Welcome to our guide of A2X for Amazon sellers – the tool that helps you import your Amazon sales into your cloud accounting software (eg. Xero and Quickbooks). For our special tip, read till the end to find out which is our favourite, cheaper and better A2X alternative at What a Figure! Ecommerce Accounting.
Differences to look out for
There are several tools around for Amazon sellers to import your sales, however, there are some crucial differences!
Several years ago, when we started working with Amazon sellers, A2X was one of the first tools and hence the most popular. When it comes to importing Amazon sales, the best software choice can greatly depend on the countries you are selling in. As there are so many around, it is important to choose the most suitable one for you (to keep both the taxman and your wallet happy).
How do they work in general?
A2X as all other alternative softwares are accounting software add-ons.
What does it mean?
It means that you need to use a cloud accounting software (eg. Xero or Quickbooks) and additionally use one of these add-ons. It will be like a link between your accounting software and your Amazon seller central account. Normally, you would go through the folllowing set up steps to be able to use them:
1.) To start with, you would already have an Amazon seller central account (with historical sales).
2.) Secondly, you would also have a cloud accounting software set up. Our favourite is Xero, but there are plenty of choice for Amazon sellers.
3.) Once you have the first two set up and active, that is when you would set up A2X to connect the two (your Amazon seller account with your cloud accounting software).
Crucial difference in how they work
“1-step method”
Softwares that use a 1 step method, create a sales invoice based on your Amazon settlements and post the total VAT or sales tax as a summary line at the bottom of the invoice (not as VAT on top of the invoice amount).
“2-step method”
These softwares post the Amazon settlements in 2 steps. First they post the sales as a manual journal that will show on the Balance Sheet in a control account. Then they create a sales invoice to move the sales from the control account and show it on your Profit & Loss with a VAT on top of the invoice amount. The advantage of this is that the correct VAT % is used and it will show correctly on the VAT return without any adjustment.
A2X for Amazon Sellers
A2X for Amazon sellers (www.a2xaccounting.com) is the biggest and most popular (even if this is not necessarily suitable for all markets – due to their 1 step method).
Which Amazon sellers does it work for?
A2X works for both Amazon and Shopify sellers.
It has lots of 5-star reviews from both Amazon sellers as well as Amazon accountants and it is a great reliable solution if you sell in North America (USA, Canada or Mexico) or Amazon Oceania (Australia and Japan). In our opinion, A2X is however not the best for Amazon sellers in the EU (especially for Amazon UK sales).
How does A2X work?
We will try to be the least technical possible, but it is important for you to understand it.
Once you connected A2X to your online accounting software (let’s say Xero), it will import the Amazon settlements every 2 weeks. If the 2 weeks period overlaps a month-end, then you will have 1 settlement imported in 2 parts (to account for monthly sales correctly).
A2X will create a sales invoice in Xero for every settlement. This invoice includes your total sales, and separately all the Amazon fees deducted and 1 line for the total sales tax collected and due. This is the 1 step method we explained above.
Now, this is cruicial!
This is how the sales invoice (created by A2X) looks as below. You can see the line for ‘total sales tax’.
IMAGE
The VAT column has several percentages to chose from, but this line indicates the full amount of sales tax due to the government. Hence the total amount (100%) is sales tax.
This is where the problem happens. Cloud accounting softwares are set up that the VAT (=sales tax) % they calculate on the price. This can be either exclusive (added on top of the price) or inclusive (included in the total price). So let’s look at why this is an issue in both cases:
-Exclusive:
If the total sales tax due is £1000, and we select 100%, then an additional £1000 will be added on top, making it £2000 (so you are paying twice as much as you should! = you are not happy)
-Inclusive:
If the total sales tax due is £1000 and we select 100% inclusive, then the online accounting software will think £500 is due (so you are paying half as much as you should! = tax man not happy)
Solution:
To ensure both you and the tax man are happy, you need to adjust the figures manually before you submit your VAT return to the goverment.
UK and now several EU countries are starting to move toward ‘Making Tax Digital’ (MTD). UK has implemented it already and other countries are catching up fast.
What does this mean? It means that taxes have to be submitted to the tax authority directly without manual entry or modification. However, if you use A2X, to ensure your taxes due to the UK are correct, you have no choice, but to adjust it manually. Not to mention, your sales tax will show as 100% instead of UK’s 20% tax rate. If you get a tax audit, despite paying the correct tax, the taxman probably won’t be happy and you have lots of explanation to do to prove you have adjusted the numbers correctly.
