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[Setup] Step 3: Choose your preferred account and tax rates

Daniel Little avatar
Written by Daniel Little
Updated this week

Average time to complete: 5-7 minutes
​Estimated difficulty rating: Medium (Best to involve your accountant)

***DISCLAIMER***
​The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
​***END DISCLAIMER***

Link My Books makes setting up your accounts and tax rates preferences very straightforward thanks to our proprietary Tax Wizards.

Since the process of setting up each sales channel varies slightly and Xero and QuickBooks have some unique aspects too, we have broken this help article up into sections so that you can quickly navigate to the section that fits your needs.

The step by step guide linked below covers all sales channels and both bookkeeping platforms.

👉 Step by step guide with screenshots

The video guides linked below are specifically focused around each different combination of sales channel + bookkeeping platform.

👉 Video guides

Step by step guide with screenshots

Step 1 - Choose which Wizard you need

Before mapping your transactions, start by choosing the wizard that best fits your setup:

  • Default Wizard – Perfect if you're just getting started or prefer a simple setup. We’ll create all the necessary accounts for you automatically using default mappings.

  • Custom Wizard – Ideal if you already have accounts set up in your bookkeeping software and want to map transactions to those existing accounts.

👉 Tip: Most people use our default accounts as it means it's nice and easy to see which data has been sent through from Link My Books to your bookkeeping software.

This screenshot from the "Link My Books" application features the "Accounts & Taxes Setup Wizard," currently at "Step 1: Map transactions to an account." A progress tracker on the left confirms this as the active step, preceding "Confirm tax rates." The main interface offers two choices for account setup: "Default Chart Accounts," highlighted as "Most Popular," which will add a suitable chart of accounts to the user's Xero account, or "Custom Chart Accounts," for users who already have a custom setup. The top right displays "LMB Shop (Demo US) manager," while a "Having trouble? Message Us" link is provided at the bottom left, set against a clean, white background.

Step 2 - Map transactions to an account

For each sales channel we group the many different types of transactions into around 9 main categories.

If you selected the Custom Wizard in the first step, you will then need to assign an account for each category from the dropdown menus.

This image is a screenshot from the "Link My Books" application, displaying the "Account & Tax Groups Wizard" at "STEP 1: Map transactions to an account." On the left, a vertical progress bar shows "Map transactions to an account" as the active step. "Confirm VAT registration status," "Optional product VAT groups," and "Confirm tax rates" are pending. The main section is for "Amazon EU Demo (AMAZON EUROPE)" and lists various "Transaction Category" entries like "Amazon Sales," "Amazon FBA Inventory Reimbursement," "Amazon Seller Fees," "Amazon FBA Fees," "Amazon Storage Fees," "Amazon Advertising Cost," "Amazon Loans," "Amazon Reserved Balances," and "Amazon Refunds." Each category has a corresponding "Transaction Type" (e.g., Revenue, Other Income, Expense, Current Liability, Current Asset). To the right of each transaction type, there's a dropdown for "Account Name." In the screenshot, the dropdown for "LMB3: Amazon Seller Fees" is open, revealing a list of possible accounts: "Search," "200: Sales," "260: Other Revenue," "270: Interest Income," "310: Cost of Good Sold," and "320: Direct Wages." A large red arrow points to this open dropdown. At the bottom of the screen, a "HAVING TROUBLE? WATCH VIDEO GUIDE" link is present. On the right, "EXIT" and a blue "NEXT" button are visible. A "Having trouble? Message Us" link is also at the bottom left.

