Amazon payouts combine sales, fees, refunds, and taxes into single bank deposits that don't match your actual sales. This creates a reconciliation issue in Xero when done manually.

Sellers who try manual entry face accounting errors, tax miscalculations, and waste hours on spreadsheets each month.

To accurately record sales, Xero needs direct Amazon integration. Link My Books connects these platforms and automatically sorts all Amazon transactions in Xero. This keeps your books accurate with minimal effort.

This guide shows you the fastest way to record Amazon sales in Xero - through automation or step-by-step manual methods.

Key Takeaways from this Post

Amazon sales reports are messy: You need automation to track fees, refunds, and sales accurately.

Most sellers overpay VAT: Correct tax mapping in Xero prevents unnecessary losses.

Manual reconciliation is outdated: Automated tools like Link My Books ensure accuracy and save time.

Why Most Sellers Struggle with Recording Amazon Sales in Xero

The biggest challenge with Amazon bookkeeping is that a single payout from Amazon is not just sales revenue, it’s a bundle of different transactions that need to be accounted for correctly.

When recording Amazon sales in Xero manually, you must:

Download and analyze Amazon sales reports
Separate sales, refunds, Amazon fees, and taxes
Apply the correct Amazon VAT or sales tax rates
Manually reconcile payouts to bank deposits

Each of these steps takes time and leaves room for errors. A small mistake in VAT calculations or missing a refund can result in inaccurate financial reports, potential tax issues, and extra work down the line.

The alternative? Automating the process with Link My Books.

With Link My Books, all your Amazon sales data is categorized correctly and reconciled with Xero automatically, giving you accurate financial reports without the hassle.

And, you can try it for free, without even using your credit card.

How to Record Amazon Sales in Xero

Let’s break down each step.

Step #1: Start a Free Trial of Link My Books

Head over to Link My Books and sign up for a 14-day free trial. This lets you test the platform and see how it seamlessly integrates Amazon Seller Central with Xero, saving you hours of bookkeeping time.

Step #2: Connect Amazon to Xero

Once you’ve set up your Link My Books account, you’ll be prompted to connect your Amazon Seller Central and Xero accounts. This step enables Link My Books to import your Amazon data directly into Xero, including sales, fees, refunds, and VAT.

Use the Setup Wizard: This helps you configure sales, fees, refunds, and tax rates.
Choose sync mode:
- Manual Sync: Review and approve each payout before posting.
- AutoPost: Automatically sync settlements from a set date onwards.

✅ Why This Matters: Without automation, you’d have to manually enter sales invoices and cross-check reports.

Step #3: Import Amazon Data

Amazon payouts aren’t just sales, they include:

✔ Sales Revenue
✔ Refunds & Adjustments
✔ Amazon Fees (FBA, commissions, etc.)
✔ Taxes (VAT, GST, sales tax)

Instead of downloading Amazon reports and manually entering them into Xero, Link My Books automatically categorizes each item and creates an invoice that aligns perfectly with your payout.

💡 Pro Tip: Always check Amazon's reserved balance, sometimes payouts don’t match actual sales due to held funds.

Step #4: Assign Tax Rates Correctly

Most Amazon sellers overpay VAT- Here’s how to stop

Amazon collects VAT in some regions but not others. If you’re not categorizing sales correctly, you might be double-paying taxes.

Use the Guided Tax Wizard in Link My Books.
Separate VAT vs. non-VAT sales: Identify which sales are subject to VAT and which are zero-rated.
Ensure Amazon Marketplace Facilitator Tax is handled correctly: Amazon might be collecting VAT on your behalf, so you don’t need to pay it twice.

✅ Why This Matters: Incorrect VAT setup leads to compliance issues, audits, and financial losses.

Step #5: Reconcile Amazon Payouts with Your Bank

Amazon pays sellers every two weeks, bundling all transactions into a single payout.

With Link My Books, reconciling Amazon payouts in Xero is effortless:

✅ Amazon sales, refunds, and fees are already categorized.

✅ Each Amazon payout is matched perfectly with your Xero bank feed.

✅ With one click, your Xero accounts stay accurate and up to date.

💡 Pro Tip: If you’re doing this manually, always cross-check with the Amazon settlement report to avoid discrepancies.