If you are selling in North America or Oceania with a Zero Rated Income tax, then, in that case, it won’t make a difference and it can be used for those.
Pricing
A2X: Xero and Quickbooks $69
Our favourite A2X alternative
If we don’t recommend A2X for UK/EU sales, you might rightly ask, ok, but what do we recommend?
After several trial and error trying to make A2X work for Amazon Sellers in the UK/EU, we came across Weava as an excellent solution we highly recommend.
Despite them being a fairly new and small startup, their software is now our favourite. It’s been developed with the help of several accountants and their support is very personal and outstanding.
They have less functionality than A2X (they only support Amazon and not Shopify) and currently only works for Amazon NA and Amazon EU (Oceania is now in beta). However, what works is very robust and comes at an unbeatable price (at the time of this writing) – see further below.
How is Weava different from A2X for Amazon sellers?
Weava has a solution to resolve the problem A2X has with a 2-step approach. Instead of creating a sales invoice for every settlement, Weava posts the settlements as a Manual Journal. Then once at the end of every month, it creates a sales invoice for the sales and the VAT due.
This solution not only ensures no adjustment is needed, but also that the VAT % used is correct (20% instead of 100%). So if you are an Amazon Seller in the UK / EU, we would highly recommend you give Weava a try.
Let’s look at the pricing:
Weava: Xero only £27.50 ($35.50)
Other A2X for Amazon sellers alternatives:
LinkMyBooks
-3 Amazon Seller accounts, unlimited marketplaces
-Separates out EU sales for those tax rates and then send an invoice into Xero (or MJ into Quickbooks) with the VAT rates set in LinkMyBooks.
We haven’t used LinkMyBooks, but if their EU sales are separated, the way they work sounds like a good solution.
Xero and Quickbooks $39
Taxomate
-Unlimited Seller accounts, unlimited marketplaces
-We can’t see any information on their website whether they separate EU sales. They create an sales invoice directly in Xero (or MJ for Quicbooks) and from the sound of it enter the total tax calculated by Amazon.
We haven’t used Taxomate, but Weava or LinkMyBooks looks a bit more sophisticated for close to the same price.
SellerZen and Entriwise:
We will mention these two softwares as additional alternatives that we came across:
SellerZen (https://sellerzen.com/): Quickbooks for $250
Entriwise (https://www.entriwise.com/): Quickbooks for $250 with EU VAT
They seem to be the high end for importing Amazon sales, but they offer features you probably won’t need. Such as importing your transactions daily or by the minute. Before you get too excited by these features, let us highlight that Xero and Quickbooks Online are cloud accounting softwares. When it comes to the ‘cloud’ that data needs to be stored somewhere. So when you signed up to Xero or Quickbooks, you were probably not aware of the small print (or their API developers’ guide) that there are limitations to these softwares. Xero has a soft limit of 1000 invoice creations a month. After researching this in detail, it looks like you can create a maximum of 2000 invoices a month, but that is it.
As we specialize in Xero, despite finding the limitations of Quickbooks, they weren’t fully clear. I couldn’t find the number of invoices that they let you create, but as they have a lot of limits too, I believe there will be one for this as well.
Don’t pay for what you don’t need!
Therefore, importing your Amazon sales by day could be still ok. However, be aware that most of these softwares create a separate sales invoices for each marketplace! Meaning if you sell on all the Amazon EU marketplaces, that will be six invoices a day: UK, Germany, France, Italy, Netherlands and Spain.
North America: US, Canada and Mexico another three invoices and there is still Australia and Japan.
So if you sell on all 11 marketplaces, a daily import will mean 330 sales invoices a month just for your Amazon sales.
Therefore we highly discourage you to pay for imports by transaction. You will pay a lot for an importing software that will eventually break the limits of your accounting software (or maybe Quickbooks gives you the option to pay even more for it). Either way, it is not ideal.
Profitability analysis:
Some of these softwares provide SKU level profitability analysis – which is a cruicial information to maximise your profits. Please note, that most of these softwares will need you to enter the COGS (Cost of Goods Sold) by yourself, rather than the softwares syncing them automatically. As the COGS changes over time, you will have to constantly manually update these figures. It can already be a pain when you have 10 SKUs, let alone 100+. So, if this is a main concern for you and you are looking to monitor SKU level profitability, make sure the software can do it automatically.
We hope this article helped you make a decision. If you have any questions or other suggestions, let us know in the comments below!
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