Learn how to create accurate and proper QuickBooks Online invoices for your Amazon sales transactions.
Look through our comprehensive guide for creating proper documents in QuickBooks Online so that you can use your bookkeeping to track inventory, sales, and other important information.
For this article, we’ll go over using one sales document that includes income and expenses.
The most important step is to create all the proper service items in QuickBooks Online. But before we can create the service items, we’ll need to create the proper accounts in QuickBooks Online.
You’ll need to create a new account to map for each service item. Let’s take a look at a sample Amazon invoice:
This is an example of an order you’ll see on your Amazon account.
To properly create the QuickBooks Online document for this Amazon sale, we’ll have to create the service items to use as line items for the QuickBooks Online invoice. But first, we’ll have to create the account that links to the service item.
- Creating accounts in your Chart of Accounts
- Creating service items in Products and Services
- Creating invoices
- Contra revenue accounts
- Other articles in our Amazon to QuickBooks Online Accounting Series
We’ll want to track certain fees since they’re common. So we’ll create two accounts that are named Amazon FBA Pick & Pack Fees and Amazon Referral Fees.
You may want to name them with the marketplace and region in front if you sell on multiple marketplaces and want to separate the fees by marketplaces. So you may have Amazon US FBA Pick & Pack Fees, Amazon MX FBA Pick & Pack Fees, and Amazon CA FBA Pick & Pack Fees.
If you separate the fees in this way, you’ll have to create separate accounts for all of your service items.
Others just lump all the marketplace FBA Pick & Pack fees into one account: Amazon FBA Pick & Pack Fees.
Once you’ve created these accounts, we’ll need to create the service items and link those to the accounts we’ve just created. The Account Type is important. FBA fees are expenses, so choose Expenses. For the Detail Type, you’ll want to select the type that best fits.
For this particular FBA Pick & Pack Fees account, we’ll use Other Miscellaneous Service Cost. You may be able to use this Detail Type for most Amazon-related expenses. Or choose the Detail Type that best describes the account.
Create the service items necessary for all the Amazon expenses. Make sure you link the proper accounts when you create the service items.
Once you have the service items, we can create the QuickBooks Online invoice.
Check out our guide on Default customers.
If you’re FBM, you’ll need to click on “Receive payment” once you’ve shipped the order on Amazon. If you’re FBA, you can click on Receive payment right away.
Once you’ve clicked on Receive payment into your Amazon Undeposited Funds account, you’re done with creating the QuickBooks Online invoice for your Amazon sales order.
When done properly, you can run reports to see your overall income and expenses. Below a sample Profit and Loss report after we’ve completed the invoice. This report shows us that we’ve sold an item for $46.99. Our cost for the product (Cost of Goods Sold) was $10. Our fees for the product were $10.04. Overall, we’ve earned $26.95.
As you enter the settlement income and expenses and your other orders, you’ll get a much more detailed view of your business.
You’ll need to create all the proper service items along with linking them to the correct income and expense accounts in your Chart of Accounts.
For income and expenses that you don’t necessarily need to track because they’re rare, you can use a general Income and Expense account. For example, you can create service items called “Amazon Other Income” and “Amazon Other Expense” and link those to the accounts. Then use those accounts for the income and fees that don’t need to be categorized.
You should track the most common income and expenses. This gives you more detailed insight into your business. Lumping them all into one account makes tracking difficult, and the reporting won’t give you details you can use.
Not all negative amounts from Amazon orders are considered expenses. Some of those, like sales discounts, are considered contra revenue accounts and should be debits to income accounts rather than credits. When you add these sales and sales discounts accounts together, you’ll get the net sales income.
For example, you have a product that sells for $100. For one week, you have a sale with $10 off. That $10 isn’t really an expense, so crediting $10 to an expense account isn’t correct.
Instead, that $10 is a reduction from the sale, so it should be a debit to an income account.
Here’s how the report should look with the contra account properly configured and a $10 discount on a $100 item. Some sellers will mistakenly record the $10 discount as an expense.
Partial refunds or Goodwill discounts that occur after the sales transaction should be treated as expenses. You shouldn’t go back to the invoice to edit it, nor should you issue a Refund Receipt for a partial refund. Remember, any refund receipt will increase your inventory.
For the most part, Amazon will reimburse you for any discounts or promotions it gives to customers. So you’ll see the discount on the invoice along with a credit for the same amount.
- Amazon to QuickBooks Online Accounting: Configuring your New Company
- Amazon to QuickBooks Online Accounting: Using Purchase Orders to Receive Inventory
- Amazon to QuickBooks Online Accounting: Configuring Sales Tax and Marketplace Facilitator Tax
- Amazon to QuickBooks Online Accounting: Handling Refunds and Returns
- Amazon to QuickBooks Online Accounting: Recording Reimbursements
- Amazon to QuickBooks Online Accounting: Processing Settlements and Bank Deposits