1099-K form

As an amazon seller, it is essential to understand your amazon 1099-K report and how it is calculated. This report will show the number of gross sales collected by amazon and can be used for tax purposes.

You should download the relevant reports from your Amazon Seller Central account to verify that the numbers are correct. This blog post will explain everything you need to know about the 1099K report for amazon sellers!

What is a form 1099-K?

A 1099-K report is a form that amazon or any other e-commerce marketplace uses to report sellers’  gross sales to the  Internal Revenue Service. This report is different from a 1099-misc, which amazon also issues.

The 1099-K only reports sales processed through amazon accounts, while the 1099-misc reports other income such as interest and dividends. According to IRS regulations, any third-party payment provider must provide such reporting. Same with amazon payments.

Form 1099-K is used to report all customer payments through Amazon to IRS.

Who is eligible for a 1099-K form?

Amazon will send a 1099-K report to any amazon seller who meets certain criteria:

When is a form 1099-K issued?

The 1099-K report is issued by amazon yearly. Amazon’s due dates to issue the report is no later than January 31, 2023.

What information is included in a form 1099-K?

The 1099-K report includes the following information:

Where can I download my form 1099-K on Amazon?

If you want to download a detailed report of the 1099-K form, you can do so by going to your amazon seller central account and navigating to the ‘Reports’ tab.

From there, you should select the ‘Tax Document Library’ link. This will take you to a page where you can download form 1099-K.

What accounting method is used in form 1099-K?

Both cash and accrual basis. You can use it for your tax report.

How is that possible? You instantly receive money from a customer after invoicing him (no date difference between cash and accrual methods) to your Amazon account. 

Just imagine that your amazon account balance is like a bank account, but the money is just on hold for 14 days.

Where can I download the detailed report that includes all 1099-K form transactions?

The 1099-K form is built from the Date Range Report. Double-check all the info at your seller central (Reports -> Payments -> Date Range Report).

Date Range Report

How is the form 1099-K calculated?

The 1099-k form is calculated using the total unadjusted gross sales for the reporting year. Generally, it is what you get from your client, including collected sales tax.

Calculation:

Product Sales + Shipping Credits + Gift Wrap Credits + Sales Tax – Promotions

Calculation form 1099-k

What is missing in form 1099-K?

Any expenses or costs of goods sold that are happening to your amazon account, such as refunds, fba shipping fees (for amazon fba), commissions (amazon selling fee), storage fees, PPC costs (online advertising), etc.

Also, the form 1099-K  form includes sales tax. Keep an eye on having it deducted when filing taxes. In another way, you will overpay taxes as sales taxes increase your profit, but it is not considered income.

The form 1099-K includes unadjusted total gross sales, including sales taxes, and doesn’t include amazon shipping costs, selling fees, storage fees, etc.

What should I do if I didn’t receive a 1099-K form?

If you didn’t receive your 1099-k report from amazon by the due date, you should contact amazon seller support. They will investigate and resend the report to you if necessary.

What if my information is wrong on the 1099-K form?

If you believe the information on your 1099-k form is incorrect, you can contact seller support, and they will investigate the issue.

Conclusion

It is essential to take all the fees Amazon charges you into account when preparing your taxes. 1099-K only reports sales processed through amazon and doesn’t include other income sources such as interest or dividends.

If you have any questions about the 1099-K form or amazon seller taxes in general, please reach out to us; we’d be happy to help!

About My Real Profit

My Real Profit helps you track your Sales and Profits during the year every day. It has fully automated financial analytics that shows you all the needed data to track business performance and turn insights into actions.

Schedule a call for a demo: LINK TO SCHEDULE A DEMO

Sign up for a free trial using the link below: LINK TO START A FREE TRIAL

My Real Profit dashboard

If you are an Amazon seller running an Amazon store or a business on any other e-commerce platform, it is essential to track your key performance indicators (KPIs) to ensure that you are profitable and on track for success.

This blog post will list 20 of the most critical KPIs you need to track to measure your business performance and its financial health. We will also provide a detailed explanation of each KPI so that you can understand how it impacts your business. Let us get started!

