Is my accounting method correct?

[Avneesh Yadav]

Hi,
I am an Amazon seller. Amazon transfers the weekly amount of our sales after deducting their all fees. Amazon issues invoices for the services they provide, at the end of month. So, Amazon acts like a bank for me. So, I made following accounts.

So, I made three accounts Amazon customer, Amazon clearing account, Amazon vendor.

When I make sales, I tansfer the sales amount to our amazon account:

Entry: Amazon clearing account: Credit

When Amazon tranfers money to my real bank account after deducting their fees on weekly basis

Entry: Amazon clearing account: Debit
Real bank account: Credit

When Amazon issue invoices for their services like shipping, etc. at end of month

Entry: Amazon clearing account: Debit
Expenses: Credit

So, is this methodology correct?

And, since Amazon raises the proper GST compliant invoices for my customers with my company name and I have saved them all.
So, in my accounting can I make my all invoices in the name 'Amazon customer' without saving any addresses? Though I have saved the states name in which the sale is made.

Also, If there is a case of return and refund, Can I skip that entry permanently? As amazon charges and makes an invoice called 'refund charges' in my name. So, there is no need to debit and credit notes on a product level basis.

If I have messed up somewhere feel free to ask. It will be a great help if you can verify this method and help me.

Regards,
Avneesh

[Ganeshan Kalyani]

Accounting entry is very important to do in a correct method. There are Accounting Standards to be followed while maintaining books of accounts. Which amount to consider is also an important point. Hence it is my humble submission that you should consult a practicing Chartered Accountant who would guide you in a proper way. Thanks

[Avneesh Yadav]

Hi,

I understand that you are correct but I am a very small business owner. I had a CA but I had to pay him 25% of my net profits. The fees is too high. That's why I had to do my own.

Can you please tell me what's wrong with this method?

AI Summary

Accounting method for marketplace settlements: verify clearing account entries, GST invoicing and refund treatment for compliance. Seller treats Amazon as intermediary using three accounts (Amazon clearing, Amazon customer, Amazon vendor): sales posted to clearing account; weekly net transfers recorded as clearing account debit and bank credit; monthly Amazon service invoices recorded as clearing account debit and expenses credit. Amazon issues GST compliant invoices in the seller's company name and state names are retained. Seller asks if invoices may be recorded to 'Amazon customer' without addresses and whether product level return entries can be skipped because Amazon issues a separate refund invoice. A respondent advises following Accounting Standards and consulting a Chartered Accountant.