Amazon is every bookkeeper's nightmare. One vendor, thousands of possible categories. Here's how to handle Amazon transactions correctly.
The Amazon Categorization Problem
Unlike most vendors where the name tells you the category ("Shell" = Gas, "Staples" = Office Supplies), Amazon sells everything. A single statement might show:
- $45.99 - Office supplies
- $299.00 - Computer equipment
- $25.00 - Personal items (books for kids)
- $150.00 - Inventory for resale
The bank statement just shows "AMAZON.COM" or "AMZN MKTP" with no detail about what was purchased.
Categorization Strategies
Strategy 1: Use Amazon Business
Amazon Business provides detailed purchase reports that can be exported and matched to transactions.
Benefits:
- Itemized purchase history by date
- Category suggestions for each item
- Separate business and personal accounts
- Tax-exempt purchasing (for eligible businesses)
Workflow:
- Download Amazon Business purchase report
- Match totals to bank transactions by date
- Assign categories based on item descriptions
Strategy 2: Review Order History Manually
For regular Amazon accounts, log in and check order history for each transaction date.
Workflow:
- Find Amazon transaction in bank statement
- Note the date and amount
- Check Amazon order history for matching order
- Categorize based on items purchased
Tip: Amazon orders sometimes post 1-2 days after the order date. Check adjacent dates if you can't find a match.
Strategy 3: Default Category with Review
When you can't verify each purchase, assign a default category and flag for client review.
Recommended defaults:
- Most businesses: Office Supplies / Office Expense
- E-commerce/retail: Cost of Goods Sold / Inventory
- Construction/trades: Supplies / Materials
Flag large Amazon purchases ($200+) for client verification before finalizing.
Common Amazon Purchase Categories
Office Supplies (Schedule C Line 18)
- Printer paper, ink, toner
- Pens, notebooks, folders
- Desk organizers, storage
- Shipping supplies (boxes, tape, labels)
- Cleaning supplies for office
Computer & Equipment (Depreciation or Section 179)
- Computers and laptops ($2,500+)
- Monitors, keyboards, mice
- Printers and scanners
- External drives, USB hubs
- Cables and adapters
Note: Items over $2,500 may need to be capitalized rather than expensed.
Software & Subscriptions (Other Expenses)
- Software purchases
- Kindle books (if business-related)
- Amazon Web Services (AWS)
- Prime membership (business portion)
Inventory / Cost of Goods Sold
- Products purchased for resale
- Raw materials
- Packaging for products
- Components and parts
Personal / Owner Draw (NOT deductible)
- Household items
- Personal clothing
- Gifts for family
- Entertainment items
Handling Split Orders
When a single Amazon order contains both business and personal items:
Option 1: Split the Transaction
In your accounting software, split the transaction into multiple lines with different categories.
Example:
- $89.00 Amazon order
- → $45.00 Office Supplies (printer paper)
- → $44.00 Owner Draw (personal items)
Option 2: Reimburse the Business
Categorize the full amount as business expense. Have the owner reimburse the business for the personal portion.
Option 3: Client Review
Flag mixed orders for client to break down. Send them a list of Amazon transactions to categorize.
Amazon Prime Membership
Prime membership ($139/year) is deductible if used primarily for business.
100% business Prime: Fully deductible as "Dues & Subscriptions"
Mixed use: Deduct business percentage only
Documentation tip: If Prime is mixed use, estimate business percentage based on order history.
Amazon Web Services (AWS)
AWS charges appear as "AWS" or "Amazon Web Services" on statements. These are almost always 100% business.
Category: Software & Cloud Services, or Computer & Internet Expense
Amazon Seller Fees
If your client sells on Amazon, track seller fees separately:
- Referral fees → Commissions & Fees (Line 10)
- FBA fees → Commissions & Fees (Line 10)
- Storage fees → Rent/Warehouse (Line 20b)
- Advertising fees → Advertising (Line 8)
Using TraceEntry for Amazon
TraceEntry identifies Amazon transactions but can't know what was purchased. The AI will assign a default category based on your industry:
- Retail businesses → Inventory/COGS
- Service businesses → Office Supplies
- All businesses → Flagged for review
During review, verify Amazon transactions against order history and adjust categories as needed. Your corrections are saved for future reference.
Best Practices
- Use Amazon Business if you make frequent business purchases
- Keep business and personal Amazon accounts separate
- Review large purchases ($200+) individually
- Document mixed orders with itemized breakdowns
- Flag unusual transactions for client verification
Need help with Amazon transaction categorization? Upload your bank statement and TraceEntry will flag Amazon transactions for your review.