Amazon to QuickBooks Online Accounting: Configuring Your New Company

If you’re just starting with a new QuickBooks Online company, there are some settings you’ll need to enable before you start using our guide.

Our guide is based on a QuickBooks Online Plus subscription because it’s the only one that has inventory tracking. You’ll get the most out of the guide using SellerZen or tracking inventory if you enter documents manually. If you don’t track inventory, then you can use any subscription plan and a non-inventory item for your documents.

Already have QuickBooks Online configured properly? Go to the bottom of the page to see our series on Amazon to QuickBooks Online accounting.

Click through our guide to skip to different sections if you’re already familiar with specific settings.

Changing QuickBooks Online Company settings

Inventory tracking will also give you much better reporting on your inventory items, so you’ll know when to raise prices or clear out products.

If you sell on foreign marketplaces like Amazon MX (Mexico) or Amazon CA (Canada), you’ll need to enable Multicurrency as well.

Before we start, here are some of the settings you’ll need to change under the Gear icon > Company Settings.

You should change or enable these settings:

Company > Track classes

Company > Track locations

Sales > Track quantity and price/rate ON

Sales > Track inventory quantity on hand ON

Expenses > Use purchase orders ON

Advanced > Multicurrency (if you sell on foreign marketplaces)

We’ll go through some use cases for these options in other articles.

Continue below for a visual guide for all the setting locations.

Gear Icon options

Company options

Sales Options

Expenses options

Advanced Options

Setting up basic QuickBooks Online Default options and accounts

Most, if not all, of the basic accounts your business needs will already exist in QuickBooks Online. While you can use those, we recommend creating accounts that are specific to your marketplace. That way you can separate and track individual marketplaces instead of using default accounts for all of them.

For instance, if you sell on two Amazon marketplaces, you may want to use two different Undeposited Funds account to track payments from each.

You’ll want to create specific accounts (and later, products and services) to be able to track your business with greater detail.

Here are some of the basic accounts you should create:

Payment Methods

Adding Amazon as a Payment method will allow you to track all Amazon payments. This is helpful if you sell on other marketplaces and track those payments methods as well.

Gear All Lists

Payment Methods Location

Adding Amazon Payment Method

Using a Default Customer Account

Many sellers will want to track individual customers on Amazon, but this may not be a good idea if you have thousands of orders per month. Within a year, you could have tens of thousands of customers, and this large list would slow QuickBooks Online down when you’re using search functions or generating reports.

Using a default customer account will still allow you to search for customer information in the Shipping field. However, most sellers don’t use customer information for Amazon sales. The most important piece of information is the Order ID, and that should be entered on the Invoice. The best place for this is the Memo field.

If you have multiple Amazon marketplaces, then separate them by using one default customer account for each marketplace: Amazon US Customer, Amazon MX Customer, and Amazon CA Customer.

QuickBooks Customer Location

New Customer form

Vendor

You’ll need to add Amazon as a Vendor. We’ll use Amazon for Vendor-related documents such as Vendor Credits and Vendor Expenses.

If you sell on multiple marketplaces, you may want to add separate Vendors for each one: Amazon MX, Amazon CA, and Amazon US.

QuickBooks Online Vendor

New Vendor Form

Undeposited Funds

We recommend that you set up an Undeposited Funds account that is specific to Amazon. For this Amazon Undeposited Funds account, we recommend you use Bank > Cash on hand. That’s because we’ll need this type of account for some transactions that don’t allow the default Undeposited Funds account.

You can use your default QuickBooks Online Undeposited Funds account for other business you conduct.

New Account Location

Undeposited Funds account

Previous and Current Reserve Amounts

Last, but not least, you’ll need to create an account that will keep a running balance of your Current Reserve. Amazon withholds funds every settlement period. If you track both your Previous and Current Reserve amounts in this one bank account and make it a sub-account of your Undeposited Funds, you’ll always know what payout to expect on the next settlement.

Both Reserve amounts should be deposited to this account so that it’ll always have the Current Reserve amount balance. The process is similar to adding the Bank account above:

New Account Location

Current Reserve Account

Bank Account

Last, but definitely not least, we’ll need to set up a Bank account for all the settlement deposits.

New Account Location

Adding New Bank Account

Once you have these basic accounts configured, you’ll be ready to continue using our guide. We’ll go over how to create other accounts and items as needed.

Learn how to handle other accounting aspects for your Amazon business:

Amazon to QuickBooks Online Accounting: Configuring Sales Tax and Marketplace Facilitator Tax

This step-by-step guide will show you how to set up sales tax in QuickBooks Online from a brand new company.

If you’re not careful, sales tax collected through Amazon may be different from the sales tax calculated in QuickBooks Online. You’ll want to make sure that invoices you create in QuickBooks Online display the correct sales tax collected. Otherwise, your accounts may not reconcile properly.

