Xero Amazon: A Book-keeping and Accounting in Xero software for

Amazon Sellers

Building an Amazon Accounting Tech Stack

An Amazon accounting tech stack is the collection of tools, platforms, apps, and software you use to manage your
accounting and bookkeeping for your Amazon business. A tech stack can help you automate and streamline your
accounting and bookkeeping tasks, saving time, money, and errors. A tech stack can also help you improve your
financial visibility, control, and decision-making.

Creating a well-rounded Amazon accounting tech stack involves assembling various tools, platforms, and software to
streamline and automate your financial processes. This saves time, reduces errors, and enhances financial visibility
and decision-making capabilities.

One essential application for managing your Amazon business's financial aspects is PayTraQer, an integration
management software. This software connects widely used accounting platforms like QuickBooks Online or Xero with
payment processors (such as PayPal, Stripe, or Square) and e-commerce platforms like Amazon, Shopify, and eBay.

Effective Reconciliation of Sales and Fees

Precise recording of Amazon transactions is fundamental for effective financial management. This involves capturing
essential customer information, fees, line items, and taxes and handling multi-currency transactions. Streamlining the
reconciliation process is further facilitated by syncing payouts and bank deposits. This meticulous approach ensures a
comprehensive and error-free record of your financial activities on the Amazon platform.

Efficient Inventory and COGS Tracking

To thoroughly understand your Amazon business, it's crucial to track inventory levels, costs, and profits effectively.
This involves syncing inventory and Cost of Goods Sold (COGS) data with your accounting platform, providing
seamless margins and cash flow monitoring. This integrated approach ensures a streamlined and effortless overview
of your business's financial health on the Amazon platform.

Detailed Profit and Loss Reporting

Creating meaningful profit and loss reports is essential for gaining valuable insights into the financial well-being of
your Amazon business. This process involves leveraging synced data from accounting platforms such as QuickBooks
or Xero to ensure the accuracy of your reports. Furthermore, customization options allow you to tailor these reports
based on various parameters, including date, product, channel, or category. This flexibility empowers you to delve
deeper into specific aspects of your financial performance, fostering a comprehensive understanding of your Amazon
business's financial landscape.

Choosing the Right Integration Software

Choosing intuitive and user-friendly integration software ensures a seamless financial management process. When
selecting a solution, prioritize software that offers straightforward setup, unlimited support, and comprehensive
onboarding services. Many providers understand the importance of flexibility and cater to different business needs
and budgets by providing free trials and adaptable pricing plans. This approach allows you to test the software's
compatibility and assess its suitability for your requirements, ensuring a smooth and tailored integration into your
Amazon business's financial ecosystem.

You can establish a reliable and efficient financial management system by incorporating effective integration software
like PayTraQer into your Amazon accounting tech stack.

What is Amazon Bookkeeping?

Amazon bookkeeping refers to keeping accurate financial records for an e-commerce sales or business that sells on
Amazon. It involves tracking all transactions related to your Amazon sales, such as product sales, refunds, fees, and
other expenses.

Proper bookkeeping helps you understand the financial health of your Amazon business, make informed decisions
about pricing, inventory, and expenses, keep business bills, and stay compliant with tax regulations.

Some critical tasks in Amazon bookkeeping include recording sales and expenses in a ledger, reconciling bank
statements, tracking and purchasing inventory, and generating financial reports such as profit and loss statements
and balance sheets.

While it can be time-consuming, maintaining a proper accounting system and bookkeeping records is essential for the
success of any Amazon business, as it provides the necessary insights to make informed business decisions,
accurately calculate taxes owed, and keep your finances in order.

What Does an Amazon Bookkeeper Do?

An Amazon bookkeeper maintains accurate financial records for an e-commerce business that sells on Amazon. Here
are some of the critical tasks that an Amazon bookkeeper typically performs:

 Set up and maintain a chart of accounts to categorize income and expenses.