However, if you selected our Default Wizard will create them as new account codes in your bookkeeping platform

👉 Tip: Throughout the setup wizard when you see the blue "i" icon beside something, that means that further clarification is available if you hover over it:

This is a screenshot from the "Link My Books" application, showing the "Account & Tax Groups Wizard" at "STEP 1: Map transactions to an account." On the left, a vertical progress bar indicates "Map transactions to an account" is the active step, with "Confirm VAT registration status," "Optional product VAT groups," and "Confirm tax rates" pending. The main section focuses on "Amazon EU Demo (AMAZON EUROPE)." A text box at the top, highlighted by a red arrow pointing to it, explains: "We've grouped the many different Amazon transaction types into the categories below. Please assign a Xero Account Code for each category or use the default one. (Using our defaults will create new account codes in your Xero account)." Below this explanation, various "Transaction Category" entries are listed, such as "Amazon Sales," "Amazon FBA Inventory Reimbursement," "Amazon Seller Fees," "Amazon FBA Fees," "Amazon Storage Fees," "Amazon Advertising Cost," "Amazon Loans," "Amazon Reserved Balances," and "Amazon Refunds." Each category has an associated "Transaction Type" (e.g., Revenue, Other Income, Expense, Current Liability, Current Asset) and a dropdown for "Account Name" (e.g., LMB1: Amazon Sales, LMB2: Amazon Reimbursements), allowing users to map them to specific accounts. An information icon next to "Amazon FBA Inventory Reimbursement" shows a tooltip: "Compensation received in reimbursement for damaged inventory held in Amazon warehouses." At the bottom of the screen, there's a "HAVING TROUBLE? WATCH VIDEO GUIDE" link, along with "EXIT" and a blue "NEXT" button. A "Having trouble? Message Us" link is also at the bottom left.

If you'd rather pick your own accounts to use then you can do so via these dropdown menus:

Step 3 - Confirm VAT registration status (UK users only)

Here you will confirm if your business holds any VAT registrations. We use this information to group your sales accordingly so it's important that you select the correct option:

This image is a screenshot from the "Link My Books" application, displaying the "Account & Tax Groups Wizard" at "STEP 2: Confirm VAT registration status." On the left side, a vertical progress bar shows that "Map transactions to an account" is completed (green checkmark), and "Confirm VAT registration status" is the active step (blue dot). "Optional product VAT groups" and "Confirm tax rates" are pending. The main content area, under the heading "STEP 2: Confirm VAT registration status," explains: "We will use your VAT registration status to determine how we will group your transactions." A question "Are you VAT registered in the UK?" is prominently displayed, with a dropdown menu below it labeled "Choose an Answer" and "Select an option..." as the placeholder. In the top right corner, "Amazon EU Demo (AMAZON EUROPE)" is visible within a dropdown. At the bottom of the screen, a "HAVING TROUBLE? WATCH VIDEO GUIDE" link is present, along with "BACK" and a greyed-out "NEXT" button. A "Having trouble? Message Us" link is also at the bottom left. The overall design is clean with a white background.

Step 4 - Optional product VAT groups (UK users only)

IMPORTANT

If completing the wizard after 2nd May 2023, Amazon and Shopify accounts won't see this step as product grouping is now handled automatically. Read more here.

If the products your business sells are all Standard Rated for UK VAT then you can select the top option on this page to skip setting up product groups.

This image is a screenshot from the "Link My Books" application, displaying the "Account & Tax Groups Wizard" at "STEP 3: Optional product VAT groups." On the left side, a vertical progress bar shows "Map transactions to an account" and "Confirm VAT registration status" as completed steps (green checkmarks). "Optional product VAT groups" is the active step (blue dot), and "Confirm tax rates" is pending. The main content area, under the heading "STEP 3: Optional product VAT groups," states: "If you sell any zero or reduced rated goods then product groups help us to set the correct tax rate for your goods." Below this, there are two checkboxes: 1. "I only sell products that are Standard Rated for UK VAT" 2. "I sell some products that are Zero Rated or Reduced Rated for UK VAT" At the bottom of the screen, a "HAVING TROUBLE? WATCH VIDEO GUIDE" link is present, along with "BACK" and a greyed-out "NEXT" button. A "Having trouble? Message Us" link is also at the bottom left. The overall design is clean with a white background.

