Get Started with an Amazon Invoice Example for Accounting

Amazon invoice example for Accounting

Hello! Sarah here from smallbusinesssarah.com,  and today I'm gonna show you how to do your Amazon   bookkeeping from if you're an Amazon seller in  QuickBooks Online this should also work in other   accounting programs but my preference I just love  QuickBooks Online this method does not require   any apps any integrations it's quick it's fast  it's easy and it's accurate you're going to tie   to your Amazon 1099 perfectly at the end of the  year so let's get started on walking you through   this method so this method relies on inputting  in the form of a journal entry one one journal   entry that summarizes the monthly activity from  Amazon and we're going to use Amazon's monthly   report for that entry so if we started off on the  home screen of Amazon seller central we're gonna   go to reports and then payments then we're gonna  go to date range reports then we're gonna go to   generate report we want this summary and select  which other whichever month you're doing and then   hit generate so that reports gonna generate then  you can hit refresh down here to get the report   and then download now this particular account  that I'm using hasn't sold on Amazon in a while   so I'm going to go and get another report where  I've highlighted some stuff for you and that has   a lot of activity so you can really understand  the journal entry that we're putting together so   this is the report that you're gonna download from  Amazon now our report is for the month of January   of 2020 and let me walk you through this report so  we've got our income items here our expense items   over here and this is any transfers the total  amount that amazon move to your bank account   because as you know when you sell on Amazon you'll  make a sale but Amazon holds on to that money for   a little bit before they transfer it to your bank  account and that's one of the things that makes   Amazon bookkeeping a tiny bit tricky if you're  not sure what you're doing because the deposits   include sales less fees and it's also a little bit  tricky because of that lag there's a lag and time   between when you make a sale and when you get  deposit so that's why using the Amazon summary   that for a month makes this process a lot easier  because we're using exactly the figures that   Amazon is telling us and we're kind of ignoring it  on a per deposit basis we're tying to Amazon on a   monthly basis and you'll understand a bit more  as we go through this process now you'll notice   that I've highlighted a couple of things on this  report and that's because there are certain things   certain accounts that we want separated out in our  journal entry so that our QuickBooks profit and   loss reports have elements broken out separately  and that's gonna allow us to tie to our 1099 at   the end of the year really easily I mean you could  just lump all of this stuff together but then   you're gonna have a bear of a time understanding  how your quickbooks records tie to the 1099 you   got from amazon whereas if we just break this out  and now when we're doing our entry we're gonna tie   to the penny and it's gonna be awesome so follow  along with me as i'm gathering the numbers for our   journal entry and what I would do is kind of  you know go through this process and jot down   these numbers as you're doing your own summary  at home and then we'll head to the journal entry   and input it there okay so I tried to highlight  this report and it didn't work super well so I'm   going to draw a little to help the first thing  when I should also mention we've already added   these accounts that we need to QuickBooks in a  prior video that's the video about customizing   your chart of accounts for an Amazon seller I'll  put a link in the description but if you haven't   done that yet you probably want to take that  step first and then come back here okay so the   first thing we want to break out is our product  sales now product sales non FBA versus FBA doesn't   matter so you'll see I've highlighted these two  numbers and those can be combined together and   when we add those together they total three  thousand three hundred fifty-five dollars and   eighty-eight cents no I'm sorry and forty-five  cents three thousand three hundred fifty-five   dollars and forty-five cents so I'm jotting that  down on my piece of paper the next thing we're   gonna do are our refunds and the refunds are right  here and here you can see that over here refunds   refund and we had sales and sales was our first  and the refunds obviously total negative twenty   seven dollars and ninety-four cents in accounting  speak we're gonna put these actually as credits   in our journal entry and these actually as debits  in our journal entry so if you want to write that   down you might find that easier so credit of  this and debit of this we're gonna skip this   temporarily let's do shipping now so you can see  shipping credits shipping credit refunds we're   gonna combine those together and they get their  own line so that's a credit of 1181 the next would   be gift wrap you can see gift wrap credits gift  wrap credit