 Record all Amazon transactions in a ledger or accounting software, including sales, refunds, fees, and other
costs.
 Reconcile bank and credit card statements to ensure the accuracy and completeness of financial records.
 Track inventory levels and value to ensure accurate cost of goods sold (COGS) calculations.
 Generate financial reports, such as profit and loss statements and balance sheets, to evaluate business
performance and make informed decisions.
 Calculate and file taxes owed, including sales and income tax, in compliance with applicable laws and
regulations.
 Maintain organized records and backup documentation for audits and tax purposes.
 Provide financial analysis and insights to help the business owner make informed pricing, inventory, and
expenses decisions.
 Keep up-to-date with changes in tax laws and regulations that may impact the business.

Why Bookkeeping for Amazon Sellers?

Bookkeeping is essential for Amazon sellers for several reasons:

Financial Clarity

Accurate bookkeeping allows Amazon sellers to understand their business’s financial health clearly. It offers valuable
insights into the company's cash flow, revealing both inflows and outflows of money and identifying where
expenditures occur. This information is critical for making informed business decisions and identifying opportunities
for growth and improvement.

Inventory Management
Monitor Inventory Levels: Proper bookkeeping tracks inventory purchases, sales, and adjustments, crucial for
maintaining optimal inventory levels.

Cost of Goods Sold (COGS): Accurately calculating COGS is essential for understanding the true profitability of
products sold on Amazon.

Cash Flow Management: Bookkeeping helps monitor cash flow, ensuring the business has enough cash to cover
operational expenses.

Managing Payments: Amazon typically pays sellers every two weeks, so managing finances between these payment
periods is essential.

Attracting Investors or Loans: If a seller seeks external funding, lenders or investors will require detailed financial
statements to assess the business's health.

Tax Compliance

Amazon sellers are subject to various tax obligations, including sales tax, income tax, and other tax requirements.
Accurate bookkeeping is essential for calculating taxes owed and ensuring compliance with tax laws and regulations.
Proper bookkeeping also helps to minimize the risk of audits and penalties for non-compliance.

Better Financial Management

Bookkeeping allows Amazon sellers to keep track of their expenses, including fees, refunds, and other costs
associated with running their business. This information can help sellers optimize their profitability by identifying
areas where payments can be reduced or eliminated.

Easier Financial Reporting

Good bookkeeping practices make it easier to generate financial reports, such as profit and loss statements and
balance sheets. These reports provide a clear picture of the business’s financial performance and help track progress
and set financial goals. Integrating Amazon Seller Central with Xero is a great way to get Amazon bookkeeping done
quickly, easily, and accurately.

Whether you’re an Amazon seller, or an accountant or bookkeeper who works with Amazon sellers, you’ll likely be
very familiar with the complexity that comes along with Amazon bookkeeping. Coding Amazon fees, refunds, sales,
and other transactions to Xero can be confusing and time-consuming.

Fortunately, integrating Amazon with Xero can automate most of the bookkeeping process and make reconciliation
much easier.

In this article, we’ll discuss options for integrating Amazon and Xero, and how to set them up.

Key takeaways

 Integrating Amazon Seller Central with Xero means connecting these two tools so that your Amazon seller
data can flow seamlessly into Xero for quicker and easier accounting and bookkeeping.
 There are three options for getting Amazon data into Xero – learn why using a specialized integration tool like
A2X is the most reliable, accurate, and efficient way to do so.
 Setting up A2X is easy and just takes a few steps

Amazon sellers have three options for a Xero-Amazon integration:

1. Xero and Amazon integration with an ecommerce accounting automation tool like A2X that will categorize
and reconcile your payout data.
 2. Integrate Xero and Amazon with a data-syncing app that puts individual orders into your accounting software
for manual categorization.
3. Manually enter data from Amazon reports into Xero.

Integrate Xero and Amazon with ecommerce accounting automation tool, A2X

A2X is an ecommerce accounting automation tool for businesses selling

on Amazon, Shopify, eBay, Etsy, Walmart, and BigCommerce.
In contrast to other syncing applications used for Amazon to Xero integrations, A2X avoids sending individual orders
to your accounting system. Instead, it compiles your Amazon transaction data into summaries and sends them to
Xero as journal entries, streamlining the reconciliation process.

