What is a chart of accounts?

It is the master list of accounts your bookkeeping is organized into, grouped under five types: assets, liabilities, equity, income, and expenses. Every transaction in your business gets categorized into one of these accounts. The structure of your chart of accounts determines how useful your financial statements are: a good one makes margin and profit visible, a poor one hides them.

What accounts should an Amazon seller's chart of accounts include?

Beyond the basics, break out the Amazon cost stack: separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising, and refunds, plus cost of goods sold kept distinct from your inventory asset. You'll also want a dedicated account for FBA reimbursements and a pass-through treatment for marketplace-collected sales tax. The goal is detail that maps to your settlement report and your real cost drivers.

Is inventory an expense in the chart of accounts?

No, inventory is an asset until it sells. When you buy stock, it goes to an inventory asset account; only when a unit sells does its landed cost move to cost of goods sold as an expense. Expensing inventory at purchase is a common mistake that distorts both your balance sheet and your profit timing.

Should I delete unused accounts or make them inactive?

Make them inactive rather than deleting them. Marking an account inactive preserves the historical transactions booked to it and keeps prior-period reports accurate, while still removing it from your active list. Deleting can orphan past transactions and break historical reporting, so inactivation is the safer cleanup approach.

Should I use account numbers?

Yes, once you're past a dozen or so accounts. Numbered ranges (1000s assets, 2000s liabilities, 3000s equity, 4000s income, 5000s cost of sales, 6000s expenses) keep reports in a predictable order and make it obvious where a new account belongs. Leave gaps between numbers so you can add fee types later without renumbering.

Do I need separate income accounts for each sales channel?

If you sell on more than one channel, yes. Separate Amazon, Shopify, and eBay income accounts let you read channel performance directly off the P&L instead of building a report every month. Keep the split at income level and resist creating a full parallel set of fee accounts per channel unless the fee structures genuinely differ.

Does accounting software set up the chart of accounts for me?

Partly. QuickBooks and Xero ship a generic default that isn't built for marketplace selling, and connectors like A2X or Link My Books will suggest seller-specific accounts during setup. Those suggestions are a decent starting point, but the mapping decisions are yours. If you're comparing amazon accounting software, look at how much control you get over which account each settlement line hits, since that mapping determines whether your P&L is readable or just full.

Glossary

What is Chart of accounts?

The list of accounts (income, expense, asset, liability) your books are organized into.

A chart of accounts is the organized list of every account your bookkeeping is built on, the buckets your transactions get sorted into across the five families of accounts: assets, liabilities, equity, income, and expenses. It is the backbone of your books. Every sale, fee, refund, inventory purchase, and reimbursement has to land in one of these accounts, and the quality of your chart of accounts determines whether your financial statements actually tell you anything useful or just produce a vague net number at the bottom.

For an Amazon or multichannel ecommerce seller, a generic, out-of-the-box chart of accounts is rarely enough. Marketplace selling generates a specific set of money movements (referral fees, fulfillment fees, storage fees, advertising, marketplace-collected sales tax, refunds, and FBA reimbursements) that a default template lumps together or ignores. A chart of accounts designed for how you actually sell is what turns a pile of settlement data into a P&L you can run the business on, and it's the structure tools like BeanHawk map your Amazon activity into.

The cost of getting this wrong isn't abstract. A seller with one 'Amazon fees' expense line cannot tell you whether their margin problem is referral fees, storage, or ad spend, so they end up guessing at price changes. Splitting that one account into five takes an afternoon and changes what you can see for the rest of the business's life.

The five account types and what belongs where

Every account in your chart belongs to one of five categories, and getting transactions into the right one is the difference between a balance sheet that balances and a month of cleanup. Assets are what you own (cash, inventory, money owed to you). Liabilities are what you owe (loans, sales tax payable, credit cards). Equity is the owner's stake. Income is revenue from selling. Expenses are the costs of running and selling.

For sellers, two of these deserve special attention. Inventory is an asset, not an expense: you don't expense a product until it sells, at which point its cost moves to cost of goods sold. And marketplace-collected sales tax is a liability or pass-through, not income. Misfiling either of these is the most common reason ecommerce accounting produces a P&L that looks wrong, because it either inflates expenses early or overstates revenue.

The five types also determine which statement an account appears on. Assets, liabilities, and equity live on the balance sheet and carry their balance forward year to year. Income and expenses live on the profit and loss statement and reset each year. That's why misclassifying an inventory purchase as an expense doesn't just distort one month, it permanently removes the value from your balance sheet.

•Assets: cash, inventory, accounts receivable, prepaid expenses
•Liabilities: credit cards, loans, sales tax payable
•Equity: owner contributions, retained earnings, draws
•Income: gross product sales, by channel if useful
•Expenses: COGS, referral fees, fulfillment fees, ads, software, shipping

Building a chart of accounts that fits an ecommerce seller

A seller-ready chart of accounts breaks out the Amazon cost stack instead of dumping it into a single 'Amazon fees' line. At minimum you want separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising spend, and refunds, because each one behaves differently and each one is a lever you manage separately. Collapsing them hides exactly the information you need to find your margin leaks.

