How the Amazon integration works

This article explains how FreeAgent handles sales, refunds and fees relating to your Amazon seller account once you’ve set up the integration to import your Amazon data into FreeAgent.

What happens once you’ve connected FreeAgent to Amazon?

Once you’ve set up the Amazon integration, a dummy Amazon bank account will automatically be created in the Banking area in FreeAgent.

Make sure that the bank account that Amazon pays disbursements into has been added to FreeAgent (if it’s not your main business bank account) and has a bank feed enabled (if available). To get the most out of the integration, we’d recommend that you make sure that Guess is enabled in your bank account.

FreeAgent will take the reserve balance from your last completed Amazon settlement report and use this as the opening bank balance of the Amazon bank account. The Amazon bank account in FreeAgent will continue to reflect the reserve balance after each settlement is disbursed from Amazon.

FreeAgent will start an automatic data sync and import the sales data from your last completed settlement report. Please note that any sales data prior to this will not be imported.

If you’ve not yet received a settlement report, because they’re yet to be disbursed by Amazon for example, then FreeAgent’s initial automatic sync will wait until the first settlement report has been completed. Therefore, it may take up to 13 days for your sales data to start importing into FreeAgent if you set up the integration during your first settlement period.

After the initial sync, FreeAgent will import your sales, refunds and fees on a daily basis. Amazon disbursements will also automatically be imported into FreeAgent.

If FreeAgent receives a transaction from Amazon that doesn’t contain a description of what the transaction relates to, it’ll be added to your Amazon bank account in FreeAgent for you to explain.

Sales from your Amazon seller account

Each day, an invoice will be automatically created in FreeAgent if there have been sales in your Amazon seller account. If you’ve received more than 20 orders in a single day, these may be split over multiple invoices.

The invoice(s) will contain the Amazon orders for that day with the total sales values (principal and shipping) and any compensation payments, populated as line items.

The total Amazon sales value of the invoice(s) will be recorded as a credit entry in your Sales account in FreeAgent (nominal code 001). The aggregate value will also be added to the Amazon bank account and automatically explained as an Invoice Receipt against the invoice(s).

Please note that daily sales will be imported on a three day lag to ensure FreeAgent receives all of the correct data from Amazon. For example, sales data from a Monday will be synced on Thursday, and so on.

If you’ve sold items on additional marketplaces, you’ll need to upload or manually enter any transactions for non-UK sales, into your main bank account in FreeAgent. Don’t record these sales in the Amazon bank account in FreeAgent as this could cause reconciliation issues.

If you’re VAT-registered

Tax amounts reported by Amazon on orders within the UK will be imported as VAT (if you’re registered for VAT within FreeAgent) and included as a line item on the invoice(s).

If Amazon has not provided any tax amount on an order, VAT will not be included as a line item on the invoice(s).

If you’re on the VAT Flat Rate Scheme and an order was shipped outside of the UK with Amazon acting as a marketplace facilitator (i.e. Amazon paid the tax), FreeAgent will record these sales as outside the scope of VAT on a separate invoice(s).

If you're waiting on HMRC to issue your VAT number

If you've selected 'Registration Applied For' in your VAT registrations settings in FreeAgent, tax amounts reported by Amazon on orders within the UK will be imported as VAT and included as a line item on the invoice(s).

If Amazon has not provided any tax amount on an order, VAT will not be included as a line item on the invoice(s).

When your VAT number arrives from HMRC, you'll need to provide Amazon with your VAT number and update your VAT registration settings in FreeAgent to ensure the data coming from Amazon contains the correct VAT.

Here is an example of an invoice created by the Amazon integration:

Refunds from your Amazon seller account

If you receive a sales refund and there have been refunds in your Amazon seller account, a credit note will be automatically created in FreeAgent. If you’ve received more than 20 refunds in a single day, these may be split over multiple credit notes.

The credit note(s) will contain the Amazon refunds for that day with the total refunded sales values populated as line items.

The total Amazon refunded sales value of the credit note(s) will be recorded as a debit entry in your Sales account in FreeAgent (nominal code 001). The aggregate value will also be added to the Amazon bank account and automatically explained as a Credit Note Refund against the credit note(s).

If you’ve refunded items on additional marketplaces, you’ll need to upload or manually enter these transactions into your main bank account in FreeAgent. Don’t record these refunds in the Amazon bank account in FreeAgent as this could cause reconciliation issues.