If you do sell any Zero Rated or Reduced Rated goods then you should select the second option and continue to set up product groups:

This image is a screenshot from the "Link My Books" application, displaying the "Accounts & Taxes Setup Wizard" at "STEP 4: Confirm tax rates." On the left side, a vertical progress bar shows "Confirm business details," "Map transactions to an account," and "Optional product VAT groups" as completed steps (green checkmarks). "Confirm tax rates" is the active step (blue dot). The main content area, under the heading "STEP 4: Confirm tax rates," states: "We've pre-filled all required tax rates with our default tax rates. Please check them and ensure they are correct for your business." The page is divided into "Sales" and "Fees & Other Transactions" sections, each listing various "Tax Category" entries with their corresponding "Tax Rate" (e.g., "Standard Rated Goods Shipped to UK - 20% (VAT on Income)," "Zero Rated Goods Shipped to UK - Zero Rated Income," "Reduced Rated Goods Shipped to UK - 5% (VAT on Income)," "Sales Shipped outside of the UK - Zero Rated Income"). For "Fees & Other Transactions," categories like "Fees," "Split Month Rollovers," "Loans," "Sales Tax," and "Inventory Reimbursements" are shown with their respective tax rates (e.g., "20% (VAT on Expenses)," "No VAT," "20% (VAT on Income)"). At the bottom of the main content area, there's a checkbox: "I've confirmed these tax rates with my accountant and take full responsibility for being accurate." Below this, a "PREVIOUS" button and a greyed-out "FINISH" button are visible. A "Having trouble? Message Us" link is at the bottom left, and "LMB Shop (Demo UK) manager" is visible at the top right.

Link My Books will create 3 product groups if you turn on this setting:

  • Standard Rated Products

  • Reduced Rated Products

  • Zero Rated Products

After the setup wizard you will be able to allocate your products to the correct groups via the Product Groups page which is contained in the Inventory menu.

You will also confirm the tax rate you wish to apply to zero and reduced rated products on this page too. These tax rates will override the main tax rate set for sales where UK VAT is due.

Step 5 - Confirm tax rates

At first glance this may look intimidating but based on your answers you have given so far plus your businesses location (which we have detected from your connected bookkeeping account) we will provide you with a set of default tax rates to confirm.

If you selected that you held at least one VAT registration then your tax rates are broken down into three sections:

  • Sales

  • Fees & Other Transactions

For more information on how Link My Books calculates VAT see this article.

👉 Tip: Remember when you see the blue "i" icon more information is available when you hover over it.

This image is a screenshot from the "Link My Books" application, displaying the "Accounts & Taxes Setup Wizard" at "STEP 4: Confirm tax rates." On the left side, a vertical progress bar shows "Confirm business details," "Map transactions to an account," and "Optional product VAT groups" as completed steps (green checkmarks). "Confirm tax rates" is the active step (blue dot). The main content area, under the heading "STEP 4: Confirm tax rates," states: "We've pre-filled all required tax rates with our default tax rates. Please check them and ensure they are correct for your business." The page is divided into "Sales" and "Fees & Other Transactions" sections, each listing various "Tax Category" entries with their corresponding "Tax Rate" (e.g., "Standard Rated Goods Shipped to UK - 20% (VAT on Income)," "Zero Rated Goods Shipped to UK - Zero Rated Income," "Reduced Rated Goods Shipped to UK - 5% (VAT on Income)," "Sales Shipped outside of the UK - Zero Rated Income"). For "Fees & Other Transactions," categories like "Fees," "Split Month Rollovers," "Loans," "Sales Tax," and "Inventory Reimbursements" are shown with their respective tax rates (e.g., "20% (VAT on Expenses)," "No VAT," "20% (VAT on Income)"). At the bottom of the main content area, there's a checkbox: "I've confirmed these tax rates with my accountant and take full responsibility for being accurate." Below this, a "PREVIOUS" button and a greyed-out "FINISH" button are visible. A "Having trouble? Message Us" link is at the bottom left, and "LMB Shop (Demo UK) manager" is visible at the top right.