Sales KPIs

Organic Sales %

This KPI tracks the percentage of your total sales that come from organic traffic (i.e. non-paid traffic). To calculate this KPI, simply take your total sales and subtract ad sales and divide it by your total sales.

Organic Sales % can help you track your SEO effectiveness and how strong your keyword positions are.

Organic Sales % = (Total Sales – PPC Sales) / Total Sales * 100%

organic vs ppc sales on amazon

Average Purchase Price (APP)

This KPI tracks the average amount people spend purchasing your product. To calculate this KPI on Amazon, divide the total sales by the number of orders.

Average Purchase Price can help you to track the average order value and ensure that your product is priced correctly.

APP = (Total Sales – Discounts) / Tota Units Sold

Sales Velocity

This metric tells you the average number of sales per day over a given period. To calculate this, take the total number of sales over a particular time and divide it by the number of days in that period.

Sales Velocity can help you to track the dynamics of your daily business sales and ensure that it is not lowering. Also, sales velocity is very helpful when you do inventory planning.

Sales Velocity = Total Units Sold / Days


Advertising KPIs

ACoS, RoAS, and TACoS

To calculate ACoS, divide your total ad spend by your total ad sales.

ACoS = PPC Spend / PPC Sales * 100%

To calculate RoAS, divide your total ad sales by your total ad spend.

ROAS = PPC Sales / PPC Spend * 100%

To calculate TACoS, divide your total ad spend by your total sales.

TACoS = PPC Spend / Total Sales * 100%

PS. TACoS, Total ACoS, Total Advertising Cost of Sales, ACoTS – the same metric 🙂

amazon ppc meme (TACoS, Total ACoS, Total Advertising cost of sales)

All these 3 amazon kpis can help you understand how much you’re spending on ads and whether or not that spend is resulting in a profit.

Break-Even (BE ACoS, RoAS, TACoS)

Break-Even ACoS/RoAS/TACoS is the line between profit and loss in advertising: you will either start making or losing profit from advertising.

BE ACoS & TACoS = Product Profit Margin %

BE RoAS = Profit Per Unit in $

Read also: How to calculate your product profitability

Click Through Rate (CTR)

This amazon KPI tracks the percentage of people who see your ad and click on it. To calculate this KPI, divide the number of clicks on your ad by the number of impressions.

This KPI can help you track your ads’ effectiveness in getting people to click on your ad and understand if you picked the right audience for your product.

Click Through Rate (CTR) = Clicks / Impressions * 100%

Cost Per Click (CPC)

This amazon KPI tracks the average amount you’re paying per click on your ad. To calculate this KPI, divide your total ad spend by the number of clicks on your ad.

This KPI can help you understand how competitive the keyword is (higher CPC -> more competition for showing an ad), track the cost of your ads, and make necessary adjustments to ensure that you’re profitable and fit the budget.

CPC = Ad Spend / Clicks * 100%

Advertising Conversion Rate (Ad CVR)

This amazon KPI is essential for any amazon seller. Advertising conversion rate is the case also. It is the percentage of people who make a purchase after seeing your ad. To calculate this KPI, divide the number of conversions by the number of clicks.

A conversion rate can help you understand how “attractive your listing” is and if you picked the right audience for your product.

Advertising Conversion Rate (Ad CVR) = Total Ad Orders / Clicks

Cost Per Action (CPA)

This amazon KPI tells you how much money you need to invest into PPC to get a conversion (sale). To calculate this amazon KPI, divide your total ad spend by the number of sales.

This metric is important because it allows you to track the cost per purchase and use it for your future unit economics (product profitability).

Cost Per Action (CPA) = Total Ad Spend / Ad Orders

Discount Redemption Rate

If you offer discounts or coupons, this KPI tracks the percentage of people who redeem them.

To calculate this amazon KPI, divide the number of redemptions by the total number of coupons or discounts offered. This KPI is important because it allows you to track your discount campaigns’ effectiveness in getting people to purchase your product.

Discount Redemption Rate = Number of Redemptions / Total Units Sold

Coupon usage average statistics ($20 product, home&kitchen category)
Coupon: 1 – 5% | Usage rate: < 35%
Coupon: 6 – 9% | Usage rate: 45%
Coupon: 10 – 14% | Usage rate: 55%
Coupon: 15 – 20% | Usage rate: 60%
Coupon: 21% + | Usage rate: 70%

Why do you need to track it?

