Guide
What to record, how to keep it right for VAT, and how to stop spending an afternoon on it every fortnight.
Last updated: 19 September 2026
Short answer: good Amazon FBA bookkeeping means recording each Amazon settlement in full — sales, refunds, FBA fees, storage, advertising, seller fees and VAT — rather than just the payout, then matching it to the money that reaches your bank. UK sellers usually do this in Xero or QuickBooks, with a connector such as TrueBooks, A2X or Link My Books importing each settlement automatically.
Amazon pays you roughly every 14 days. Each payout comes with a settlement report listing every transaction in that period. The payout equals your sales minus everything Amazon deducted. The settlement report — not the bank deposit — is your source document. You can download it from Seller Central under Payments, or have a connector fetch it for you.
| Item in the settlement | Where it belongs |
|---|---|
| Product sales, shipping charged, gift wrap | Sales (income) |
| Promotional discounts | Reduction of sales |
| Refunds to customers | Refunds (reduces income) |
| Referral fees, closing fees, subscription | Amazon selling fees (expense) |
| FBA fulfilment fees | FBA fees (expense) |
| Monthly and long-term storage | Storage fees (expense) |
| Sponsored Products and other ads | Advertising (expense) |
| Reimbursements for lost or damaged stock | Other income |
| Reserve held back / released | Balance sheet, not profit |
If you are VAT-registered, four things catch most Amazon sellers out:
Your profit is sales minus Amazon's fees and the cost of the goods you sold. Keep the purchase cost of each product (including shipping and import duty) and record cost of goods sold as stock sells. Supplier invoices go in as bills in Xero.
Once a settlement is recorded, the total should equal the Amazon deposit in your bank. If it doesn't, something is missing or misclassified. Doing this every settlement keeps problems small and easy to find.
You can type each settlement into Xero by hand from the report. With hundreds of lines per settlement that quickly becomes an afternoon every fortnight. A connector does it automatically: TrueBooks imports each settlement, classifies every line on the right account and UK tax code, and posts one Xero invoice that matches the deposit to the penny. It is priced from £9.99/month + VAT with a 30-day free trial. See the Amazon Xero integration, or compare options in the guide to Amazon accounting software.
This guide is general information, not tax advice. Check your VAT position with your accountant.
It is recording everything behind your Amazon payouts — sales, refunds, Fulfilment by Amazon fees, storage, advertising, seller fees, reimbursements and VAT — in your accounting software, so your profit and VAT return are correct. It also covers tracking the cost of the stock you sell.
No. The deposit is sales minus fees, refunds and sometimes VAT. Recording only the deposit understates your turnover and hides your costs, which gives the wrong figures for your VAT return and accounts. Record the full sales and the fees separately.
If you are VAT-registered, UK sales are usually standard-rated and exports outside the UK are zero-rated. On some orders Amazon itself collects and pays the VAT as a marketplace facilitator; those must not be charged VAT again in your books. Your accountant can confirm the treatment for your business.
Every settlement — roughly every 14 days. Waiting until the end of a VAT quarter means reconciling six or seven settlements at once, which is when mistakes creep in. A connector that imports each settlement automatically removes the backlog.
Yes. Selling fees, FBA fees, storage, advertising and subscription fees are business costs. Since 1 August 2024, Amazon bills UK seller fees from its UK branch, so VAT-registered sellers can normally reclaim the UK VAT on them.
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