Summarizing data is crucial since Amazon sellers get paid every two weeks, which means one payment could
comprise sales made across two months. This makes it challenging to match individual orders with their
corresponding batched payments. A2X resolves this issue by condensing transaction data, ensuring the summaries
match perfectly with the batched payments.

A2X’s integration process is user-friendly, and resources are available for assistance if needed. These include a
support center, online chat, and a dedicated support team.

1. Sign up for a free A2X trial.

Start the process by getting a free trial of A2X for Amazon to Xero. Click on the ‘Try A2X for free’ button in the top
right corner of the A2X website. Then, select ‘Amazon’ as the channel you’d like to connect to first.

2. Create an account using your preferred sign in method, then follow the prompts to finish setting
up your A2X account. There is the option for single sign-on (SSO) using your Xero account, or you can use Google to
authenticate your email address and set up your A2X account. You will land on the A2X dashboard.

3. Connect to Xero.
Click the ‘Connect to Xero’ button on the A2X dashboard next to the Xero logo.
 Connec
t A2X to Xero by logging into your Xero organization when prompted. Now, A2X can sync with your Chart of Accounts
and tax rates. However, it will only do this once you’re ready. Within A2X, you can select which bank accounts you
receive your Amazon deposits in. After connecting, A2X will return you to your dashboard.

4. Connect to Amazon
In the A2X dashboard, you will be prompted to connect to Amazon.

If you
are an accountant, bookkeeper, or third party managing this process on behalf of a seller, you can select ‘I need to
request access’ and follow the prompts to request access from the seller you’re working with. If you’re an Amazon
seller, select ‘I have accesses to connect to your own store.

You will be prompted to select your primary Amazon region, which is the main marketplace you sell on. Keep in mind
that by selecting a region, all marketplaces in that region will be covered by that one A2X connection. For example, if
you selected the United Kingdom as your primary region, A2X would also fetch settlements from any European
marketplaces you sell on. The marketplaces you sell on will determine how many A2X accounts you need. When you
connect A2X to a certain marketplace in one Amazon region, A2X will automatically detect and connect to all other
marketplaces in that same region where you have sales.

At this stage, you have integrated Amazon to Xero. Fantastic! The following steps set up everything you need to
enable A2X to categorize the data it receives from Amazon and send it through to Xero in neat summaries. These
steps involve pulling your Xero Chart of Accounts into A2X or creating new ones.

Note: If your business receives payments in more than one currency or sells in different regions, you will first need
to set your currency settings currency settings set up in Xero.

5. Map your accounts and taxes

Go to the ‘Accounts and Taxes’ tab on your A2X dashboard. You will be prompted to answer some questions about
where your business is located and where you’re registered for tax. From there you will have two options: assisted
setup or custom setup.
Assisted setup: With assisted setup, A2X will create all of the accounts you need directly in your Xero and map each
transaction type to the corresponding account. A2X can also apply a tax rate to be used in Xero if this is applicable to
your location and tax settings.

Custom setup: With custom setup you will map your own accounts. Instead of A2X’s generic default accounts, you
can select your own account for any transaction type. Open the dropdown and find the account from your chart of
accounts list. This option is more applicable if you’d like to use your own accounts or if you have more complicated
requirements.

Save your mappings by clicking ‘Save mappings’.

Note: If you create new accounts in your Xero after connecting A2X, you will need to refresh your cache by going to
‘Settings’ → ‘Connections’.

6. Review and post

Before sending an entry to Xero, you should review the entry in A2X by going to ‘Settlements’ and clicking ‘Review’.

Use the dropdown to review all information that will be posted to Xero. You can control when you send the entry to
ensure you’re happy with what is being posted to Xero. When you’re confident in the entry, click ‘Send to Xero’ to
post it to Xero as a draft invoice or approved invoice. It can be found under the Invoices tab in Xero.
Reconcile in Xero
With the post sent to Xero, you can now reconcile it.
Go to your banking screen. There will be a green match, and you can reconcile in one click.
If you can’t see your invoice in the banking screen, it will likely be in your draft invoices.
For detailed instructions on integrating Amazon and Xero using A2X, our support centre has thorough
instructions with accompanying screenshots or a step-by-step checklist.

