Overview
Step-by-step guide to calculating Cost of Goods Sold for Amazon FBA businesses including landed costs, prep fees, and proper accounting methods.
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Calculate Amazon FBA COGS by adding: product purchase price + inbound shipping/freight + customs duties + prep and labeling fees + packaging materials. Use FIFO (First In, First Out) method for consistency. COGS is your largest deductible business expense.
Step-by-step guide to calculating Cost of Goods Sold for Amazon FBA businesses including landed costs, prep fees, and proper accounting methods.
COGS includes: wholesale product cost, manufacturing costs, inbound shipping to Amazon, customs duties and import fees, prep service fees, labeling costs, packaging materials, and inspection costs. It does NOT include FBA fees, storage fees, or advertising.
FIFO (First In, First Out) is recommended for most Amazon FBA sellers and is required for tax purposes in many jurisdictions. FIFO assumes your oldest inventory is sold first, which is usually accurate for FBA since Amazon ships from available stock.
Landed cost = (Product cost + Shipping + Duties + Insurance) / Number of units. Example: $500 product cost + $200 shipping + $50 duties = $750 total for 100 units = $7.50 landed cost per unit.
COGS directly reduces your taxable income. Higher accurately tracked COGS means lower tax liability. The IRS requires you to properly account for beginning inventory + purchases - ending inventory = COGS for the tax year.
ShelfKeeper helps Amazon FBA sellers track profits, expenses, and tax deductions in one place.
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