It's equally important not to over-engineer it. A chart of accounts with hundreds of hyper-specific accounts becomes impossible to keep consistent and makes reporting noisier, not clearer. The right granularity is enough detail to see your real cost drivers and reconcile cleanly, without so much detail that booking a transaction requires a judgment call every time. Aim for accounts that map directly to lines on your settlement report and to decisions you actually make.

Resist the urge to create a separate account per SKU or per product line. That's what classes, tracking categories, or a proper subledger are for. Your chart of accounts answers 'what kind of money movement was this', while dimensions answer 'which part of the business'. Mixing the two jobs produces a chart nobody can maintain.

A sample structure for a multichannel seller

Numbered ranges keep a chart readable as it grows, and both QuickBooks and Xero support account numbering. A common convention gives 1000s to assets, 2000s to liabilities, 3000s to equity, 4000s to income, 5000s to cost of goods sold, and 6000s and up to operating expenses. Within each range you leave gaps, so adding a new fee type later doesn't force a renumber.

Income deserves a split by channel if you sell in more than one place. Separate accounts for Amazon sales, Shopify sales, and eBay sales let you read channel performance straight off the P&L without building a report. Keep the fee accounts channel-agnostic unless the fee structures are genuinely different, which for referral versus final value fees they usually are.

The clearing accounts matter more than they look. A marketplace clearing account holds the gap between when a sale is recorded and when the payout hits your bank, and it should return to a balance you can explain after every settlement. If your clearing account drifts and nobody can say why, the problem is almost always a settlement line mapped to the wrong place.

•1000s Assets: operating cash, Amazon clearing, Shopify clearing, inventory, supplier deposits
•2000s Liabilities: credit cards, sales tax payable, loans, accrued freight
•3000s Equity: owner contributions, draws, retained earnings
•4000s Income: Amazon sales, Shopify sales, eBay sales, FBA reimbursements, shipping income
•5000s Cost of sales: COGS, referral fees, fulfillment fees, storage fees, inbound freight
•6000s Operating expenses: advertising, software, contractors, professional fees, bank charges

Where reimbursements, COGS, and sales tax fit

Three categories trip sellers up most, and each deserves a deliberate home in your chart. FBA reimbursements should not be booked as sales: they offset lost inventory or overcharged fees, so they belong in a dedicated account (often a contra to COGS or an other-income line) so they don't inflate revenue. Cost of goods sold should reflect the landed cost of units actually sold in the period, kept separate from the inventory asset account where unsold stock sits.

Marketplace-collected sales tax needs its own treatment too, typically as a pass-through or clearing account so it nets to zero rather than masquerading as revenue or piling up as a phantom liability. When these three are mapped correctly, your gross margin and net profit become trustworthy. When they're not, every report downstream (margin, profit, even your 1099-K reconciliation) inherits the error.

One wrinkle on the tax side is worth building into the chart before you need it. Marketplace facilitator rules mean Amazon collects and remits sales tax on your marketplace orders in most states, which is why a pass-through account works there. Sales through your own storefront are different: where you have nexus in a state, the tax you collect is your liability until you remit it, and it needs a real sales tax payable account rather than a pass-through. Whether you have nexus in a given state depends on physical presence and on that state's economic thresholds, which get revised often enough that any nexus chart you saved last year is suspect. Confirm against current state guidance or a sales tax service, then give each state you file in its own subaccount so the payable ties to the return.

Keeping reimbursements in their own account has a practical payoff beyond accuracy: you can see the number. A seller who books recoveries into a general income line has no idea whether Amazon owed them $400 or $14,000 last year, which makes it impossible to judge whether chasing reimbursements is worth the effort. One account, reviewed quarterly, answers that.

A worked example: mapping one settlement

Say a two-week Amazon settlement shows $18,400 in product sales, $2,760 in referral fees, $2,150 in fulfillment fees, $310 in storage, $1,900 in advertising, $640 of refunds, $1,480 of marketplace-collected sales tax, and a $95 reimbursement, with a net deposit landing in your bank.

The wrong version books the bank deposit as revenue. That single entry understates sales by thousands, hides every fee, and makes your margin unknowable. The right version records gross sales of $18,400 to Amazon Sales, each fee to its own expense account, refunds to a contra-revenue account, the $1,480 of facilitated tax through a pass-through account that nets to zero, and the $95 reimbursement to its dedicated account. The difference between gross activity and the deposit clears through your Amazon clearing account.

Separately, if 620 units sold from that period at an average landed cost of $6.10, you post $3,782 from Inventory to COGS. That entry has nothing to do with the settlement and doesn't come from Amazon's report, which is precisely why sellers who only book settlements end up with revenue and fees but no cost of goods.

Common chart of accounts mistakes

Letting the software invent accounts is the most common. Bank feed rules and imports will happily create 'Amazon.com', 'AMZN Mktp', and 'Amazon Marketplace' as three separate expense accounts if nobody stops them. Turn off auto-creation where you can, and review new accounts monthly.