Benefits of A2X
A2X is specifically designed to tackle the issue of getting transaction data from sales channels, such as Amazon, into
cloud accounting software, such as Xero.
With years of experience doing just this, the tool has grown and developed more as Amazon and Xero have changed
and updated their practices over the years, providing many benefits.
A2X understands Amazon’s transaction types
Because it’s a purpose-built ecommerce accounting tool, A2X can precisely detect and classify various Amazon
transaction types, including refunds, returns, tax, adjustments, advertising, promotions, commissions, fulfillment and
warehousing, discounts, reimbursements, shipping, and many more.
As a result, A2X can accurately sort your financial information from Amazon into the appropriate transaction category
before being transferred to Xero. Because of all this work done by A2X, you will see a green match in Xero, meaning
you can reconcile with just one click.
Reconciles without the need for clearing account
A2X directly reconciles with your bank account and Xero, balancing everything to the penny and eliminating the need
for a clearing account. This simplifies your accounting process and saves you time.
Order details are attached to the entry
Rather than bringing over vast amounts of unnecessary sales transaction data – which can overload Xero and slow
things down – A2X attaches the order details to entry. This allows you to look up individual orders should you need
to, it saves transferring unnecessary data, and it gives you a trail to follow in the event of an audit.
It’s accurate, automated, and saves time
Once A2X is set up, it’s time for you to spend time growing your business while it automates a formerly time-
consuming and error-prone task. Because A2X takes the data directly from Amazon and while having access to your
Xero account, it leaves no room for mistakes. Not only does this make doing your books easier but if you ever want to
sell your business it ensures you have all the data your potential buyers need to make their decision.
Very customizable
A2X understands that you need your accounting to be a particular way, and that’s why it’s easy to customize
depending on your business needs. For example, with A2X, you can split your sales by SKU or product type if you
need to.
Skilled support when you need it
A2X is known for its fantastic support team, quick response times, and support staff who all have prior ecommerce
accounting experience. Because the support team understands both A2X and accounting, they can walk you through
any issues. In addition, A2X has a support center with articles on completing an Amazon to Xero integration and a
blog and ecommerce accounting hub where you can learn more about ecommerce accounting in general.

Inventory reports available

A2X also has a feature to automatically fetch month-end stocktake data from Amazon for FBA inventory and use
uploaded cost data (from your Cost of Goods Sold cost file) to calculate an inventory valuation for the stock held by
Amazon, keeping you up to date on your stock and its value.

A2X challenges
Set up time
A2X is designed to integrate Amazon and Xero, but the setup process may take longer than other options, particularly
if you’re using custom mapping. However, A2X provides assisted setup to help guide users through the process and
has a dedicated support team available for assistance.
The upside is that the additional time spent on setup and testing guarantees proper integration. So, although more
time may be required during the initial setup, once that phase is complete, A2X will only be saving you time.
It can be very detailed
A2X can provide a lot of detailed data, which may seem overwhelming when you first start using it, especially if your
last bookkeeping method was a little more relaxed. However, this information is provided to ensure your numbers
are accurate, and so you can do full and proper analysis on your financials.
End-of-month close can take time
Amazon sellers using A2X could have a delayed month-end close depending on settlement periods. This is because
Amazon settlements occur every two weeks. So, if a particular settlement took place at the end of the month, it
wouldn’t finish until mid-way through the following month.
For example, a settlement period starting November 30 would conclude on December 14. The upside is that even if a
month-end close is delayed, your numbers are going to be accurate and 100% reliable.

