Accounting Q - How to calculate net profit per month?


#1

Hello all, new seller here and for the life of me can’t get any numbers to line up. I’m trying to calculate my net profit for the month of AUG. I figure that’s enough time to have the payments disbursed and any fees from aug deducted.

How does everyone calculate their net profits? If I look at payments they don’t seem to line up with the transactional reports.


#2

Payments you receive from Amazon = your sales
Net profit = Sales - all outside Amazon costs


#3

I ignore all the twaddle from Amazon except what is paid into my bank. After all that is all the income I get and it doesn’t count as income until it is in my control. Then I use a simple spread sheep with all my expenses including an hourly rate for me. The difference is either profit or loss.


#4

Of course, but how do you calculate/isolate sales that happened for example aug 1 to aug 31, and be able to see what exactly each sale paid out? I know it shows what it should pay out on the transactional report but it’s not really lining up for me.

Trying to calculate: (Sales 8/1 to 8/31) - (ACOS) - (FBA fees) - (Storage) - (COGS) = net profit


#5

Exactly what im saying, the transactional view looks good, but doesn’t seem to match what actually gets paid out. Trying to break down what gets paid out is what I am trying to do. I was on the phone with amazon for 2 hrs trying to figure this out and they didnt seem to be able to make the numbers line up between the two reports. It shouldn’t be this hard to see what you are actually making… Unless I am totally missing something.


#6

We do not go month by month. We look at the payment statements every 2 weeks.


#7

We do a preliminary weekly and a final monthly.

The real problem is because Amazon does not give a detailed list of expenses.


#8

And when you look at them, how do you tell what sales are included in them?


#9

I am not interested in individual sales.
I have neither time nor reason to account on individual sale.


#10

How do you know what’s profitable and what’s not?
My items range between 150-600 so I am more concerned with individual sales.


#11

I check individual items occasionally adjusting prices if necessarily.
Every order (both FBA and FBM) has information how much will be deposited. I just check it against cost of the item shipped.

Since many expenses: refunds, storage fees, FBA returns, FBA reimbursements are not calculated per order/SKU and sometimes may be posted months after sale it is much easier to deduct total expenses from total funds received.


#12

I track my sales on my own spread sheets in excel. I never use any report from Amazon. I know what I need for doing taxes and so I track everything I need to including some things that I don’t need to but which help me adjust my business. I know on a daily basis what is going on with my Income & Expenses. I do my end of the month accounting at the end of every month and put those totals into my yearly sheet and those final numbers into a sheet that lets me see how my business has been profitable over the life of the business. I am a numbers person so it is fun for me.

Sounds like you could use some basic accounting and I am sure that there is plenty of info on that on the internet or at a book at your local library. Be sure that you check out the IRS and the Schedule C and the instructions to go with it on the net. Even if you have someone else do your taxes, you have to know what numbers you need to be tracking.


#13

Keep in mind that you have more costs than Amazon.

You might consider looking at tool like Inventory Labs, but you will need to upload your product cost (including inbound shipping costs that are not included with Amazon).

That will get you closer - at least to Gross Profit, but your true Net should factor in other costs like telecom, bank fees, office space, staff wages, etc. and depreciation of assets.

Dave


#14

I’ve taken accounting classes in college and have been doing the books for my businesses for years now (also have an accountant that files for me). That’s why all of this is so frustrating for me, because I am also a numbers guy. When you look at each month, at the end of each month, how do you do the books for that since it’s not final yet, pending returns/other? Amazon holds the funds and disperses them every 2 weeks? So at the end of the month, you really can’t have a 100% accurate calculation, because there could be returns, ect and the finds have not hit your account.

I understand all of this, i understand returns, ad fees, expenses very well. I have each expense itemized down to the duty, the item cost, the average ACOS, the FBA shipping everything down to the cent, but for the life of me can’t get the numbers from the transactional view to line up with the payments. How can i look at AUG and see what was actually paid out? Since the payouts were made in late aug and sep.

What i want to be able to see is itemised in the payments, that when I sold product A, (X amount from that sale) is transfered to my bank account. I can see this in the transactional view, but not the actual payments.


#15

I sell my products, I get paid twice a week. I enter the amount that was deposited into my checkbook for my account when it comes through. I have not ever tried to reconcile when I get a payment to when it was earned. I enter all costs like postage for each item, seller fee for each item, etc. and income on my income sheet and all costs like the $39.99 seller fee and my internet fee under costs for each month which is why I can close out the month prior by the 1st or 2nd. Any refund needed goes on the expense sheet for the month I paid it out, unless of course it comes through on the same month. I sell on more than one venue so ALL income goes on one sheet and ALL expenses goes on the expense sheet. At the end of the year, everything lines up for whatever category they go into for my Schedule C. I would get the jitters trying to go by reports that Amazon or any other venue gives us, as I want to fill things out my way. I have been doing things like this for 17+ years now with no trouble. In my last job before disability hit, I also closed out the end of the month on the next working day. The boss never said that I should be waiting for this or that before closing out the month. The IRS tells us we have to keep records but they don’t specify how we have to keep them, so I do them the way I want to and that I feel comfortable with and helps me get the right numbers for doing taxes.


#16

Do you use any type of software?


#17

IRS gets copy of your 1099. If you reported sales are different from your 1099 - they will investigate.


#18

This is pretty complex issue. So you need to understand Amazon inventory location and orders really well not to double count. Also Amazon has lots of black holes when inventory turns into money and the opposite or just disappears for periods of time. Their inbound quantities are often incorrect so you need to keep track of them yourself.
Now this head-on program… Which is cool but from the point of accounting it’s a hot mess.
We had to write our own software to do it somewhat right. And we are still having issues as inventory “in the cloud” is essentially much harder then “inventory on the shelf”


#19

There was a genius on a facebook group I got into this subject with… He claimed all he did was figure the profit and just report that. Nope you can not do that… That doesn’t record any expenses and you are only reporting a fraction of the amount figured on the 1099-K.

I import each Amazon transaction into my ecommerce software. From there all orders are imported into my quickbooks individually. (this captures the gross amount of the sale only).

From there, I do a journal entry to record any fees (referral fees, shipping expenses, pro-account fees etc), and also account for the payment hold (when an order is entered for October 1st, the funds are not deposited until later so that must be accounted for to keep checkbooks in balance).

Really easy and automated except for the journal entry which is about 6-8 total lines.


#20

There are a couple of automated tools available to take all of your Amazon sales and correctly categorize them for entry into accounting software. I use A2X Accounting but I had also tried a similar provider called Taxomate. Every two weeks when you receive a payment from Amazon their software goes through line by line and creates a summary of what sales occurred in what month and it exports that to Quick Books Online or Xero. The cheapest plan is about $20 a month, Taxomate starts at about $10. The price scales up depending on number of transactions.

A2X offers to post cost of goods sold but you have to have a higher tier plan than I currently use ($49/month). Taxomate offers COGS with their base plan but in my case my costs for a particular item can change on each order so I’m sticking with a spreadsheet and manual journal entry each month.