👉 Tip: If you are connecting a non-UK sales channel account or you selected that your business did not hold any VAT registrations then your taxes will be much simpler:

This screenshot from the "Link My Books" application displays the "Account & Tax Groups Wizard" at "STEP 4: Confirm tax rates." On the left, a progress bar shows "Map transactions to an account" and "Confirm VAT registration status" as completed, while "Confirm tax rates" is the active step. The main section is for "Amazon EU Demo (AMAZON EUROPE)" and explains that default tax rates have been pre-filled for confirmation. The content is divided into "Sales" and "Fees & Other Transactions." The "Sales" section lists categories like "Standard Rated Goods Shipped to UK - Seller Responsible for VAT" (20% VAT on Income), "Reduced Rated Goods Shipped to UK - Seller Responsible for VAT" (5% VAT on Income), "Zero Rated Goods Shipped to UK - Seller Responsible for VAT" (Zero Rated Income), "Sales Shipped to UK - Marketplace Responsible for VAT" (Zero Rated Income), "Sales Shipped outside UK - Dispatched from GB" (Zero Rated Income), and "Sales Shipped outside UK - Dispatched from Outside GB" (No VAT). The "Fees & Other Transactions" section includes "Amazon FBA Reimbursements" (No VAT), "Amazon Fees" (20% - Reverse Charge Expenses), "Amazon Advertising Costs (EU)" (20% - Reverse Charge Expenses), "Amazon Advertising Costs (UK)" (20% (VAT on Expenses)), "Amazon Loans" (No VAT), and "Amazon Reserved Balances" (No VAT). A checkbox at the bottom states, "I've confirmed these tax rates with my accountant and take full responsibility for being accurate." Below this, "CANCEL" and a greyed-out "CONFIRM" button are visible. A "HAVING TROUBLE? WATCH VIDEO GUIDE" link is also provided, along with a "Having trouble? Message Us" link at the bottom left.

Once you’ve reviewed your chosen tax rates and checked them with your accountant, tick the checkbox to confirm that you take full responsibility for their accuracy, then click Confirm to apply them.

Step 6 - QuickBooks bank accounts (QuickBooks users only)

Here you will select which bank accounts each marketplace deposits funds into and which bank account or credit card they charge if your seller balance goes into the red:

This is a screenshot from the "Link My Books" application, displaying the "Account & Tax Groups Wizard" at "STEP 5: QuickBooks Bank Accounts." On the left side, a vertical progress bar indicates that "Map transactions to an account," "Confirm VAT registration status," and "Optional product VAT groups" are completed (green checkmarks). "QuickBooks bank accounts" is the active step, marked with a blue dot. The main content area, for "Amazon EU Demo (AMAZON EUROPE)," lists various Amazon marketplaces (Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.it, Amazon.es, Amazon.nl, Amazon.se, Amazon.pl), each represented by its flag. For each marketplace, there are two dropdown menus: "Positive Balance Deposit Account" and "Negative Balance Charge Account," both currently showing "Select and account...". At the bottom of the screen, a "HAVING TROUBLE? WATCH VIDEO GUIDE" link is present, along with "CANCEL" and a greyed-out "SUBMIT" button. A "Having trouble? Message Us" link is also at the bottom left. The overall design is clean with a white background.

This will complete the setup wizard and you will be taken to your settlement dashboard.


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Video guides

Amazon + Xero

Amazon + QuickBooks

eBay + Xero

eBay + QuickBooks

Shopify + Xero

Shopify + QuickBooks

Etsy + Xero

Etsy + QuickBooks

Amazon + Xero

Amazon + QuickBooks

eBay + Xero

eBay + QuickBooks

Shopify + Xero

Shopify + QuickBooks

Etsy + Xero

Etsy + QuickBooks

Can't find your setup?

Try our Demo Link My Books account to explore how it works before connecting your own sales channel and bookkeeping software.

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If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].

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