revenue and total fees. The settlement report breaks down every transaction. Matching those reports to what actually hits your bank account is how you catch discrepancies and keep your books accurate.

Most FBA sellers in the Buena Park and greater Orange County area who come to us have been running their business for a year or more before realizing their books don’t reflect reality. The Amazon dashboard shows sales numbers, but that’s not the same as proper bookkeeping. Accurate books require tracking gross revenue, each fee category, inventory costs, reimbursements, and refunds separately. That’s what gives you real profit margins by product and lets your tax preparer, including our official tax partner, Dharia Tax & Services, Inc., file correctly.

If your books are already behind or you’ve been winging it with spreadsheets, getting them cleaned up and structured properly now saves you from bigger problems later. Our team at Sarker Accounting Services in Orange County works with Amazon sellers and understands the specific reporting Amazon generates and how to translate that into clean, useful financial records.