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

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.

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

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.

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

Do you use any type of software?

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.

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.

There are lots of software which will give you an estimated profit on an accrual basis, however realistically you need to use some form of accounting software which not only takes into accounts the sales/fees associated with Amazon but also your businesses running costs. Personally I’ve found Xero pretty good and there is QBO and others as well.

As for getting the data in, the best way is to take the settlement data (e.g the payouts), its actually pretty complex and I would suggest checking out the software LinkMyBooks, basically takes the settlements, breaks the data down into different sections (such as fees as in Europe this has different tax rates) and puts it into Xero… real time saver