What is a chart of accounts?

It is the master list of accounts your bookkeeping is organized into, grouped under five types: assets, liabilities, equity, income, and expenses. Every transaction in your business gets categorized into one of these accounts. The structure of your chart of accounts determines how useful your financial statements are — a good one makes margin and profit visible, a poor one hides them.

What accounts should an Amazon seller's chart of accounts include?

Beyond the basics, break out the Amazon cost stack: separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising, and refunds, plus cost of goods sold kept distinct from your inventory asset. You'll also want a dedicated account for FBA reimbursements and a pass-through treatment for marketplace-collected sales tax. The goal is detail that maps to your settlement report and your real cost drivers.

Is inventory an expense in the chart of accounts?

No — inventory is an asset until it sells. When you buy stock, it goes to an inventory asset account; only when a unit sells does its landed cost move to cost of goods sold as an expense. Expensing inventory at purchase is a common mistake that distorts both your balance sheet and your profit timing.

Should I delete unused accounts or make them inactive?

Make them inactive rather than deleting them. Marking an account inactive preserves the historical transactions booked to it and keeps prior-period reports accurate, while still removing it from your active list. Deleting can orphan past transactions and break historical reporting, so inactivation is the safer cleanup approach.

Glossary

What is Chart of accounts?

The list of accounts (income, expense, asset, liability) your books are organized into.

A chart of accounts is the organized list of every account your bookkeeping is built on — the buckets your transactions get sorted into across the five families of accounts: assets, liabilities, equity, income, and expenses. It is the backbone of your books. Every sale, fee, refund, inventory purchase, and reimbursement has to land in one of these accounts, and the quality of your chart of accounts determines whether your financial statements actually tell you anything useful or just produce a vague net number at the bottom.

For an Amazon or multichannel ecommerce seller, a generic, out-of-the-box chart of accounts is rarely enough. Marketplace selling generates a specific set of money movements — referral fees, fulfillment fees, storage fees, advertising, marketplace-collected sales tax, refunds, and FBA reimbursements — that a default template lumps together or ignores. A chart of accounts designed for how you actually sell is what turns a pile of settlement data into a P&L you can run the business on, and it's the structure tools like BeanHawk map your Amazon activity into.

The five account types and what belongs where

Every account in your chart belongs to one of five categories, and getting transactions into the right one is the difference between a balance sheet that balances and a month of cleanup. Assets are what you own (cash, inventory, money owed to you). Liabilities are what you owe (loans, sales tax payable, credit cards). Equity is the owner's stake. Income is revenue from selling. Expenses are the costs of running and selling.

For sellers, two of these deserve special attention. Inventory is an asset, not an expense — you don't expense a product until it sells, at which point its cost moves to cost of goods sold. And marketplace-collected sales tax is a liability or pass-through, not income. Misfiling either of these is one of the most common reasons an ecommerce P&L looks wrong, because it either inflates expenses early or overstates revenue.

•Assets — cash, inventory, accounts receivable, prepaid expenses
•Liabilities — credit cards, loans, sales tax payable
•Equity — owner contributions, retained earnings, draws
•Income — gross product sales, by channel if useful
•Expenses — COGS, referral fees, fulfillment fees, ads, software, shipping

Building a chart of accounts that fits an ecommerce seller

A seller-ready chart of accounts breaks out the Amazon cost stack instead of dumping it into a single 'Amazon fees' line. At minimum you want separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising spend, and refunds — because each one behaves differently and each one is a lever you manage separately. Collapsing them hides exactly the information you need to find your margin leaks.

It's equally important not to over-engineer it. A chart of accounts with hundreds of hyper-specific accounts becomes impossible to keep consistent and makes reporting noisier, not clearer. The right granularity is enough detail to see your real cost drivers and reconcile cleanly, without so much detail that booking a transaction requires a judgment call every time. Aim for accounts that map directly to lines on your settlement report and to decisions you actually make.

Where reimbursements, COGS, and sales tax fit

Three categories trip sellers up most, and each deserves a deliberate home in your chart. FBA reimbursements should not be booked as sales — they offset lost inventory or overcharged fees, so they belong in a dedicated account (often a contra to COGS or an other-income line) so they don't inflate revenue. Cost of goods sold should reflect the landed cost of units actually sold in the period, kept separate from the inventory asset account where unsold stock sits.

Marketplace-collected sales tax needs its own treatment too, typically as a pass-through or clearing account so it nets to zero rather than masquerading as revenue or piling up as a phantom liability. When these three are mapped correctly, your gross margin and net profit become trustworthy. When they're not, every report downstream — margin, profit, even your 1099-K reconciliation — inherits the error.

Maintaining your chart of accounts over time

A chart of accounts is not set-and-forget. As you add sales channels, new fee types, or new product lines, the chart should evolve — but deliberately, not by letting your software auto-create stray accounts every time it sees an unfamiliar transaction. Uncontrolled account sprawl is what turns a clean chart into an unreconcilable mess. Periodically review for duplicate accounts, near-identical accounts that should be merged, and accounts no longer in use.

When you retire an account, mark it inactive rather than deleting it, so historical transactions stay intact and prior-period reports remain accurate. Both QuickBooks and Xero let you export your chart of accounts and mark accounts inactive, which is useful for auditing the structure or migrating to a cleaner template. A tidy, stable chart of accounts is what makes month-end close fast instead of a recurring archaeology project.

Frequently asked questions

What is a chart of accounts?: It is the master list of accounts your bookkeeping is organized into, grouped under five types: assets, liabilities, equity, income, and expenses. Every transaction in your business gets categorized into one of these accounts. The structure of your chart of accounts determines how useful your financial statements are — a good one makes margin and profit visible, a poor one hides them.
What accounts should an Amazon seller's chart of accounts include?: Beyond the basics, break out the Amazon cost stack: separate accounts for referral fees, FBA fulfillment fees, storage fees, advertising, and refunds, plus cost of goods sold kept distinct from your inventory asset. You'll also want a dedicated account for FBA reimbursements and a pass-through treatment for marketplace-collected sales tax. The goal is detail that maps to your settlement report and your real cost drivers.
Is inventory an expense in the chart of accounts?: No — inventory is an asset until it sells. When you buy stock, it goes to an inventory asset account; only when a unit sells does its landed cost move to cost of goods sold as an expense. Expensing inventory at purchase is a common mistake that distorts both your balance sheet and your profit timing.
How do I export my chart of accounts from QuickBooks?: Both QuickBooks Online and Desktop let you export the chart of accounts to a file (commonly Excel or CSV) from the accounts list, which is useful for auditing the structure or migrating to a cleaner setup. The exact steps differ between the Online and Desktop versions, so follow the current process for your specific product version.
Should I delete unused accounts or make them inactive?: Make them inactive rather than deleting them. Marking an account inactive preserves the historical transactions booked to it and keeps prior-period reports accurate, while still removing it from your active list. Deleting can orphan past transactions and break historical reporting, so inactivation is the safer cleanup approach.

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