Inventory reports available

A2X also has a feature to automatically fetch month-end stocktake data from Amazon for FBA inventory and use
uploaded cost data (from your Cost of Goods Sold cost file) to calculate an inventory valuation for the stock held by
Amazon, keeping you up to date on your stock and its value.
A2X challenges
Set up time
A2X is designed to integrate Amazon and Xero, but the setup process may take longer than other options, particularly
if you’re using custom mapping. However, A2X provides assisted setup to help guide users through the process and
has a dedicated support team available for assistance.
The upside is that the additional time spent on setup and testing guarantees proper integration. So, although more
time may be required during the initial setup, once that phase is complete, A2X will only be saving you time.
It can be very detailed
A2X can provide a lot of detailed data, which may seem overwhelming when you first start using it, especially if your
last bookkeeping method was a little more relaxed. However, this information is provided to ensure your numbers
are accurate, and so you can do full and proper analysis on your financials.
End-of-month close can take time
Amazon sellers using A2X could have a delayed month-end close depending on settlement periods. This is because
Amazon settlements occur every two weeks. So, if a particular settlement took place at the end of the month, it
wouldn’t finish until mid-way through the following month.
For example, a settlement period starting November 30 would conclude on December 14. The upside is that even if a
month-end close is delayed, your numbers are going to be accurate and 100% reliable.

Integrate Xero and Amazon with an order-syncing app

Another option for an Amazon to Xero integration is to use a data or transaction-syncing app. These apps are
designed to move transaction data from Amazon to Xero and a simplified view of daily sales is imported as a
summarized invoice. There are many of these apps available and you’ll find them in the Xero App Store.
These apps can be suitable for smaller businesses but may throw up issues for growing businesses, as they can send
data from every transaction, which is more than your accounting software needs. It’s also worth remembering they
usually have limited options for customization and it may be hard to control which data is synced.

How to integrate Amazon with Xero using a data-syncing app

Typically, data-syncing tools have a setup process similar to A2X, where you link Amazon to Xero using your login
credentials. Here is an example setup process for a syncing application, though the specific details will differ
depending on the app you use:
Choose the data-syncing tool of your choice and create an account for it.
Connect Amazon: Select and connect Amazon as the app from which you want to send data.
Connect Xero: Select and connect Xero to where you want to receive the data. At this stage, be sure that data isn’t
automatically synced as soon as Xero is connected. If it is, this can be difficult to undo and you may need to then
delete entries in Xero.
Set up what the app should transfer: Configure the necessary syncing actions, e.g, making sure sales data is
mapped to the right place in Xero.
Test action and turn it on: Once you have connected the app to both Amazon and Xero and configured the action,
test the data syncing app to make sure it works as expected before turning it on to start automating the process of
creating daily summaries in Xero for new orders in Amazon.
These apps sometimes have limited control of what data you sync, so bear this in mind before you start the app, as it
can be hard to reverse once you’ve set it up.

Benefits of a data-syncing app

They are inexpensive (or free)
Using a syncing app to link Xero and Amazon FBA can be a very cost-effective option. Many of the tools offer free or
low-cost plans, especially if you have a small business with few orders.
Order details in Xero
With many apps, you’re able to look up details of a specific order in your accounting software. That said, it isn’t
necessary to have this level of detail in Xero and may eventually bog it down with all this extra data. You could also
use an operations tool for this.
It may allow for a faster month-end close
It might allow you to close off your month end sooner, because you wouldn’t be waiting for the settlement period to
finish, however, this could create inaccurate financials.
Adequate for new or small businesses
These apps usually work fine for smaller, less complicated businesses without a large number of orders but may not
suit a growing business.