If the usage rate is higher than your category average, you are underpricing your product, and you can decrease coupons by x% without seeing a big difference in sales velocity.

Also, remember that for every coupon redeemed, you pay Amazon $0.6 each.

amazon coupon and promotion redemption rate

All these amazon kpis will help you keep an eye on advertising performance. We recommend tracking these KPIs on the brand, portfolio or campaign level as well as on the ASIN level.

My Real Profit offers advanced advertising reporting that shows you all KPIs above and even more.

Check out our advertising reporting: the advertising report demo

Operation KPIs

Refund Rate

This KPI tracks the percentage of orders that are refunded. To calculate this KPI, simply divide the total number of refunds by the total number of orders. This KPI is important because it ensures that you provide a quality product and track a defect rate and customer satisfaction.

Refund Rate = Total Returns / Total Units Sold

Amazon refund rates tracking by child asin

Return on Investment (ROI)

This is one of the most critical amazon key performance indicators that track the profitability of your business. To calculate this KPI, take your profit and subtract by COGS (product cost, delivery from china, etc.).

This amazon KPI can help you see how much money you earn on each dollar invested into inventory. We recommend tracking these amazon KPIs on the brand level as well as on the ASIN level, especially during scaling, as it directly impacts your business growth.

ROI = (Profit / Product Cost (landed)) * 100%

amazon product profitability tracking using ROI kpi

Out of Stock Rate (OOS %)

This amazon KPI tracks the percentage of time that your product is out of stock. To calculate this, take the total number of days your product was out of stock and divide it by the total number of days you were selling it.

This KPI is important because it allows you to track inventory levels and ensure that you are not losing sales due to being out of stock and helps you improve your inventory management processes.

OOS % = Days Out of Stock / Total Days

Inventory Turnover Ratio

This KPI tracks how fast you’re selling through your inventory. To calculate this KPI, divide the cost of goods sold by your average inventory.

This KPI is important because it allows you to track your inventory management efficiency and your primary business asset performance.

Inventory Turnover Ratio = Cost of Goods Sold (landed costs) / Inventory Cost


Customer Behavior

Conversion Rate (CVR)

This amazon KPI tracks the percentage of sessions to your listing who take the desired action – a purchase.

To calculate this amazon KPI, simply divide the number of orders by the total number of sessions. This KPI is important because it allows you to track the effectiveness of your listings in converting visitors into customers.

CVR = Total Orders / Sessions (Product Detail Page Visits)

You can use Business Reports to track your sessions and conversion rates by account.

If you want to track it by item level, you can check: My Real Profit

Seller performance report

Reviews Per Unit

This metric tells you the average number of reviews that your product has. To calculate this, simply divide the total number of reviews for your product by the total number of units sold. This metric is important because it allows you to track customer satisfaction and ensure that you provide a quality product.

Reviews Per Unit = Total Reviews Gained / Total Units Sold

Add-to-Cart Rate (ATC Rate)

This KPI tracks the percentage of sessions where a product is added to the cart. To calculate this, take the total number of items added to the cart and divide it by the total number of sessions.

This KPI is important because it allows you to track customer engagement with your product and understand what percentage of your customers are churning and how likely they are to purchase it.

You can track your Add-to-cart rate using brand analytics reports.

ATC Rate = Total Add-to-Carts / Sessions

(Bonus) Amazon business KPIs

Buy Box %

For sellers on Amazon, the Buy Box is the box on a product detail page where customers begin the purchase process by adding items to their shopping carts. A seller must be “Winning” the Buy Box to have their offers visible when customers add items to their shopping cart.

The Buy Box share metric tells you what percentage of the time your offers are visible in the Buy Box vs other sellers’ offers.

You can use Business Reports to track your buy box percentages.

Inventory Performance Index (IPI)

This metric is a number from 0 to 1000 that measures how well you sell on Amazon. If your IPI falls below 350, then Amazon will limit how much inventory you can send.

