Let’s face it: many Amazon sellers, even those using QuickBooks Online, don’t create individual invoices when an order is fulfilled on Amazon. If you’re like the hundreds of thousands of third-party sellers on Amazon, chances are you lump all your sales and fees into some income and expense accounts on QuickBooks Online when Amazon pays you.
What’s worse, many sellers don’t keep up with entering those settlements into QuickBooks Online every two weeks—chances are, many sellers put data entry off for months, promising themselves that they’ll “get to it” next time.
But if all you do is lump all the income and fees, you’ll never know the real cost of doing business on Amazon. You could be losing thousands of dollars, and you’d never know. With a catalog of hundreds, if not thousands, of ASINs, it’s difficult to know the actual cost of doing business on Amazon since many sellers don’t create accurate QuickBooks Online documents.
Amazon makes knowing your true profit difficult–having to track down and itemize individual transactions like commissions, holdbacks, and discounts, can be a colossal task even for an experienced data entry clerk. That’s because there just isn’t enough time in a day to manually process hundreds of orders.
Besides, no one wants to manually enter invoices into QuickBooks Online eight hours a day. It’s just not feasible, especially if mistakes are made, to spend hours to reconcile and track down incorrectly entered documents.
That’s why a service like SellerZen is invaluable—automating a tedious task such as data entry can not only lead to fewer mistakes and less time spent reconciling accounts, but accurate accounting in QuickBooks Online also allows you to see your true income and expenses. Knowing how much you earn for each product, as well as how much in fees you’re spending, can help you make important decisions.
We’ll show you how we create an accurate QuickBooks Online invoice in this article, and we’ll talk about why it’s essential that you create proper invoices.
Let’s start with how an order looks on Amazon. Below, we have the details of a sample order:
Notice the individual line items—most sellers would lump all those Amazon fees into one account, but this isn’t necessarily accurate. Why does this matter? Some costs can’t be avoided, like referral fees or FBA Pick & Pack fees, but other expenses can be managed. For instance, knowing how much you spend on the FBA Pick & Pack Fee allows you to determine whether or not you should continue using FBA.
To accurately create QuickBooks Online invoices, you’ll need to have each of those Amazon invoice line items mapped to a service under Products and Services. Those services should be assigned to the correct income or expense account in your chart of accounts.
You can create services under the Sales link on the left navigation menu when you log into QuickBooks Online. Then click on Products and Services, New, and select Service.
You should see a window that prompts for the service name. Each line item on an Amazon invoice should have a corresponding service in your QuickBooks Online services.
That means you should have FBA Pick & Pack Fees, Referral Fees, and discounts and shipping. These fees should be linked to the appropriate accounts in your QuickBooks Online Chart of Accounts. You can select either an expense or an income account under the “Income account” field. Each time you create an invoice using those services, the accounts will be properly debited or credited.
Here’s how an accurate QuickBooks Online invoice would look with the individual income and fees mapped properly. Notice how each sales line item (income and expenses) appear as they do on the Amazon invoice.
If you map the individual income and expense transactions properly, you can then use QuickBooks Online’s host of tools to run profitability reports. Take a look at a sample of profit and loss report using SellerZen’s data import service.
By accurately creating your invoices and mapping the services and accounts, you’ll have detailed insight into your finances.
It may not come as a surprise for some sellers to learn that the fees associated with FBA can be more than expected. While Amazon referral fees are 15% for many categories, other associated costs can quickly increase the total you pay to sell on Amazon. In our example above, total expenses add up to roughly 25%, almost a quarter of the gross sales for the period!
Ultimately, by lumping all of your fees into one account, you’ll never know exactly how much you’re paying for a particular service. You could be saving thousands of dollars a month just by knowing where your money is going.
Don’t forget to receive payment to close the invoice once you ship on Amazon! If you’re using FBA, then you can close the invoice immediately since FBA ships only after payment.
Using SellerZen, you can automate this entire process so that you’ll never have to create QuickBooks documents for Amazon again. You’ll have your expenses itemized on QuickBooks Online. From there, you can view reports and make informed business decisions. Automation doesn’t have to stop at just data entry. There are plenty of processes and tasks you can automate for your Amazon business.
Want step-by-step guides to accounting in QuickBooks Online for your Amazon business? Check out our series of articles:
- Amazon to QuickBooks Online Accounting: Configuring your new Company
- Amazon to QuickBooks Online Accounting: Configuring Sales Tax and Marketplace Facilitator Sales Tax
- Amazon to QuickBooks Online Accounting: Using Purchase Orders to Receive Inventory
- Amazon to QuickBooks Online Accounting: Creating Proper Invoices
- Amazon to QuickBooks Online Accounting: Handling Refunds and Returns
- Amazon to QuickBooks Online Accounting: Recording Reimbursements