Data-syncing app challenges

May not cover all transaction types
As shared above, Amazon has numerous transaction types, and keeping track of them all can take a lot of work.
While transaction-syncing apps likely cover the most common transactions, like those attached to orders, there’s no
guarantee they’ll cover them all, especially those that occur monthly or those not linked to an order, as these can be
more challenging to detect.
Additionally, these apps often have limited tax functionality, which can compromise the accuracy of your data during
tax filing season. For instance, they may not accurately track the tax collected versus tax paid for Marketplace
Facilitator Tax.
Can be hard to reconcile
When using one of these apps, it will have a set transaction cut-off, which could be daily, hourly, or weekly. It can be
challenging to reconcile depending on the cut-off, as it becomes complicated to match settlement payments to
particular entries. This means eating into time that could have been spent elsewhere in the business.
Difficulties with clearing accounts
It’s common for these tools to use clearing accounts, which could leave a balance unaccounted for. If you find you
have a clearing account that’s unable to be cleared, it could be hard to figure out what this money is from, forcing a
much deeper, time-consuming investigation.
Can send more data than is needed
Although you want your accounting software to account for every transaction, you don’t necessarily need a lot of
individual sales data in your accounting software. The downside of using some data-syncing apps is that you have
little control over what is and isn’t sent to Xero, resulting in the transmission of unnecessary data and leaving you to
sift through and identify the relevant information among the superfluous.
Danger of swamping your software
Not only does sending more data than needed leave you figuring out what you do and don’t need, but it also runs
the risk of swamping your Xero account. This happens when your account is overloaded with data, slowing
everything down and making it frustrating to use. It’s not unheard of for business owners to abandon a clogged
account to start fresh, which brings its own set of issues, primarily slowing down a process that a transaction-syncing
app was supposed to speed up.
The level of support available can vary
It’s often not until you need help that you expose the downsides of using a cheap or free syncing app. Depending on
the app you use, it may be challenging to figure out how you can get the support you need, and other times you
might discover the support team does not fully understand the issue you’re having. The level of support you can get
may also depend on what plan you’ve subscribed to. Ultimately, the lack of adequate support can lead to spending
more time fixing the automation issues, negating the benefits the app was supposed to provide.
Manually enter data from Amazon reports into Xero
Another way to transfer data is to manually take the transaction data from Amazon and enter it in Xero yourself,
replacing any syncing app with data entry to create a report. This option takes more time and effort on your behalf,
but it might be suitable if you’re a small or new business.
How to enter sales and transaction data from Amazon into Xero
manually
Log into Amazon: Once you have received your Amazon settlement in your bank account, it’s time to start the
process. First, log into your Amazon account.
Download a report from Amazon: There are three reports that could be downloaded or used from Amazon, however
only one of them is comprehensive enough to guarantee accurate accounting:
Note: The Amazon Settlement V2 file Report is the only report that matches what you’ve been paid. It’s important to
use this document rather than the numbers in your Seller Central dashboard.
Here is an example Settlement Report which shows a $24,041.65 deposit resulting from sales totaling $39,713.28
minus the Amazon deductions (various expenses and refunds).
The summary statement: Many sellers use this report because it’s what they see in Amazon, however it is not
detailed enough to complete accurate accounting. For example, if you watch the video above, you’ll see the
transaction types that A2X includes (refunds, returns, tax, adjustments, advertising, promotions, commissions,
fulfillment and warehousing, discounts, reimbursements, shipping, etc). Not all of these transactions are included in
the settlement report. The summary also won’t match the payment period you’ve been paid for. A Date Range
Report: This is more accurate for month-end totals, however, it still doesn’t tie back to what you’ve been paid. This
means transactions will be missing and you may not be able to link the correct transactions to the right payout.
To download this report, go to your Amazon Seller Central dashboard, navigate to Reports → Data Range Reports.
Click Generate Report and click Download when it’s completed. Finally, select either summary or transaction, then
pick what reporting range you want to see.
The Amaz on

Settlement V2 file Report: This is the most accurate report, but it does contain lines and lines of data. This
information is what A2X organizes into summaries (as well as some additional data). While this report is very
accurate, it contains so much data that it might even cause lag problems when using a spreadsheet.
To download this report, go to your Amazon Seller Central dashboard, navigate to Reports → Payment. Select the
report for the settlement amount you want to reconcile, click Print Statement, and export the report.

 Consolidate the data from the report: Now, you need to enter the data from the report into Xero and ensure
that your records match what was deposited. To do this, you must find your deposit and click Add details.
Then you need to enter all accounts and the exact amounts to ensure the total exactly matches the deposit.
This step can be difficult and requires care because it needs to balance to the penny.
Here’s an example of how the Settlement Report from above needs to be broken down into transaction types and
carefully accounted for to ensure everything balances correctly:

Common mistakes with manual Amazon bookkeeping

Because it’s so easy to make mistakes when doing this process manually, we’ve put together this list of common
mistakes Amazon sellers make when doing their bookkeeping:

Mistake #1: Not including tax because MFT covers it

Amazon is a Marketplace Facilitator, meaning it collects and remits your sales tax for nearly all US states as the
Marketplace Facilitator Tax (MFT). Because Amazon is responsible for this, it can be tempting not to include it in your
books. However, you are still responsible for ensuring the amount Amazon collects, and remits is correct, so you must
have it in your books.