Account Health Rating (AHR)

The Amazon Account Health Rating (AHR) is a feature that monitors your compliance with Amazon’s selling policies. Adherence to these standards is based on factors such as unresolved policy violations within a given time.

Professional sellers can currently access this information in their seller central account. Although always subject to change, it is evident that Amazon wants its sellers to maintain healthy accounts according to their guidelines. A few recent refinements have been made regarding how you can monitor your account health, but more updates will come from the retail giant soon.

Wow, that’s a lot of metrics… Any automated solutions that can help me?

You can use My Real Profit to get all the analytics in just a few clicks. It will automatically take all your data safe from amazon and create a dashboard with KPIs data and a product dashboard with detailed information on your expenses, metrics, and profit margins.

Amazon analytics software with multiple amazon kpis

It is a must-have for tracking your amazon KPIs

Schedule a call for a demo: LINK TO SCHEDULE A DEMO

Sign up for a free trial using the link below: LINK TO START A FREE TRIAL

E-commerce business sounds like a very lucrative business model, especially with Amazon. It handles all your deliveries and returns of your products. There are no limits to scalability.

Thanks to Amazon FBA, you will be confident that everything is delivered on time regardless of the number of units sold. Nevertheless, using Amazon FBA includes many costs associated with this business model.

To increase profits, amazon sellers need to keep an eye on their profit and loss, reporting tracking as much amazon data as they can.

Let us do a detailed breakdown of how you should calculate your Amazon profit and what amazon seller fees you should include for true profitability calculation.

Profit calculation formula:

Amazon sales –

Cost of Goods Sold

Amazon Fees (Referral Fee, FBA fee, Storage Fee)

Refunds

Discounts/Promotions

PPC costs

Other Amazon Fees (Adjustments, Removals)

= REAL AMAZON PROFIT


Two possible methods of Amazon profit calculation: 

  1. Cash Method.Cash Method is based on when Amazon deposits the money into your Amazon account and, every 14 days, makes transfers to your bank account (disbursements).
  2. Accrual Method.Accrual Method is used when the product customer purchased your item, regardless of when Amazon paid you.

The main difference between these methods is timing.

Which method should you use for your business?

The answer is accrual. We highly recommend using the accrual method, as it provides a more accurate picture of your business’s profitability. And here is why:


Let us compare sales and ad spend on the current payout vs. other seller central reports.

Sales and ad spend on the current payout vs. other seller central reports

PPC Spend and Advertising Sales Data

As all Amazon sellers, you focus on PPC and keep track of your sales correlation to your marketing budgets. Amazon advertising console shows you ad spend and sales based on an accrual basis. Let’s compare it to the amazon payout.

On the disbursement report, amazon charged our account for $1,5k while, in reality, for the selected period, we spent $1,9k.

Amazon advertising console

So, how does Amazon charge you for your PPC campaigns?

Amazon has a threshold called a “credit ladder.” You get charged until you reach the threshold of $50, $150, $200, $350, and the maximum of $500. Each time you reach a new level in the “credit ladder” and your credit limit changes, your account will be charged. If you use a credit card to pay for advertising costs, you will not see the “Cost of Advertising” charge on your disbursement report.


Sales Data Business Reports Sales vs Disbursement Report Sales

Disbursement Report Sales

What about business reports? They also use the accrual basis method. They show sales when the customer makes a purchase.

On the disbursement report, amazon paid us $13k for posted sales, while for the selected period, we sold $14,7k worth of sales.

Why do your amazon sales seem different?

Disbursement sales are orders shipped for a selected period, while Business Reports include orders placed during a selected time period, regardless of settlement status.


To sum up, Cash Basis is for Cash Flow. Accrual Basis is for Profit Analytics

Now you see that using the cash basis method can give you a completely different picture of your business. That is why we recommend constantly tracking and calculating your sales and ad spending on an accrual basis.

How does this affect your performance KPIs?

It completely changes business performance metrics as well as your true profit calculation. Let’s make a few examples.

TACOS

Organic Sales %

It will affect any KPI and, of course, profitability calculation.


