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A Guide toAmazon Accounting

by Link My Books

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Amazon Accounting Guide Using Link My Books

In this guide we will outline the process of settlement based accounting using Link My Books. The 6 steps below will take you all the way from creating an account with us right up to reconciling your freshly exported Amazon settlements against the corresponding Amazon disbursements. You will find even more helpful guides and articles about using Link My Books on our help site, help.linkmybooks.com.

Contents

Step 1: Create an account with Link My Books Page 2-4

Step 2: Connect to your first Amazon Marketplace and Xero account Page 5-11

Step 3: Choose your preferred account and tax rates Page 12-14

Step 4: Review and send your first Amazon settlement to Xero Page 15-17

Step 5: Reconcile invoices in Xero to incoming deposits from Amazon Page 18-21

If you find this guide helpful the best thanks you can give us is to share it with your friends and colleagues that are also Amazon Sellers. You’d be helping us spread the word about Link My Books and helping them to simplify their Amazon Accounting too! Thanks again and happy accounting! Should you have any questions regarding this guide, or the Link My Books application, please reach out to our support team at support@linkmybooks.com

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Step 1: Create an account with Link My Books Singing up to Link My Books is super simple thanks to us only accepting Google's "Sign in with Google".

No need to provide your name, email address or any information for that matter, plus there is no new username and password to remember either!

To sign in with Google all you need is a Gmail or Google account.

Do you already have a Gmail or Google account?

Yes Great! Then all you need to do is click the "Sign in with Google" button on the registration page and sign in to your normal Google account. You'll use your Google account to log in to Link My Books - this is very wise in terms of security for both us and you as Google accounts are very secure. The button looks like this on the registration page:

No If you don't have a Gmail account or Google account, don't worry - the steps below will show you how to sign up for Link My Books without an existing Google or Gmail account.

Step 1: Click the "Sign in with Google" button

Step 2: Click the "Create Account" link

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Step 3: Create a new Gmail or use existing email

You can either sign up for a completely new Gmail account with a new Gmail email address or use your existing non-Gmail email address to create a new Goggle account.

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Once you complete the Google sign up process you will then be redirected back to Link My Books and logged in with your new account.

If you have any issues with the above, please open a new conversation with us via the blue support icon on the bottom right of every page.

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Step 2: Connect to your first Amazon Marketplace and Xero account We make connecting your Amazon, Xero and Link My Books accounts super easy.

For notes on adding multiple Amazon accounts please scroll to the bottom of this step.

Step 1: Pick which Amazon region you want to connect to

We currently support both the Amazon North American and Amazon European regions. Each region consists of multiple Amazon marketplaces. When you connect your Link My Books account to an Amazon region you connect it to all of the marketplaces at once. The marketplaces for each region are listed below:

Amazon North America Amazon.com Amazon.ca Amazon.com.mx

Amazon Europe Amazon.co.uk Amazon.de Amazon.fr Amazon.es Amazon.it

Step 2: Click the "Visit Seller Central" button

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Step 3: Log in to Amazon and accept the MWS Agreement

Once you log in to Amazon you will see the page shown below. The developer details should be pre-filled so all you need to do is click Next.

On the next page, shown below, simply check the checkbox to agree to the MWS agreement and click Next.

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Amazon will then generate an MWS Auth Token. Copy and paste the Seller ID and your MWS Auth Token into Step 4 on the Link My Books setup process.

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Step 4: Copy & Paste your MWS credentials into Link My Books

Give your new account a name so that you can distinguish between multiple Amazon accounts should you have more than one.

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Then paste the Seller ID and MWS Authorisation Token into the two final boxes and click Verify Details.

Step 5: Click the "Connect to Xero" button

With your Amazon account successfully connected, the final step is to connect to Xero. Simply click the Connect to Xero button and then click Allow access as shown below.

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You may need to select your organisation from the dropdown list before allowing access if you have access to multiple organisations through your Xero logins.

Notes for users with multiple Amazon accounts

If you sell in multiple marketplaces, then it's also simple to connect up multiple Amazon regions to your Link My Books account. The same applies if you also have multiple seller accounts in the same regions too.

The process for connecting your first Amazon region and any others after that is exactly the same.

The only difference is how you start the process. To add an additional account simply click the dropdown menu at the top right of your current Link My Books account and select Add new account as shown below.

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For more details on how to connect additional Amazon seller accounts see the How to add a second Amazon seller account help page.

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Step 3: Choose your preferred account and tax rates The last thing you need to do before you start sending Amazon settlements to Xero, is to choose which Accounts and Tax Rates you want to assign to the different Amazon transaction types.

There are two ways to do this but remember, whichever way you choose you need to check with your accountant that you have this set up correctly BEFORE you start sending settlements to Xero.

Option 1 - The Easy Way

The easiest way is to use our default settings. We take the 160+ different Amazon settlement transaction types and split them into 9 groups:

• (LMB1) Amazon Sales

• (LMB2) Amazon FBA Inventory Reimbursement

• (LMB3) Amazon Seller Fees

• (LMB4) Amazon FBA Fees

• (LMB5) Amazon Storage Fees

• (LMB6) Amazon Advertising Cost

• (LMB7) Amazon Sales Tax

• (LMB8) Amazon Loans

• (LMB9) Amazon Reserved Balances

We create these 9 groups as new Accounting Codes (Accounts) in Xero, but don't worry you can use your existing Accounts if you want to instead by taking option 2.