Mistake #2: Not covering all transaction types

Amazon has many transaction types, and skipping or missing some is easy. Failing to cover all transaction types in a
settlement period will mean your books won’t balance or will be incorrect if you enter information under the wrong
transaction types.

Mistake #3: Resorting to incorrect methods

Because it is so hard to balance, some sellers enter data from their Seller Central dashboard rather than the
Settlement Report. Then, they add any difference between the dashboard and the deposit to an accounts receivable
account.

For example, a seller receives a deposit of $15,000 but can only account for $13,000 of it. They put the remaining
$2,000 in an accounts receivable account, wrongly assuming it’s money Amazon will pay them eventually. Not only is
this inaccurate, but because there is no way to know what this money was for, the seller won’t know what to do or
how to explain it if this balance keeps increasing.

Additionally, Amazon has transactions that are charged monthly and are not linked to an order. By relegating
unknown sums to an accounts receivable account, they are missing out on crucial information and making their
records unreliable.

Why care about this level of detail?

The fixation on detail might seem like overkill. Still, there are a few reasons why properly accounting for everything in
great detail is important, especially for building a sustainable, long-term business:

1. Tax is still your responsibility: Even if Amazon collects and remits it for you, it’s still your responsibility to
ensure accuracy.
2. Business forecasting: Your sales might increase, but if you aren’t adequately tracking them, you have no real
visibility on your actual costs and no way of knowing if you’re making as much profit as possible.
An estimated 29% of ecommerce businesses fail due to cost and pricing imbalances, with others failing when
they try to scale too quickly.
3. Tax deductions: You should do everything possible to reduce your tax burden. Make sure you claim your
expenses!
4. For potential buyers or investors: By having accurate and tidy financials you’ll have the necessary
information on hand if you ever want to sell your business. If you have a more relaxed approach to your
books, you’ll need to tidy them before handing them over, which could result in a buyer walking away or
offering a price lower than your business is worth.

Benefits of entering data manually

No monetary cost
By transferring data manually, you save on the monthly expenses associated with using an app or tool. The only cost
you incur is the time spent on the task, which can vary greatly depending on your business size. This cost-effective
approach is especially popular among new business owners.

Complete control over when you post

Since you are downloading and collecting the data from Amazon yourself, you have total control over what is entered
into Xero. By inputting only the necessary information and reports, you reduce the chances of overloading your
accounting software, ensuring it remains responsive and quick to load.

Ability to customize entries

Manual data input into Xero allows for full customization of entries to meet your specific needs. While this process
may be time-consuming, it ultimately results in perfectly tailored entries that reflect your unique business
requirements.

Opportunity to identify errors

As you manually input data, you have the chance to carefully review the information and catch any discrepancies or
errors before they impact your accounting records.
However, it’s important to note that manual data transfer can be time-consuming and prone to human error.
Balancing the benefits and drawbacks will help you determine whether this method is the best fit for your business.

Manual challenges
Complexity of numerous transaction types
Amazon has hundreds of transaction types, meaning you have to account for all these transactions in your entries.
This involves going through a lot of data to ensure your books are fully accurate and each transaction type – whether
it’s associated with a sale or not – is accounted for.

Risk of cutting corners and unreliable data

Due to the sheer volume of data, it’s easier to unintentionally cut corners than when using an automation app. While
the data might still seem “close enough” to use for analysis, cutting corners makes it unreliable to use for your
financials as it wouldn’t stand up to scrutiny from professionals.

Amazon’s payment schedule complications

Amazon pays sellers every two weeks, which can complicate month-end close procedures, as payments may include
sales from two different months. This requires meticulous tracking to ensure accurate reporting.

