How to categorise Amazon fees

Accounting
1

Hi there,

I was just wondering how to categorise amazon fees.

I think sales commission would probably be the most suitable fit however its showing as an expense and not a variable cost which surely it is?

Any guidance would be brilliant!

2

Personally, I would set them up as a supplier, and follow the same method as PayPal, Stripe and GoCardless fees. Take a look at this post if you’re a bit unsure on what I mean:

http://community.quickfile.co.uk/t/showing-deductions-for-paypal-fees/2990/2?u=parker1090

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3

@Parker1090 is correct the best way is to setup a bank account (of type ‘Merchant Accont’) called ‘Amazon Marketplace’ and any sales made through Amazon pay the invoice into this account. When Amazon remit the funds to you (usually minus their fee) you treat this as a transfer from the Amazon Merchant account to your current account. Any balance left over you can enter as a money out entry and tag is a payment to a supplier, again named ‘Amazon Marketplace’.

4

Hi @Glenn

So, in the above situation, when we have an invoice from Amazon, we tag it against the supplier Amazon Marketplace with the description ‘bank charges’ (like we do with PayPal)?

Many thanks
Jose

5

Yes, all these scenarios in accounting where you’re paid from a middle entity NET of fees is handled the same way. So in that respect Amazon Marketplace would work much like PayPal.

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6

Thanks Glenn!

Much appreciated
Jose

7

OK, I have a question about incoming Amazon payments.

Unlike PayPal, incoming payments from Amazon go straight into the bank account, so we can’t log that as a transfer between accounts (merchant to bank).

So if Amazon pay £10 into the bank, and the Amazon fees are £2, how would we log that in QuickFile?

Create a money in entry in the merchant acc: £12 gross
Create a money out entry in the merchant acc: £2 fees to Amazon

  • here’s the issue: the £10 income is not in the merchant acc - it’s in the main bank account.

Any input is welcome

Cheers
Jose

9

You’re still adjusting down the balance of the merchant account, so in this case you would find the £10 incoming payment on your current account and tag it as a transfer from the Amazon merchant account.

If you don’t do this your Amazon account will accrue a larger and larger balance over time.

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10

Thank you Glenn,

I finally get it.

I assume that I tag the incoming £12 in the merchant account as ‘sales income’, because Amazon don’t ask for an invoice, so there’s no invoice to pay down with the incoming £.

Many thanks Glenn - I really appreciate it.

Best Regards
Jose

11

You create an invoice in QuickFile anyway, even if you don’t actually send it to anyone. I’d use a dummy client named something like “Amazon Sales”. I have to do a similar thing running my physical retail shop, creating one “invoice” in QuickFile for the total amount of each day’s till sales.

2 Likes
12

Thanks Ian,

Much appreciated! I think that’s Amazon 101 covered in this thread :slight_smile:

This thread should help a few people in the future - thank you all - it’s got me back on track.

Al the best
Jose

1 Like