How Link My Books Makes Recording Amazon Sales in Xero Automatic & Easy

Link My Books eliminates all the challenges of Amazon bookkeping by automating the entire process, ensuring that every Amazon transaction is accurately recorded in Xero with minimal effort.

With Link My Books, you get:

✅ Automatic data sync: Pulls sales, refunds, and fees directly from Amazon into Xero.
✅ Accurate tax calculations: Applies the correct VAT, GST, or sales tax for each transaction.
✅ Effortless reconciliation: Matches Amazon payouts to your bank feed in Xero with one click.
✅ Time savings: Reduce bookkeeping time from hours to minutes.

Instead of spending hours on manual entries, let automation do the work for you…

Here’s a quick break down of what you can expect:

Automated Amazon Payout Reconciliation

Amazon settlements don’t just include sales, they bundle in fees, refunds, VAT, and withholding taxes, making reconciliation a complicated process.

Link My Books automatically breaks down and categorizes every Amazon payout, ensuring that all transactions are correctly mapped to Xero. This means:
✔ Every sale, refund, and fee is recorded correctly
✔ Amazon deposits match Xero bank transactions effortlessly
✔ No more missing or miscategorized entries

This automation saves you hours of bookkeeping every month, ensuring that your financials remain up to date and error-free.

Accurate VAT & Sales Tax Calculation

For Amazon sellers, tax compliance is one of the biggest bookkeeping challenges. With different VAT rates across the UK and EU, and Amazon’s Marketplace Facilitator Tax rules in various countries, keeping up with tax laws manually is a recipe for mistakes.

With Link My Books:
✔ Amazon VAT and sales tax are automatically calculated
✔ Tax rates are correctly applied based on each jurisdiction
✔ No risk of overpaying or underreporting taxes

💡 Fact: Before using Link My Books, 75% of Amazon sellers discovered they were overpaying VAT or sales tax simply due to incorrect categorization.

Cost of Goods Sold (COGS) Tracking for Accurate Profit Margins

Many Amazon sellers struggle with understanding their true profitability because they don’t have an accurate way to track Cost of Goods Sold (COGS). Without this, financial reports show revenue, but not real profit after expenses.

Link My Books ensures:
✔ COGS is automatically recorded and applied to each sale
✔ Profit margins are calculated accurately, factoring in Amazon fees
✔ Better visibility into how costs impact overall business performance

With accurate COGS tracking, you can make smarter pricing and inventory decisions, leading to increased profitability.

Real-Time Financial Reporting & Analytics

Having clear insights into your business performance is crucial, but Amazon’s built-in reports are often too complex and time-consuming to analyze.

Link My Books provides real-time financial reports, giving you an instant overview of:
✔ Profitability per marketplace
✔ Amazon account reserve balances
✔ Sales growth and refund ratios
✔ Cash flow trends

These reports are specifically designed for e-commerce sellers using Xero, ensuring that you always have a clear, real-time picture of your financial health.

Industry Benchmarking for Smarter Decision-Making

Are your sales, fees, and refunds in line with industry norms? Link My Books helps you benchmark your business against other sellers by analyzing anonymous industry data.

✔ Compare sales growth, refund ratios, and fee trends
✔ Identify areas where your business is underperforming or excelling
✔ Use percentage-based insights to understand broader eCommerce trends

By tracking these key performance indicators, you can adjust your strategies based on real data, rather than guesswork.

Easy Setup & User-Friendly Interface

You don’t need to be an accountant to set up Link My Books. Most Amazon sellers are up and running in under 15 minutes with the help of the step-by-step setup wizard.

✔ Simple onboarding process with clear instructions
✔ Free 1-on-1 onboarding call for additional support
✔ Access to a library of blogs, webinars, and video guides

Even if you’re new to Amazon bookkeeping, Link My Books makes it easy to manage your finances in Xero with minimal effort.

Why Amazon Sellers Choose Link My Books for Xero Integration

✅ Automates Amazon payout reconciliation: No more manually sorting through settlement reports.
✅ Ensures tax compliance: Stops VAT overpayments and applies correct tax rates.
✅ Tracks COGS accurately: Know exactly how much profit you’re making after fees and expenses.
✅ Provides real-time financial insights: Instantly see how your Amazon business is performing.
✅ Simple, quick setup: Get started in 15 minutes with expert support available.