Understanding Amazon’s unique terminology

Learning to transfer your transaction data manually will also mean learning Amazon’s unique and confusing
terminology. Amazon uses terms such as ItemPrice, ItemFee, Commission, Chargeback, and OtherFee, which then
have to be accounted for in your entries. You will need to spend some time getting acquainted with these terms and
what they mean.

Challenges with multiple marketplaces

For Amazon sellers who sell products on multiple marketplaces, there will likely be different taxes and currencies to
consider when doing your books. So, if it’s hard to wrap your head around this for just one marketplace, adding
others to the mix may quickly become overwhelming.

Tracking tax collected and tax paid

As a Marketplace Facilitator, Amazon must remit your tax for you on your behalf. However, Amazon sellers are still
responsible for ensuring this is accurate. This means you need to track your tax collected and tax paid closely
throughout the year. Doing this manually means close attention needs to be paid to avoid any mishaps when it
comes to making sure you’ve fulfilled your tax obligations.

Difficulty balancing books with received money

One of the most frustrating parts about manually transferring data from Amazon to Xero is that it can be very difficult
to balance your books perfectly with the money you’ve received. This is a task that an app like A2X would take care of
on your behalf but when you’re doing it yourself it can get incredibly discouraging to constantly see differing amounts
and trying to get them to balance.

Time-consuming and error-prone process

Manually entering data into Xero is not only time-consuming but also susceptible to errors. As your business grows,
this process can become increasingly overwhelming and prone to mistakes.

Reliability for tax and accounting purposes

Hand-in-hand with the point above, your books need to be rock solid to be used and relied on for tax and accounting
purposes. While it’s absolutely possible that you can transfer the necessary data from Amazon to Xero and complete
accurate and tidy entries, you do need to have 100% confidence in their accuracy to be able to use them to complete
your tax and accounting.

Managing COGS (Cost of Goods Sold)

If you’re handling the transfer of data from Amazon to Xero yourself, you’ll also need to allocate time to manage your
COGS, a task that some accounting automation tools, such as A2X, can handle for you.
A2X’s Auto Setup feature when setting up your Accounts and Tax Mapping, A2X will categorize Amazon transactions
to the following accounts:
Transaction Type Category Default Account Name Account Type
Adjustments Other Amazon Seller Fees and Charges Expense
Advertising Expense Amazon Advertising Expense
Amazon Delivery and Expense Amazon FBA Fees Direct Costs
Transport
Commissions and Selling Fees Expense Amazon Seller Fees and Charges Expense
Fulfillment and Warehousing Expense Amazon FBA Fees Direct Costs
Lending Current Liability Amazon Loans Current Liability
Other Other Amazon Seller Fees and Charges Expense
Pending Balance Current Asset Amazon Pending Balances Current Asset
Promotions Income Amazon Promotions Sales
Refund and Return Fees Expense Amazon Seller Fees and Charges Expense
Sales Income Amazon Sales Sales
Refunds Income Amazon Refunds Sales
Reimbursements Income Amazon Reimbursement Revenue
Shipping Income Income Amazon Shipping Revenue
Reserved Balance Current Asset Amazon Reserved Balances Current Asset
Shipping Expense Expense Amazon Shipping Fees Expense
Subscription and Service Fees Expense Amazon Seller Fees and Charges Expense
Tax Tax Amazon Sales Tax Collected Current Liability
Sales Tax Tax Amazon Sales Tax Collected Current Liability
Refunds Tax Tax Amazon Sales Tax Collected Current Liability
Promotions Tax Tax Amazon Sales Tax Collected Current Liability
Shipping Tax Tax Amazon Sales Tax Collected Current Liability
Other Taxes Tax Amazon Sales Tax Collected Current Liability
MFV Taxes Tax Amazon Sales Tax Collected Current Liability

A2X was launched in 2014. It was created to address the specific challenges of accounting and bookkeeping for
Amazon sellers, particularly with integrating transaction data into accounting software like QuickBooks Online and
Xero. Since its inception, A2X has been focused on automating and streamlining the accounting process for e-
commerce businesses.