Second: personal and business mixed in one chart. Owner draws are equity, not an expense, and a personal purchase run through the business account belongs in draws rather than office supplies. This one shows up painfully at tax time.

Third: no distinction between cost of sales and operating expenses. Referral and fulfillment fees scale with every unit sold; your accounting subscription doesn't. Putting them in the same bucket destroys your ability to compute a real contribution margin.

Fourth: renaming accounts instead of creating new ones. Renaming rewrites history, so a report from last year suddenly shows transactions under a label that didn't exist then. Create the new account, make the old one inactive, and leave the past alone.

Maintaining your chart of accounts over time

A chart of accounts is not set-and-forget. As you add sales channels, new fee types, or new product lines, the chart should evolve, but deliberately, not by letting your software auto-create stray accounts every time it sees an unfamiliar transaction. Uncontrolled account sprawl is what turns a clean chart into an unreconcilable mess. Periodically review for duplicate accounts, near-identical accounts that should be merged, and accounts no longer in use.

When you retire an account, mark it inactive rather than deleting it, so historical transactions stay intact and prior-period reports remain accurate. Both QuickBooks and Xero let you export your chart of accounts and mark accounts inactive, which is useful for auditing the structure or migrating to a cleaner template. A tidy, stable chart of accounts is what makes month-end close fast instead of a recurring archaeology project.

A yearly review is enough for most sellers. Export the chart, sort by account activity, and look at anything with no transactions in twelve months, anything with a name nobody recognizes, and any pair of accounts that mean the same thing. Deactivate, merge, and document what each remaining account is for. Whoever does your amazon seller bookkeeping next will need that document more than you think.

How your chart connects to your accounting tools

Your chart of accounts is where every integration you own eventually points. A settlement connector doesn't invent categories, it maps Amazon's transaction types onto accounts you've defined. That mapping is the actual work, and it's why two sellers running the same tool can end up with wildly different quality of books.

When you set up a2x accounting, Link My Books, or any amazon quickbooks connection, expect to spend real time on the mapping screen rather than clicking through it. Decide in advance which account each fee type lands in, where refunds go, and how facilitated sales tax is handled. Tools that pre-build a seller chart for you are doing you a favor, but check their choices against how you want to read your P&L rather than accepting the defaults.

The test of a good setup is a single question: can you open your P&L and see gross sales, each major fee category, COGS, and net margin without exporting anything? If yes, your chart is doing its job. If you need a spreadsheet to answer basic margin questions, the problem is usually the chart rather than the tool sitting on top of it.

Frequently asked questions

What is a chart of accounts?: It is the master list of accounts your bookkeeping is organized into, grouped under five types: assets, liabilities, equity, income, and expenses. Every transaction in your business gets categorized into one of these accounts. The structure of your chart of accounts determines how useful your financial statements are: a good one makes margin and profit visible, a poor one hides them.
What accounts should an Amazon seller's chart of accounts include?: Beyond the basics, break out the Amazon cost stack: separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising, and refunds, plus cost of goods sold kept distinct from your inventory asset. You'll also want a dedicated account for FBA reimbursements and a pass-through treatment for marketplace-collected sales tax. The goal is detail that maps to your settlement report and your real cost drivers.
Is inventory an expense in the chart of accounts?: No, inventory is an asset until it sells. When you buy stock, it goes to an inventory asset account; only when a unit sells does its landed cost move to cost of goods sold as an expense. Expensing inventory at purchase is a common mistake that distorts both your balance sheet and your profit timing.
How do I export my chart of accounts from QuickBooks?: Both QuickBooks Online and Desktop let you export the chart of accounts to a file (commonly Excel or CSV) from the accounts list, which is useful for auditing the structure or migrating to a cleaner setup. The exact steps differ between the Online and Desktop versions, so follow the current process for your specific product version.
Should I delete unused accounts or make them inactive?: Make them inactive rather than deleting them. Marking an account inactive preserves the historical transactions booked to it and keeps prior-period reports accurate, while still removing it from your active list. Deleting can orphan past transactions and break historical reporting, so inactivation is the safer cleanup approach.
Should I use account numbers?: Yes, once you're past a dozen or so accounts. Numbered ranges (1000s assets, 2000s liabilities, 3000s equity, 4000s income, 5000s cost of sales, 6000s expenses) keep reports in a predictable order and make it obvious where a new account belongs. Leave gaps between numbers so you can add fee types later without renumbering.
Do I need separate income accounts for each sales channel?: If you sell on more than one channel, yes. Separate Amazon, Shopify, and eBay income accounts let you read channel performance directly off the P&L instead of building a report every month. Keep the split at income level and resist creating a full parallel set of fee accounts per channel unless the fee structures genuinely differ.
Does accounting software set up the chart of accounts for me?: Partly. QuickBooks and Xero ship a generic default that isn't built for marketplace selling, and connectors like A2X or Link My Books will suggest seller-specific accounts during setup. Those suggestions are a decent starting point, but the mapping decisions are yours. If you're comparing amazon accounting software, look at how much control you get over which account each settlement line hits, since that mapping determines whether your P&L is readable or just full.

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