refunds if we had something there we   would add those together and they would either be  debit or credit whether they're you know negative   or a credit most likely they'll be a credit so  we have zero in this case and the next is going   to be see these promotional rebates here and  that's these two lines we're going to combine   these together and that totals 582 on the debit  side ok the last thing we have we're gonna do is   just all of these little bits so if you didn't use  a number for sales refunds shipping gift wrap or   promotional rebates then it's gonna fall in this  other category it's not stuff that we really need   to see broken out separately in our financial  statements and it doesn't affect how easy it is   to tie out toward 1099 so we would just add all  of those together and in our case it's just the   939 and it's in the credit column so we'll we'll  call it just other credits of 939 and it'll be in   the credit column so that would include like this  little item here these guys these guys you're not   gonna very often have values um in these areas but  in case you do I want you to have the tools that   you need to do this entry and then you would just  put that in whichever column once you add it the   debit or credit column most likely credit so to  review we've got our sales and not totaled three   thousand three fifty five forty five and that's  a credit read refunds of 2794 debit other credits   nine thirty nine and that's in the credit balance  1181 shipping and that'll be a credit gift-wrap   was zero and promotional rebates was a debit of  582 if you don't understand debits and credits for   accounting that's fine you don't need to all you  have to do is follow this formula and replicate it   with your data and it doesn't matter if you don't  understand the debits and credits of accounting   so let's go over here to the expenses it doesn't  matter as much what we break out in expenses but   some things that you might like to have broken out  would be shipping like your shipping cost that you   get charged that's these three lines shipping  label refunds adjustments and over here that   these all together and that so that's a debit  and we do want that to be a debit in our entry   of 208 62 and then advertising might be the other  things we've got advertising over here and it's   these numbers over here so 27:38 also in the debit  column then everything else can be added up so 319   plus 185 minus 420 don't forget to have that go  in a different direction that would be a minus   420 plus 297 plus 9 12 plus 84 cents that is going  to total 808 72 and you can check your math does   808 72 plus 27 38 plus 2 862 equal this if it does  you've done your math correctly if it doesn't then   you probably added one of these little bits wrong  and these are all just like the general selling   fees just various fees that Amazon charges to  sell on their website and so we're just lumping   that all together as selling fees down here at the  bottom you probably will not have sales tax given   to you to remit to your state Amazon is pretty  much required to collect and remit all sales tax   so the amount that they collected last what they  remitted or held these two should tie out and   so if they do then you don't have to worry about  the sales tax number at all if if for some reason   there was a balance here then you would have to  add sales tax to your journal entry as a credit   that like never happened so you can pretty much  ignore that down there okay so this is our monthly   summary report it's gonna feel confusing the  first time but once you do it a couple of times   it's gonna be a breeze and believe me this is much  easier than trying to figure out on a per deposit   basis or paying $50 a month for some random  app or integration which just makes QuickBooks   a lot more confusing to be honest okay so let's  take this information and go back to QuickBooks the first thing we need to do you'll know that  when you're using QuickBooks one of the first   things you do every month is categorize your  transactions so we're in banking or in our   checking account and we have to know how  to categorize our Amazon deposits so here   is an Amazon deposit and we're gonna actually  categorize it to Amazon holding now this is one   of the accounts we added in the other video in  the chart of accounts video every deposit from   Amazon if it's related to your Amazon seller  central if it's a return of goods not this   doesn't apply but if it's um deposits from Amazon  from your sales so a couple times a month that's   gonna be categorized to Amazon holding and I'll  get to how that all works together at the end of   the video so once you've gone through and you've  categorized all Amazon deposits to Amazon holding   now we're ready to do our journal entry so we're  gonna come up here to new journal entry and we're   going to make the journal entry as of January  not well in our case our report was for January   of 2020 so I'm gonna date my journal entry as  of January 31st of 2020 whatever month you're   doing I always choose to date my journal entry  as of the end of the month just make sure your   journal entry is dated for sometime