If you’re VAT-registered

Tax amounts reported by Amazon on orders within the UK will be imported as VAT (if you’re registered for VAT within FreeAgent) and included as a line item on the credit note(s).

If Amazon has not provided any tax amount on an order, VAT will not be included as a line item on the credit note(s).

If you’re on the VAT Flat Rate Scheme and an order was shipped outside of the UK with Amazon acting as a marketplace facilitator (i.e. Amazon paid the tax), FreeAgent will record these refunded sales as outside the scope of VAT on a separate credit note(s).

If you're waiting on HMRC to issue your VAT number

If you've selected 'Registration Applied For' in your VAT registrations settings in FreeAgent, tax amounts reported by Amazon on orders within the UK will be imported as VAT and included as a line item on the credit note(s).

If Amazon has not provided any tax amount on an order, VAT will not be included as a line item on the credit note(s).

When your VAT number arrives from HMRC, you'll need to provide Amazon with your VAT number and update your VAT registration settings in FreeAgent to ensure the data coming from Amazon contains the correct VAT.

Here is an example of a credit note created by the Amazon integration:

Amazon fees

Each day, a bill will be automatically created in FreeAgent if there have been fees incurred. If you’ve incurred a lot of fees, they may be split into multiple bills created on the same day.

The total amount of fees will be added to the bill on the day they are charged by Amazon. This includes service-based fees (for example, the Amazon subscription fee or fulfilled by Amazon storage fees) and fees relating to orders (for example, commission and shipping fees).

The total amount of Amazon fees recorded on bills, including ad-hoc fees, shipping costs and subscription fees, will be recorded as a debit entry in your Cost of Sales account in FreeAgent (nominal code 101).

The aggregate value will also be added to the Amazon bank account and automatically explained as a Bill Payment against the bill(s).

If you’ve incurred any fees from Amazon for storing products in warehouses outside of the UK, you’ll need to upload or manually enter these transactions for non-UK fees, into your main bank account in FreeAgent. Don’t record these fees in the Amazon bank account in FreeAgent as this could cause reconciliation issues.

If you’re VAT-registered

If you’re registered for VAT within FreeAgent, FreeAgent will automatically record all Amazon fees (except Advertising and Shipping Label fees) dated before 1st August 2024 as reverse charge, as they were charged by Amazon Luxembourg up until 31st July 2024.

For Amazon fees dated from 1st August 2024 onwards, FreeAgent will automatically record these as including 20% VAT as fees are charged from a UK subsidiary from 1st August 2024.

If you're waiting on HMRC to issue your VAT number

If you've selected 'Registration Applied For' in your VAT registrations settings in FreeAgent, the reverse charge won't be applied to Amazon fees.

When your VAT number arrives from HMRC, you'll need to provide Amazon with your VAT number and update your VAT registration settings in FreeAgent to 'Registered' in order to ensure the data coming from Amazon contains the correct VAT.

Here is an example of a bill created by the Amazon integration:

Amazon disbursements

When a settlement report is due or requested, the amount of your Amazon sales after Amazon’s fees have been deducted will be automatically disbursed (transferred) to your bank account.

Every day, the integration will check whether a new settlement report is available from Amazon.

The Amazon bank account will contain the running balance of funds held by Amazon and when a new settlement report is available, the disbursed amounts will be automatically imported into FreeAgent.

If you have Guess enabled, these imported bank transactions will be automatically explained as a transfer to your business bank account (the account that Amazon pays the money into) once the Amazon payment is displayed in your business bank account. These will be marked 'For approval' in both the Amazon and business bank accounts in FreeAgent for you to approve.

If you don’t have Guess enabled or the bank account that Amazon transfers the money into has been marked as a personal bank account in FreeAgent, you’ll need to manually explain these bank transactions as transfers between accounts.

Please note that since these disbursement transactions are automatically imported into FreeAgent, you don’t need to manually enter them within your Amazon account. If you do this, the transactions will be double counted which may cause reconciliation errors.

Unexplained amounts

If FreeAgent receives a transaction from Amazon that doesn’t contain a description of what the transaction relates to, FreeAgent will be unable to automatically add the transaction to the relevant invoice, credit note or bill.

Therefore, the transaction will be imported into the Amazon bank account in FreeAgent as unexplained with the label ‘Unexplained Amount’ followed by the transaction name that is provided by Amazon. You’ll need to explain the transaction, which you’ll be able to find on your Amazon settlement report, to the relevant category. If you’re unsure which category to explain the transaction to, please ask your accountant.