Automated Solution

The problem with using the accrual basis method for amazon seller analytics is that it requires downloading about ten different reports from an amazon account and properly combining them. It would help if you tracked all of these factors to get an accurate picture of your business’s profitability.

Furthermore, the best way to do that is to use the Amazon Profit Analytics tool.

It allows you to monitor all your amazon revenue and expenses in one place and track your business’s true profitability at a glance. If you want to save time and get accurate profit reports, we recommend using My Real Profit.

Amazon RealProfit Analytics tool

By using My Real Profit, you can get accrual profit analytics in just a few clicks. It will automatically take all your data safe from amazon and create a dashboard with profit data and a product dashboard with detailed information on your expenses metrics and profit margins. You can connect unlimited amazon accounts and see the full picture of your business on 1 page.

My Real Profit also does all the inventory management calculations for your Cost of Goods sold calculations, such as sellable returns or amazon reimbursements (Warehouse lost/damaged, etc.). It is a must-have for tracking your amazon product sales and profit with not having estimated profit but amazon net profit data on one page.

Schedule a call for a demo: LINK TO SCHEDULE A DEMO

Sign up for a free trial using the link below: LINK TO START A FREE TRIAL

Selling on Amazon can be a profitable venture and an ideal business model. Everything is online. Amazon manages, stores and fulfills your products and even handles product returns.

However, it is important to be aware of the associated costs. By understanding these costs, you can make informed decisions about whether or not selling on Amazon is right for you. Let us do a detailed breakdown of each amazon seller fees.

Fees for all sellers

Amazon Selling Plans: Individual vs Professional Seller Account

There are 2 plans to sell on Amazon:

  1. Individual plan: you pay Amazon a fee per unit sold ($0.99). This plan works only if you plan to sell a couple of units per month.

  2. Professional seller account: $39.99 per month. It gives you a lot of advantages.

Here is a table to compare 2 different amazon seller plans:

Amazon seller plans

To sum up, the professional plan is recommended if you plan to sell more than 35 units per month.

Referral Fee (Amazon commission)

The referral fee is a commission that Amazon charges for every sale you make. The fee is calculated as a percentage of the item sales price (including shipping and any gift-wrapping charges for FBM sales) – discounts (coupons, discounts, promotions). The referral fee is charged when the order gets shipped.

Referral fees are based on the product category and range from 6% to 20% (30% for Amazon experiences). For most categories, the fee is 15%. The minimum referral fee is $0.30 per unit sold.

Overall, for every $100 in sales, you’ll pay $6-$20 in referral fees.

If you sell products in the Books, DVDs, Music, Software & Computer/Video Games, Video Game Consoles, and Video Game Accessories categories, a variable closing fee of $1.80 per unit sold will apply.

Refund administration fee

Amazon charges a fee to process a refund requested by a customer. Amazon takes $5.00 or 20% of the refunded amount, whichever is less, as a refund administration charge.

These fees are immediately deducted from your Amazon account balance or charged to your credit card if your account does not have enough money when the customer requests a refund.


You will pay these fees to Amazon regardless of the fulfillment method you choose. Now let us check what delivery options amazon sellers have to ship their products to customers.

What are FBA and FBM? Which one should I choose?

  1. Fulfillment by Amazon(FBA) is a service where sellers pay Amazon to have their products stored, picked, packed, and shipped. It can be an excellent option for sellers who want to take advantage of Amazon’s world-class fulfillment centers network but do not have the time or resources to do it themselves.

  2. Fulfillment by Merchant (FBM) is when the Amazon seller ships the products to customers on their own. It is a good option for sellers who want more control over their shipping process or do not want to pay the fees associated with FBA.

Both fulfillment options have pros and cons; ultimately, it is up to you to decide which makes the most sense.

Pros of using FBA:

Cons of using FBA:

Pros of using FBM:

Cons of using FBM:


FBA vs FBM. What to choose?

Based on our experience, In 95% of cases, FBA is better than FBM. Fulfillment by Amazon allows you to focus on sales and grow your business instead of worrying about fulfillment, customer service, and other back-end operations. It is also important to note that customers prefer products fulfilled by Amazon, so using FBA can give you a significant competitive advantage.