in the month  you're doing this entry for if that makes sense   okay now we're gonna compose our entry and we  wrote all these numbers down already so first   let's find our Amazon sales account that we've  already created here we go here's our Amazon   income we're gonna go down till we get to our  Amazon sales and you'll know that we said that   was three thousand three fifty five and forty  five cents in the credit column now we're gonna   go to refunds Amazon refunds and you'll notice  that QuickBooks filled in that number for us   that's because in accounting debits and credits  always have to agree you don't need to know why   it's just an accounting fact so QuickBooks is  trying to help us we don't want the help right   now so we're going to override their help we  want to put that as the debit of 2794 that we   wrote down already and that's the refund let me  pull this out so you can see now let's do our   shipping income so Amazon shipping credits and we  had written down that that was eleven dollars and   81 cents now let's do our promotional rebates  actually let's do gift wrap that was zero but   let's do it just so you kind of see it in the  entry that was zero but most likely it would be   a credit if you have it let's do promotional  rebates in our case this was a debit of 582   and then we had other and that was a credit of  939 now we're going to move on to our expenses we had shipping expense that we wanted to break  out of 208 62 and we had advertising expenses   that we wanted to break out of twenty seven  dollars and 38 cents and then we had just the   other all those other selling fees if you want  to break them out by line you certainly can it's   just it's not necessary that was 808 72 so now  we're gonna let QuickBooks help us we want to   know the difference between our debits and our  credits and the difference is going to go to   Amazon holding that account we already created  so we let QuickBooks do the work for us if they   don't or if you need to calculate it just add  up your credits - your debits and the difference   it's gonna go to Amazon holding sometimes amazon  holding the balance needed will be over in this   column not very often but it could be and that's  fine whatever column amazon holding needs to be   in in order for your entry to balance that's fine  that's what you want and now we're gonna hit save   and close I want to make sure that's January yep  okay so now let's take a look at how it all works   together we're gonna come up here and hit go  to register and we're gonna find our in this   on holding register by using that arrow okay hmm  so here is our one big deposit we had from Amazon   um these are some other like previous months that  I had recorded mm-hmm so we're gonna kind of make   these but this is the one deposit that we had in  the month of January from Amazon that we had we   recorded that to Amazon holding and then this is  our big entry that we recorded for the month you   could have a couple of different deposits from  Amazon and this basically represents the ending   balance still sitting with Amazon you remember  that we talked about how money sits at Amazon   for a while before they deposit it into your bank  account so there's always going to be that lag   there's always some money of yours that sitting  at Amazon and that's what this represents right   here so if we wanted to see if that number was  kind of close you could go to here this is the   payments area I don't think it's statement view  over this statement view and you could go back   in time so we don't even have January of 2020 here  because I'm combining this Amazon home page with   a different Amazon report for our example here  but you could go back in time and let's say you   had done an entry as of April 28th of 2019 and you  could use this report to say okay amazon says my   closing balance the amount of money that's still  sitting there is 22 a B and if if your journal   entry is as of the end of April you could kind of  see okay is is it about 20 to 80 that's sitting   there with Amazon hold holding oh yes it is okay  great so that's kind of one check or balance you   could do but but it's a little tricky to check  for sure this is different than at C that's a you   can check to the penny if you agree because the  dates don't end always line up with the end of the   month but just know that this money represents the  amount of money still sitting at Amazon at the end   of the month so let's see how this looks on some  reports some profit-and-loss statements so we're   gonna go to reports we're gonna go to profit and  loss and we'll do for this year there's nothing   else really included in this report because it's  my sample okay and yet we just have Amazon in here   okay so we've got our profit and loss for the  year remember our entry was for January and you   can see how our numbers work together so we've  got the three thousand dollars in sales total   Amazon income after we add everything else then  below here we have our Amazon selling expenses   and let's compare this to what amazon reported on  their monthly summary so we've got 3 3 4 2 & 1 0   4 4 3 3 4 2 & 1 0 4 4 so this is what amazon says  