This also means that you'll only have to set the Tax Rates for 9 items instead of 160!

Simply select the correct Tax Rate for each of the 9 Accounts and hit submit.

For UK users we even pre-fill these with tax rates based on your VAT settings in Xero - but you must still check them as you are responsible for your accounts and taxes, not us.

Option 2 - The Advanced Way (Greater Flexibility)

If you want to use your own existing Accounts from Xero and are happy to choose the Account and Tax Rates for each of the Amazon Settlement Transaction Types, then choose this option.

When you see this page, select the link at the bottom for Manual Setup:

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You will then be taken to the Accounts & Taxes page where you will be able to select an Account and Tax Rate for each of the different Amazon Settlement Transaction Types.

The Transaction Types are displayed in groups, just as they appear on the settlements themselves, however for an initial setup we suggest you click the Expand All button to reveal all of the individual transaction types and set accounts and tax rates for them individually.

This is because Amazon group some transaction types together which you would probably not want to apply the same account and tax code to. For example see below, under the Order group you will see that some of the transaction types are for sales and some are for fees - which would need to be assigned to different accounts and tax rates.

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When selecting an Account and Tax Rate you can either choose to Inherit from parent or set an Account/Tax Rate to be Explicit.

For example, taking the Order transaction group above if you were to set the Order account to "200: Sales" and then each of the sub items (Item fees, Shipment fees, Item price...) would also be assigned the account "200: Sales".

Unless you select and account for one of the sub items, then in that case the selection would become explicit and the item would not inherit the account from the parent.

For example, if you set Item Fees to "310: Cost of Goods Sold" then it would be explicit and no longer would it inherit the "200: Sales" account from the parent item.

Once you have set an account a tax rate for each transaction type then simply save them at the bottom of the page.

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Step 4: Review and send your first Amazon settlement to Xero To review and send your settlements to Xero is quick and easy with Link My Books.

Starting on the Dashboard page, choose the settlement you want to review and click the view icon as shown below:

The settlement will then appear as either a single invoice or two invoices (if the settlement period falls over two different months) in the Sales & Fees tab. Click the Show invoice detail to show the full breakdown of an invoice as shown below:

You can then heck to ensure that the line items of the invoice have been mapped to the correct Accounts and Tax Rates as shown in below. (They should be as you set these up in step 3 remember)

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Once you have finished checking the Sales & Fees invoice, if you have Cost of Goods Sold turned on then you will also have a Cost of Goods Sold tab as shown below:

Here you can check that the landed cost of each product SKU is accurate and update it if needed as shown below. If you need to change the currency of your landed costs or want to update all of your products in bulk you can do so from the Product Costs page.

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Once you are happy that your Sales & Fees Invoice and COGS Bill (if applicable) is correct then you can send the settlement to Xero by clicking the Send Settlement To Xero button shown below:

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Step 5: Reconcile invoices in Xero to incoming deposits from Amazon Once you have sent a settlement to Xero you will be able to reconcile the settlement against the disbursement Amazon will have paid out to your bank account.

The good thing about settlement based Amazon accounting is that when you do so the amount shown on the invoice in Xero and the amount you receive into your bank from Amazon will be exactly the same. This makes it really easy for you (or your accountant) to reconcile your bank account.

Below are 3 steps that you will take to reconcile your Amazon settlements in Xero.

Step 1 - Navigate to the invoice(s)

You can do this one of two ways:

Option 1 - click the "View in Xero" link on the Link My Books view settlement page, as shown below:

Option 2 - Navigate directly to Xero and pull up your draft invoices by following the path: Business > Invoices > Draft

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Step 2 - Check the invoices are accurate

We always recommend that you or your accountant check your invoices in Xero ensuring that the correct account and tax rates have been applied, then Approve them and move to the next step.

Step 3 - match the Amazon disbursement to the settlement invoice(s)

The last step is to locate the Amazon disbursement on your bank statement reconciliation and click on the Match tab, as shown below:

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This will reveal all account transactions. Your job is to locate the right one(s) to match to the amount received from Amazon.

You can use the search boxes on the right to narrow down the list if you have multiple transactions. Try searching for the marketplace for example (Amazon.fr in this instance).

IMPORTANT - If a settlement period is between two months then Link My Books will automatically split the settlement into two invoices (one for each month).

As you can see below in our example, we have the split scenario so we would need to check both of the checkboxes on the left of the two invoices to match up to the final amount received from Amazon.

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Below you will see that once we tick both of the invoices, the amount goes green and we can now click OK or Reconcile to allocate this amount to those two invoices, thus marking them as paid and reconciling the bank statement line.

If you found this guide helpful the best thanks you can give us is to share it with your friends and colleagues that are also Amazon Sellers. You’d be helping us spread the word about Link My Books and helping them to simplify their Amazon Accounting too! Thanks again and happy accounting! Should you have any questions regarding this guide, or the Link My Books application, please reach out to our support team at support@linkmybooks.com