Frequently Asked Questions

COGS (Cost of Goods Sold) is the total cost to produce products you sell. It includes:

• Product cost from manufacturer/supplier
• Shipping/freight to you
• Tariffs and import fees
• Packaging materials
• Prep labor

COGS matters because: (1) It determines your gross profit margin, (2) It's a tax deduction that lowers your taxable income, (3) Accurate COGS calculation is critical for profitability analysis.

Income reconciliation process:

• Export income from each platform (Amazon, Shopify, etc.)
• Record in your income tracker template
• Match platform reports to your bank deposits
• Account for any delays or differences
• Document anything unclear
• Update your P&L with reconciled totals

This ensures accuracy and catches discrepancies before they become problems.

Yes, tracking by platform is strongly recommended. You should categorize expenses as:

• Platform-specific: Advertising, referral fees, storage fees (if using FBA)
• Shared: Software, equipment, office supplies (allocate proportionally)
• General: Rent, utilities, insurance (allocate to business)

This helps you understand which platform is most profitable and make better strategic decisions.

Keep these records for 3-7 years:

• Bank statements and payment records
• Invoices (from vendors)
• Receipts (for expenses)
• Platform payout reports
• Shipping/tracking records
• Email correspondence with vendors/customers
• Tax returns and supporting documents

Digital backups are recommended (cloud storage, external hard drive).

Sales tax requirements vary by state. You may need to collect and remit sales tax if:

• You have sales in a state with a sales tax
• You meet the state's economic nexus threshold (varies, often $100K+ annually)
• You're shipping to customers in that state

Amazon and other platforms can collect sales tax on your behalf. Check your state's requirements and consult with a tax professional.

Basic formula: (YTD Profit ÷ Months Completed) × 12 × Tax Rate ÷ 4

Example: If you've made $10,000 profit in 3 months, annualize to $40,000. At 30% tax rate, your annual tax = $12,000. Quarterly payment = $12,000 ÷ 4 = $3,000.

Deadlines: Q1 (Apr 15), Q2 (Jun 15), Q3 (Sep 15), Q4 (Jan 15 next year). Use our Quarterly Tax Calculator for estimates, but consult a CPA for accuracy.

Common deductions for online sellers:

• COGS (product costs, shipping, tariffs)
• Advertising and marketing
• Software and tools (accounting, design, etc.)
• Shipping supplies and packaging
• Home office (if applicable)
• Vehicle expenses (if business-related)
• Equipment and supplies
• Professional services (accounting, legal)

Keep detailed records and receipts. Consult a CPA to maximize deductions legally.

Yes. Amazon, Shopify, and other platforms will issue Form 1099-K if you meet reporting thresholds (typically $20,000+ in gross sales and 200+ transactions annually). You're responsible for:

• Receiving and reconciling all 1099s
• Reporting the amounts on your tax return
• Accounting for refunds and adjustments

Keep detailed records to match 1099 amounts. Discrepancies can trigger IRS scrutiny.

FBA (Fulfillment by Amazon):

• Amazon stores, packs, and ships your products
• Higher fees ($2-5+ per unit, storage fees)
• Prime eligibility, better rankings
• Better for bulky/heavy items, high volume

FBM (Fulfillment by Merchant):

• You handle storage, packing, shipping
• Lower fees but more work
• No Prime eligibility
• Better for low-margin or slow-moving items

Many sellers use both strategically based on product profitability.

Formula: Selling Price − COGS − Referral Fee (15%) − FBA/Shipping Fee − Advertising = Profit

Example ($25 price, FBA):

• Selling Price: $25.00
• COGS: $8.00
• Referral Fee (15%): $3.75
• FBA Fee: $3.50
• Advertising: $2.00
• Net Profit: $7.75 (31% margin)

Anything below 15% margin is generally not worth selling.

Amazon Reserve Account: Amazon holds back a percentage of your sales (typically 30-50% for new sellers) for 90 days. This is a safety mechanism to cover potential refunds, chargebacks, or account issues.

Key points:

• Reduces as you establish history
• Released after 14-90 days depending on performance
• Plan cash flow accordingly
• Use our Cash Flow Template to project when funds are available

Key suspension prevention strategies:

• Maintain seller metrics (defect rate <1%, on-time shipment >97%)
• Never link off-Amazon or collect outside payments
• Sell only authentic products (source from authorized distributors)
• Follow all listing policies (no keyword stuffing, false claims)
• Document everything (invoices, shipping records, correspondence)
• Respond quickly to customer inquiries and issues
• Never fake reviews or manipulate metrics

Most suspensions are preventable with adherence to policies.

Target margins vary by channel:

• Amazon FBA: 15-30% net profit (after all fees)
• Amazon FBM: 20-35% net profit
• Shopify: 30-50% net profit (higher, fewer fees)
• Etsy/eBay: 25-40% net profit

Anything below 15% is risky. Focus on higher-margin products first.

Recommended review schedule:

• Daily: Check top ASINs/products and sales trends
• Weekly: Analyze profitability by product
• Monthly: Full P&L and profitability audit
• Quarterly: Deep-dive strategic analysis and benchmarking
• Annually: Full year-end review and next-year planning

Regular reviews catch problems early and prevent profitability drift.

Profitability comparison:

• Shopify: Highest margins (fewer fees) but requires traffic
• Amazon FBM: Good margins, lower fees, less work
• Etsy: Moderate margins, niche products do well
• Amazon FBA: Lower margins but high volume potential
• eBay: Varies widely, competitive on commodities

Best strategy: Use multiple platforms to diversify. Shopify for direct sales, Amazon for discovery/scale. Analyze which is most profitable for YOUR products.

ACOS (Advertising Cost of Sales) targets:

• Established products: 15-25% (healthy)
• Growing products: 25-40% (acceptable for scaling)
• New products: 30-50% (launch phase)

Formula: (Ad Spend ÷ Sales) × 100 = ACOS%

Rule of thumb: If ACOS > 30%, product likely isn't profitable. Anything > 40% is generally a waste unless you're building reviews/visibility.

Available free templates:

• P&L Template: Track income and expenses
• Income Tracker: Record all income sources
• Expense Tracker: Categorize and monitor expenses
• COGS Tracker: Calculate product costs accurately
• Cash Flow Template: Project future cash position

All templates are Excel-based and can be customized for your business.

Free calculators include:

• Profit Calculator: Calculate per-unit profit
• FBA Calculator: Estimate FBA fees and profitability
• COGS Calculator: Calculate landed cost
• Margin Calculator: Analyze markup and margins
• Tax Calculator: Estimate quarterly tax payments
• ROI Calculator: Measure return on investment

Use these to make data-driven decisions about products and pricing.

Popular options for sellers:

• QuickBooks Online: Full-featured, integrates with platforms
• Xero: Cloud-based, good for multi-currency
• Wave: Free, basic features, good for startups
• Zoho Books: Affordable, integrations available
• Excel/Google Sheets: Free, flexible (with our templates)

Start with our templates. Graduate to accounting software as you scale.

Yes! All Seller Bookkeeping templates are free to download and use for your personal or business purposes. You can:

• Download and customize
• Share internally with your team
• Modify for your specific needs
• Use for your accounting

However, you cannot resell or redistribute the templates as your own. Always give credit to Seller Bookkeeping.