Setting up Sales Tax in QuickBooks Online with new Automated Sales Tax

QuickBooks Online’s new automated sales tax engine makes configuring sales tax very simple for users. Users no longer need to manually configure districts or city taxes. Instead, just enter the state and filing frequency, and QuickBooks Online will take care of the rest!

Look through this visual guide for setting up QuickBooks Online Sales Tax.

QuickBooks Online Sales Tax Setup

QuickBooks Online Sales Tax Setup 2

QuickBooks Online Sales Tax Setup 3

QuickBooks Online Sales Tax Setup 4

If you’re collecting and remitting sales tax for your state, select the filing frequency and start date. When you pay, you’ll select your Bank account that you used to pay your sales tax liability.

We’ll add an additional sales tax agency as an example. The process is the same for any other sales tax agency. Select the filing frequency and start date.

Amazon to QuickBooks Online Accounting: Configuring Sales Tax and Marketplace Facilitator Tax

When you have an invoice with sales tax to any state, overwrite what QuickBooks automatically enters with the amount that Amazon collects if the two amounts are different. We’ll go over how to do this below.

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Setting up Sales Tax in QuickBooks Online with Standard Sales Tax

QBO Old Sales Tax Switch to New

Some users will be presented with this screen to switch to the new automated sales tax engine used earlier in this article. We’ll continue with the old tax center.

QuickBooks Online old Sales Tax Setup 1

QuickBooks Online old Sales Tax Setup 2

QuickBooks Online old Sales Tax Setup 3

Add any additional states you need. Use the general state sales tax rate for each state you set up unless you want to manually set up the combined tax rate.

When you have an invoice with sales tax to any state, overwrite what QuickBooks automatically enters with the amount that Amazon collects if the amounts are different. We’ll go over how to do this below.

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Setting up QuickBooks Online Service Item and Bank Account for Marketplace Facilitator Sales Tax

Once you’ve configured sales tax agencies for your QuickBooks Online company, you’ll need to set up a Bank account (Detail type: Cash) for the Marketplace Facilitator Tax.

To do this properly, you’ll have to create a Marketplace Facilitator Tax service item linked to the Marketplace Facilitator Tax bank account.

Once you’ve created the service item linked to the bank account, you’ll select this Marketplace Facilitator Tax service item as the line item on your affected invoices.

QuickBooks Online Accounts

Amazon to QuickBooks Online Accounting: Configuring Sales Tax and Marketplace Facilitator Tax

Once you’ve created the bank account, you’ll need to create the service account that links to this account you’ve just created.

QuickBooks Online Add Service Item

QuickBooks Online Product and Services Add

Make sure the “Is taxable” box is not checked.

Once you’ve saved the service item, you can now select this item for both your Marketplace Facilitator Tax Shipping and Marketplace Facilitator Tax Shipping. For invoices that have taxes on sales and shipping, sellers can choose to sum up those taxes into one line item. Or sellers can use the same service item twice with the different amounts.

Another option is to create separate service items for Marketplace Facilitator Tax Principal and Marketplace Facilitator Tax Shipping. If you choose to do this, then link them both to the same Marketplace Facilitator Tax bank account.

Some sellers will want this level of separation, but it’s not really necessary since taxes are deposited to and paid from the same offset bank account.

What’s important is that the amounts are correct whatever option you choose. When you create the invoice, the amounts will be properly deposited into the right accounts.

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Example of QuickBooks Online Invoice with Marketplace Facilitator Tax

Here’s how all of this works in QuickBooks Online with an Amazon invoice. We’ll create a QuickBooks Online invoice with Marketplace Facilitator Sales Tax collected.

Sample Amazon Invoice

Once you’ve entered the amounts in the invoice, double check that the sales tax that QuickBooks Online automatically calculates is correct. If it’s correct and all the numbers are correctly entered, save the invoice.

QBO Invoice with Marketplace Tax

Marketplace Taxes won’t affect any of your accounts since any amount deposited is also withdrawn to reflect what Amazon does.

You can always run a report on the Marketplace Facilitator bank account.

Save the invoice and make sure to receive payment if you’ve already shipped the item or if it’s an FBA order.

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Congratulations! You’ve successfully configured sales tax in QuickBooks Online. You’ve also accurately recorded the sales tax that Amazon collects for its Marketplace Tax!

It’s important that you track sales tax even when you’re not the one collecting and remitting it. Using an accounting software like QuickBooks Online track sales tax means that you’ll always have a record in the event you need it.

You can automate all of the document creation for your Amazon seller account. SellerZen automatically imports all transactions in real-time so that your QuickBooks Online company is always up-to-date. Give us a try for free now!

Learn more about other bookkeeping topics through our articles on accounting for Amazon businesses: