In short

Tax support for ecommerce sellers is mostly preparation and organisation: separating marketplace-collected sales tax from tax the store collects itself, documenting inventory and cost of goods sold for the return, keeping records that support deductions such as platform fees, shipping supplies and software, and tracking the states where the business may have registration obligations so the owner and their preparer can review them together.

Ecommerce businesses meet tax in two places: income tax on the profit the store makes, and sales tax on what customers buy. Both depend on records that are scattered across platforms. Our tax support for online sellers focuses on getting those records into a shape that makes returns accurate and defensible.

Income tax: cost of goods sold and deductions

For a product business, cost of goods sold is usually the largest number on the return. The IRS covers inventory and cost of goods sold in Publication 334. We prepare a schedule that ties opening inventory, purchases, freight-in and closing inventory to your stock records, so the figure on the return can be explained line by line.

Ecommerce businesses also have many smaller deductible costs: platform subscriptions, transaction fees, packaging, shipping labels, apps and software, advertising and fulfilment services. The IRS describes deductible business expenses as ordinary and necessary in its guidance on deducting business expenses. We make sure each category is recorded with support, rather than buried in a single "fees" line.

Sales tax records

Many marketplaces collect and remit sales tax for orders placed through them, while orders through your own store may be your responsibility. Rules are set state by state. We keep the two separate in the books, reconcile tax collected to the liability account, and prepare a summary by state for you or your filer. Our state guides link to each state's official revenue site.

Questions we prepare before your return

  • Did inventory value at year end come from a count or an estimate?
  • Were any large equipment or software purchases made that should be treated as assets?
  • Did you start selling into new states or on new platforms this year?
  • Are owner draws and personal purchases separated from business expenses?

How we work with your tax preparer

If you already have a preparer, we hand over a clean, documented year-end package. If you need preparation as well, we can discuss that as part of an agreed engagement. See our tax services, how we handle ecommerce bookkeeping, or book a consultation.