Amazon provide a Marketplace Tax Collection service in some US States. Those tax amounts paid by Amazon need to be reported but are already paid, reducing the outstanding tax liability.
The amount withheld by Amazon is indicated on the settlement report used for marking the Brightpearl orders as paid. Once configured, when a withheld tax amount is seen on the payment download, an additional order payment will be created in Brightpearl. This ensures that the order is marked as fully paid and will record the reduction in tax liability so that it can be subtracted from tax reporting.
We recommend creating a separate account code and payment method for recording Amazon withheld tax. These values represent a reduction in your outstanding tax liability and will usually need to be reported as a separate figure. The values can be shown on the balance sheet under current assets or current liabilities by using an account type of bank or credit card, respectively.
How to configure Amazon withheld tax
- Go to Accounting > Chart of accounts.
- Choose the account type of bank or credit card, depending on whether the preference is to report the values under current assets or current liabilities.
- Click to add a new account code. Enter a name for the account, for example "Amazon withheld tax" and save.
- Next, create a payment method. Go to Settings > Company > Payment methods.
- Click to add a new payment method and make the following entries:
Name: Name the method, for example "Amazon withheld tax"
Code: Give the method a code, the account code can be used, or something else.
- Select the new account code and save.
- Next, assign the payment method to the Amazon channel. Go to Settings > Brightpearl apps > Amazon.
- Click to edit the relevant Amazon channel and select the new payment method as the Amazon withheld tax payment method.