If you’re looking for a fast, accurate, and automated way to record your Amazon sales in Xero, start your free trial of Link My Books today

How to Categorize Amazon in Xero

To ensure accurate financial tracking, Amazon transactions must be correctly categorized in Xero. With Link My Books, this happens automatically, but here’s how it works:

Sales Income → Amazon product sales go into your main revenue account.
Shipping Income → If you charge customers for shipping, categorize it separately.
Amazon Fees → FBA fees, referral fees, and other charges should be logged as expenses.
Refunds & Returns → Refunds should be recorded in a separate account to offset sales.
Taxes (VAT, GST, Sales Tax) → Ensure the right tax rates are applied based on location.

💡 Pro Tip: If done manually, categorization errors can lead to incorrect financial reports and tax filings. Link My Books ensures every transaction is mapped correctly.

Why Manually Recording Amazon Sales in Xero Is Problematic

Manually doing your accounting might seem manageable at first, but as your business grows, it becomes increasingly inefficient and error-prone. Handling every sale, refund, fee, and tax manually not only consumes valuable time but also increases the risk of inaccuracies that could impact your financial records, tax compliance, and overall business performance.

Here’s why manual bookkeeping is not the best approach for Amazon sellers using Xero:

1. Time-Consuming and Tedious

For Amazon sellers processing a high volume of orders, manually entering sales data into Xero is a time drain. Each payout includes multiple transactions, sales, refunds, Amazon fees, and VAT, which must be logged separately.

✅ The more time spent on bookkeeping, the less time you have for growing your business.
✅ Managing reports manually diverts focus from important tasks like marketing, inventory management, and customer service.

Automating this process saves hours every week, allowing you to focus on scaling your business instead of getting stuck in spreadsheets.

2. High Risk of Human Error

Manually entering sales into Xero leaves room for mistakes—and even small errors can have big financial consequences.

🚨 Common manual entry mistakes include:
✔ Misclassifying Amazon fees or shipping charges.
✔ Forgetting to record refunds or adjustments.
✔ Applying incorrect VAT rates across different regions.

These errors may go unnoticed until tax season or an audit, creating compliance risks and unnecessary financial stress.

3. Inconsistent Data and Mismatches

Amazon payouts are not straightforward, they include various deductions, fees, and adjustments. If any of these are misrecorded in Xero, your books won’t match your Amazon reports, causing reconciliation headaches.

💡 Example: If you record only sales revenue but forget to deduct Amazon fees, your financial reports will overstate your earnings, leading to inaccurate profit calculations.

With automation, every transaction is categorized correctly, ensuring your Xero records match your actual Amazon settlements.

4. Delayed Financial Insights

If your Amazon sales data isn’t updated in real time, you lose visibility into:
✔ Cash flow trends: Are you running out of cash or sitting on reserves?
✔ Profitability: Are you making real profits after deducting Amazon fees?
✔ Inventory costs: Are your costs increasing without you realizing it?

Without up-to-date financial reports, you could be making decisions based on outdated or inaccurate numbers, potentially missing opportunities to improve profitability.

5. Compliance and Tax Risks

Tax compliance is a major challenge for Amazon sellers, especially those selling in multiple countries where VAT rules differ.

❌ Manual entry increases the risk of:
✔ Incorrectly calculating VAT on cross-border sales.
✔ Overpaying VAT because Amazon already collects it in some jurisdictions.
✔ Misreporting tax figures, leading to penalties from tax authorities.

6. Missed Efficiency Gains from Automation

Amazon sellers don’t need to waste time manually logging transactions. Link My Books automates the process, ensuring that sales, fees, VAT, and refunds are accurately recorded in Xero without manual input.

✅ Instantly sync Amazon sales data with Xero.
✅ Reduce bookkeeping time to minutes instead of hours.
✅ Eliminate human errors and tax miscalculations.

Choosing the right accounting software and automating your accounting will make a huge difference in your business.

With Link My Books, Amazon data flows into Xero automatically, ensuring accurate records with zero manual effort.

Automate Amazon Bookkeeping With Link My Books

Instead of spending hours on bookkeeping, get set up in just 15 minutes and let automation handle your financial records.

Link My Books will:

📌 Save you time: No more manual data entry.
📌 Prevent VAT overpayments: Ensures tax compliance.
📌 Eliminate your bookkeeping errors: Every transaction is categorized correctly.

➡ Start your free trial today and take control of your Amazon bookkeeping with Link My Books.