Most amazon sellers assume that if revenue is growing, profits will eventually catch up.
But after reviewing hundreds of marketplace audits across 7- and 8-figure brands, one pattern shows up again and again: brands aren’t losing money because they don’t know about deductions,they’re losing money because their financial systems can’t keep up with scale.
Tax inefficiency at this level is rarely about missing obvious write-offs.
It’s about poor reconciliation, timing mismatches, and a lack of SKU-level visibility.
The Real Tax Problem at Scale: Financial Blind Spots
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At low volume, basic bookkeeping works fine.
At scale, it breaks.
As Amazon businesses grow, they introduce complexity that traditional tax and accounting workflows struggle to model accurately:
- Deferred transactionsand delayed payouts
- FBA fees are applied weeks after sales occur
- Refunds, reimbursements, and clawbacks posted out of sequence
- Advertising costs that don’t align cleanly with revenue periods
When these aren’t reconciled correctly, taxable income looks higher than real profit, and brands quietly overpay.
This is the core reason why Amazon sellers overpay taxes even when revenue is growing.
This is why many scaling brands need profit diagnostics that reconcile marketplace data, accounting records, and tax reporting, not just cleaner books.
Why “Common Deductions” Aren’t the Fix
Yes, deductions still matter.
But for established brands, they’re table stakes, not leverage.
Most 7-figure sellers already deduct:
- Cost of goods sold (COGS)
- Amazon referral and FBA fees
- Shipping and packaging
- Advertising spend
- Software and professional services
Knowing thatthese are deductible doesn’t move the needle.
What matters is whether those costs are:
- Allocated to the correct SKUs
- Matched to the correct revenue period
- Reflected accurately in contribution margin
If they aren’t, your tax strategy is built on distorted data.
The Silent Killer: Timing Mismatch
One of the most common findings in marketplace audits is timing distortion.
Examples:
- Revenue recorded today, but refunds hit next quarter
- Inventory purchased in bulk, but expensed incorrectly
- Ad spend incurred to protect rank during stockouts
- Storage fees accumulating long after demand slowed
On paper, the business looks profitable.
In reality, cash flow tells a different story.
This is where tax planning breaks down , because taxes are only as accurate as the numbers underneath them.
SKU-Level Margin Is the Missing Link
Another major blind spot: per-SKU profitability.
High-revenue SKUs often:
- Carry higher return rates
- Incur outsized fulfillment or storage fees
- Require aggressive ad spend to maintain rank
From a tax perspective, treating all revenue equally hides these issues.
From a profit perspective, it can lead to paying taxes on growth that isn’t actually profitable.
Strong operators track margin at the SKU level first, then let tax strategy follow.
Where Specialized Tax Advisors Actually Add Value
For scaled Amazon brands, the role of a tax partner isn’t to list deductions.
It’s to:
- Interpret marketplace-specific financial behavior
- Ensure deductions are properly timed and substantiated
- Align tax reporting with how Amazon actually pays and charges sellers
- Reduce audit risk while minimizing overpayment
This is where firms likeRMJ Tax, who work specifically with ecommerce and Amazon businesses, tend to add the most value , not by “finding” deductions, but by applying tax strategy to marketplace reality.
The Operator Takeaway
If you’re scaling on Amazon and still feel like:
- Revenue is up, but cash is tight
- Taxes feel higher than expected
- “Profit” changes depending on the report you look at
The issue probably isn’t that you missed a deduction.
It’s that your financial systems aren’t governed tightly enough for the complexity you’re operating in.
Fixing that starts with accurate profit visibility, followed by tax strategy built on clean, reconciled data, not the other way around.
About RMJ Tax
RMJ Tax works with e-commerce and Amazon businesses to apply tax strategy that reflects real marketplace operations,helping sellers stay compliant while avoiding unnecessary overpayment.