Nevertheless, if you sell large-size and heavy products and expect to sell a small quantity of each product variation monthly, then FBM may be a better option. The additional fees, particularly, FBA fulfillment fees, may not make sense for such a business model.

The Amazon fee calculator can compare your FBA vs. FBM profit margins. Link to the calculator: https://sellercentral.amazon.com/

While we’ve covered the basics of profit calculation on Amazon in another post.


By understanding Amazon FBA costs, you can make an informed decision about whether or not FBA is right for your business. Here is a list of FBA fees that appears to any amazon seller.

  1. FBA inbound shipping cost

  2. FBA fulfillment fees

  3. Returns processing fee

  4. FBA storage fees. Long term storage fees

  5. Removal fees

  6. Disposal fees

FBA Inbound Shipping Fees

The first fee you will encounter is the FBA inbound shipping cost. It is the cost of shipping your products to Amazon fulfillment centers (facilities where Amazon packs and ships products on behalf of FBA sellers). The cost will vary depending on the size and weight of your products. The distance between your location and the Amazon fulfillment center will also affect costs.


FBA Fulfillment Fees

Amazon Fba Fulfillment Fees cover the cost of picking, packing, and shipping your products to customers. The per-item fba pricing is based on the size and weight of your product, and it will vary depending on the category in which you are selling (apparel/non-apparel).

Amazon Fba Fulfillment Fees
FBA fulfillment fees (apparel)

Inventory Storage Fees

Monthly Storage Fee

In addition to the shipping cost, you will also have to pay Amazon FBA Storage fees. Amazon will charge you a monthly fee to store your products in their fulfillment centers. The storage fee depends on the size and weight of your products.

Amazon sellers are charged based on the average daily units in the fulfillment center, product volume, and size. The monthly storage fees per item are increasing during Q4.

A screenshot below displays how much it costs to store your products on Amazon.

Amazon Monthly Storage Fees

Long Term Storage Fees

Items in a fulfillment center for more than 365 days are subject to a long-term storage fee.

You can check your monthly inventory storage fees by downloading a report from your Amazon seller central account.

My Real Profit tracks all amazon fees, including long term storage fees, and combines them in one convenient report so you can track all your FBA fulfillment costs on one page.

FBA fulfillment costs on one page

Removal Fees

If you want Amazon to remove an inventory item from its warehouse and mail it back, you will have to pay a removal fee. This amazon fba pricing for this fee is charged per unit based on your product’s weight.

You got charged when the removal order was complete. It can take 90 days or more to complete a removal order.

You can see all your fulfillment costs, including removal charges, using the transaction report on your seller central account or the My Real Profit Expenses tab. You can try it for free for 14 days using this link.

All Amazon fulfillment costs

Disposal Fees

If you decide to stop selling a product and want Amazon to dispose of it, you will have to pay a disposal fee. This fee is charged per unit based on your product’s weight and size tier.

Amazon seller is charged when the disposal is complete.


Returns Processing Fee (applies s to Shoes and Apparel categories)

The FBA returns processing fee applies to products sold in the Shoes and Apparel categories where Amazon offers free return shipping.

Amazon seller is charged per unit returned based on your product’s weight and size tier.


Other Amazon Seller Fees or Income

FBA Liquidation

Liquidation is when Amazon sells your inventory to a third-party company at a discounted price. The liquidation sales price is based on your average selling price, including your sales history.

Usually, liquidation is about 5% to 10% of your average selling price.


Inventory Placement Service Fee

The Inventory Placement Service enables you to have Amazon place all units of a particular product/ASIN at the same Amazon fulfillment center for each shipment. If you use this program, you may choose whether or not to participate by selecting an inventory placement option in your seller account.


Overall, it is essential to remember that many costs are associated with selling on Amazon. By understanding these fees and keeping track of them using a tool like My Real Profit, you can ensure that your business is profitable.

My Real Profit is a real-time profit analytics software for amazon that can help you keep track of all amazon charges and profitability on one page by account, parent ASIN, child ASIN, and SKU.

Schedule a call for a demo: LINK TO SCHEDULE A DEMO

Sign up for a free trial using the link below: LINK TO START A FREE TRIAL

Thanks for reading!