this is your income and these were your expenses   for the month of January and you can see that with  this method what we went end up with is it exactly   ties we have exactly tied our profit and loss to  what amazon says and then when you go to get your   1099 at the end of the year you're still gonna  exactly tie to Amazon and it's so so nice and   simple let's take a look at our balance sheet  so if we go to reports balance sheet mmm here   is our Amazon holding account so that would be as  of in this case it's showing us of April 30th it   doesn't matter in our example this is the amount  of money still sitting in Amazon so we haven't   listed with our bank accounts sometimes I call  it like Amazon bank if you've watched my Etsy   but video I call it Etsy Bank that calling it  Amazon holding is fine you could call it Amazon   receivable it doesn't matter what it is but this  represents the amount of money still studying at   Amazon at the end of the month it's still waiting  to be deposited to you okay so let's go over the   steps again really quickly and I hope you can  wrap your head around what we're doing instead   of worrying about recording the deposit when they  get deposited as sales and fees it's all mushed   together it would be really difficult for us if  we're on the banking let me find another Amazon   deposit let me scroll down I know there's some  down here okay there's no report in Amazon that   says with all that detailed breakdown that we  need there's there's a little bit of breakdown   here but it's not everything that we need in  order to easily tie out to our 1099 there's   no report in Amazon that says okay these were  exactly your sales these were exactly your fees   um and so that's how you can split up that deposit  so instead of doing that we're just taking all of   our deposits and we're moving them to this holding  account so that's why we're gonna call it Amazon   holding or Amazon Bank or Amazon receivable  we're just moving everything there so we're   gonna add that when we're doing our bank bank  feed process so that's really easy and really   fast and then if we take a look at our journal  entry our journal entry says okay here were our   sales or our income our items that like produced  income a little shipping credit whatever these   were our expenses or things that lowered the  amount of money we had available to deposit so   this this column increased the amount of money  we have available to be deposited this column   decreases at the difference goes to Amazon holding  and the reason why is because we put we put all of   those deposits this this basically tells me for  the month of January Amazon could have deposited   two thousand two hundred and ninety-eight  dollars to us they could have done that but   they didn't in this case they only deposited  1,001 8802 okay so if I and this is getting   a little convoluted I'm going to go to I'm going  to undo some of those things that I deposited so   that you can see if I was starting with a fresh  month I think that'll be easier for you to see okay go to register not this register Amazon  holding oh I had one more I'm gonna delete that   so you can see it fresh so like let's say this  was the first month of business that we ever   had there was that deposit Amazon deposited  1,001 8802 okay but the amount available to   be deposited was two thousand two ninety eight  seventeen and that's what our our journal entry   the Amazon holding amount at the end represents  and so the amount waiting to be deposited Amazon   still would have sitting with them one thousand  one ten fifteen waiting to be deposited at some   later time so and by doing then the monthly  journal entry we exactly tie out our Amazon   revenue and our Amazon fees so that's the process  I got a little long-winded at the end here I know   because a lot of people have trouble with the  concept of recording deposits to Amazon holding   and how it all works together but hopefully you  can see that with this method there's no apps no   integrations our profit and loss exactly ties  to Amazon and their summary that they provided   it's easy it's one journal entry everything  else gets all the deposits get recorded to   Amazon holding it's just a lot of people are  gonna struggle with how this works together   and what these numbers represent so hope that's  why I went a little long at the end I hope my   long-winded explanation might help you see how  the pieces fit together a little bit more and   why this method works if you have questions leave  them in the comments I I do a pretty good job the   answering people don't don't email me separately  leave a comment in the questions because leave a   question in the comments because then everyone can  benefit from your question this this is the method   I use for many of my bookkeeping clients that I  serve every month and I highly recommend it it's   not the only method but it's the method I prefer  if this video has been helpful to you I would so   appreciate a like subscribe share whatever you  can do to to show a little love if this video   has been helpful to you I would appreciate it okay  and that's all for now hope you have a great day