Understanding which accounting records Amazon sellers need to keep is more involved than it first appears. The gap between what customers pay and what arrives in your bank account is where most of the complexity lives. Amazon deducts referral fees, fulfilment charges, advertising costs, refunds and various other adjustments before each settlement — which means a payout figure alone tells you very little about your actual sales activity or your costs.

For reliable e-commerce accounting, you need a clear trail covering gross sales, fees, VAT, refunds, inventory and the adjustments that explain each payout. That trail supports accurate tax reporting, but it also gives you something just as useful: a working view of your margins, stock position and cash flow. This post sets out what to keep, how long to keep it, and why the records go well beyond your bank statements.

An Amazon payout is a cash movement. It is not a complete record of your sales, and treating it as one creates problems that compound quickly as transaction volumes grow.

Take a straightforward example. Your customers pay £20,000 for products during a settlement period. Amazon deducts referral fees, fulfilment charges, refunds and other costs before transferring £15,000 to your bank. If you record only the £15,000 bank receipt as turnover, your accounts understate your sales and fail to show the costs deducted before payment. If you are VAT-registered, the VAT included in customer receipts also needs to be separated correctly, rather than being treated as revenue.

Your bank only shows the final cash movement. It does not show the commercial activity that created it. A monthly reconciliation therefore needs to work backwards from the settlement and account for each component:

• Gross customer sales
• Less refunds and returns
• Less Amazon referral fees
• Less fulfilment and storage charges
• Less advertising expenditure
• Plus or minus other marketplace adjustments
• Plus or minus reserves or previous balances
• Equals the amount transferred to your bank

Once you have that reconciliation working correctly each month, you have the foundation for clean accounts. Without it, bank-feed bookkeeping alone will mislead you — particularly once transaction volumes become too large to review individually.

Amazon marketplace records

You need both settlement-level and transaction-level information. Settlement data explains the amount transferred to your bank; transaction data explains the individual orders, refunds, fees and adjustments that produced that settlement. Amazon Seller Central provides several downloadable reports that support this, including settlement statements, transaction reports, date-range reports, order-level payment data, refund information and fee breakdowns. The point is not which specific report you save — it is whether you retain enough detail to demonstrate how gross marketplace activity has been converted into the final payout.

You should also download and store these reports regularly rather than relying on Seller Central as your long-term archive. The platform is designed to run the marketplace, not to preserve accounting records for statutory retention periods. A sensible monthly download habit means you are not trying to reconstruct years of activity if accounts, VAT returns or an HMRC enquiry require supporting information.

Non-Amazon records

Amazon records show only part of the financial picture. You also need supplier invoices, receipts, shipping and packaging costs, courier invoices, advertising invoices, bank statements and credit-card statements. Where you hold stock, reliable purchasing and inventory records are necessary too. If products are imported, customs documents and evidence supporting import VAT may also be relevant.

How long to keep everything

The required retention period depends on your business structure. Sole traders generally need to keep business records for at least five years after the 31 January Self Assessment submission deadline for the relevant tax year. Limited companies generally need to retain accounting records for six years from the end of the relevant financial year, with longer periods applying in some circumstances. VAT records generally need to be kept for at least six years; HMRC's VAT record-keeping guidance also sets out the digital record requirements for VAT-registered businesses. Where special VAT schemes or overseas activity are involved, different requirements can apply.

Amazon sales, Amazon payouts and accounting profit are three different figures, and you need to keep them separate if you want reliable numbers to run the business from.

Fees and fulfilment costs

Different types of Amazon cost are best recorded separately rather than lumped into a single expense category. Separating referral fees, FBA fulfilment costs, storage charges and advertising makes it easier to see where margin is being lost. If monthly sales increase by £20,000 but Amazon fees and advertising rise by £15,000 at the same time, the headline revenue growth tells you very little about the improvement in profitability. A business can generate strong sales while producing a much smaller profit once marketplace fees, advertising, fulfilment, returns and stock costs are accounted for.

Refunds and returns

Refunds reduce the economic value of your sales, but there are also related fee adjustments, stock movements and potential reimbursements to consider. You need to look at more than the refund transaction itself. A product with high sales volume but a high return rate may look successful when you examine orders alone. Once you account for refunds, fulfilment costs and unusable returned stock, the margin can look very different.

VAT

VAT becomes particularly important as your taxable turnover approaches the UK registration threshold. As of August 2026, compulsory UK VAT registration applies when taxable turnover for the previous 12 months exceeds £90,000, or when you expect taxable turnover to exceed £90,000 within the next 30 days. Once registered, you need reliable records showing sales values, VAT rates, output VAT and qualifying input VAT. For marketplace sellers, overseas sales, stock held abroad or activity across different jurisdictions can make VAT considerably more complicated. One VAT treatment does not automatically apply across every marketplace.

The simplest approach to Amazon bookkeeping is to make it a regular monthly process rather than a year-end exercise. Small errors repeated across thousands of transactions can create substantial differences by the time you reach year-end, and errors identified while transactions are still recent are much easier to resolve.

Each month, your reconciliation should cover:

• Gross marketplace sales
• Returns and refunds
• Seller and referral fees
• FBA and storage charges
• Advertising expenditure
• VAT where applicable
• Marketplace reimbursements
• Other adjustments
• Inventory movements
• Outstanding marketplace balances
• Amazon payouts received in your bank

If the figures do not agree, investigate the difference before closing the period.

Separately, Making Tax Digital for Income Tax affects some sole traders. From 6 April 2026, the regime generally applies to individuals within Self Assessment whose qualifying gross income from self-employment and property exceeded £50,000 in the 2024/25 tax year, subject to exemptions. If you are within it, you need compatible software to maintain digital records and send quarterly updates to HMRC. The threshold falls to more than £30,000 from April 2027 and more than £20,000 from April 2028 under the current timetable. You can check the current requirements through HMRC's Making Tax Digital for Income Tax guidance.

There is no turnover threshold that suddenly makes monthly management accounts compulsory. The right point is when basic bookkeeping and annual accounts no longer give you enough information to run the business effectively.

You may want to consider more regular reporting when you have several sales channels or marketplaces, increasing FBA stock commitments, large advertising budgets, frequent customer returns, significant VAT obligations, tight cash flow despite growing turnover, difficulty identifying profitable products, or rapid changes in marketplace fees or margins. At that stage, waiting until year-end to understand performance leaves too much time between a problem arising and you seeing it in the numbers.

Good monthly reporting should cover your profit and loss, balance sheet and cash position, but for an Amazon seller it can also track gross margin, net margin, Amazon fees as a percentage of revenue, advertising expenditure, returns, stock levels, working capital, VAT and expected tax liabilities, and cash available for future inventory orders. OD Accountants' management accounts service moves the conversation beyond whether the bookkeeping balances and towards what the figures mean for your next decision.

Stock deserves a particular note here. Under traditional accrual accounting, unsold inventory is carried as an asset and recognised through cost of sales as it sells. Under the cash basis for Income Tax, the treatment is different. Either way, accurate stock information tells you how much cash is tied up in products sitting in warehouses or fulfilment centres — which is commercially useful regardless of the basis you use.