You’re Growing Fast. But Are You Ready for Tax Season?
You’re hustling hard, scaling your Shopify or Amazon store, and reinvesting every dollar back into the business. More inventory. Bigger ad campaigns. Maybe even that sleek new packaging you’ve been eyeing.
Then tax season hits.
And suddenly, the IRS is knocking, telling you that you owe thousands in taxes but you have no cash set aside to pay it. Why? Because it’s all sitting in inventory.
Sound familiar? You’re not alone. Many eCommerce sellers get caught in this exact trap—profitable on paper, but scrambling for cash when tax time rolls around.
But here’s the thing: you can keep reinvesting in your business without getting blindsided by taxes. Let’s break it down.
Why This Happens: The E-Commerce Tax Trap
- Reinvesting doesn’t make your tax bill disappear. The IRS taxes you on profits, not cash flow. So even if every dollar is tied up in inventory, if you made money, you owe taxes.
- Inventory isn’t an instant write-off. Unlike marketing or software expenses, buying more inventory doesn’t immediately reduce your taxable income. That means you could owe taxes on money that’s still sitting in your warehouse.
- No tax planning = financial panic. Many sellers don’t set aside money for taxes because they assume they can “figure it out later.” Then later comes—along with a tax bill they weren’t expecting.
Let’s make sure that doesn’t happen to you.
The Solution: How to Reinvest & Stay Tax-Ready
1. Set Aside a % of Every Shopify or Amazon Payout
Waiting until April to see what you owe? Rookie mistake. The smartest move is to set aside money for taxes every time you get paid.
How much should you save?
- If your profit margins are 10-15%, save 15-20% of profits for taxes.
- If your margins are 25-40%, aim for 30-35% to cover federal and state taxes.
Pro Tip: Open a separate business savings account just for taxes. Automate transfers so you’re always prepared—no surprises.
2. Categorize Expenses Properly to Lower Your Tax Bill
Many eCommerce sellers overpay on taxes because they don’t track expenses correctly. Here’s what you should absolutely be writing off:
✔ Marketing & Ads (Facebook, Google, TikTok, influencer sponsorships)
✔ Software & Subscriptions (Shopify, QuickBooks, email marketing tools)
✔ Shipping & Fulfillment (USPS, FedEx, Amazon FBA fees)
✔ Business Travel & Networking (trade shows, supplier visits, conferences)
✔ Home Office Deduction (if you run your biz from home)
Need help organizing deductions? Insogna CPA, a top Austin tax accountant, helps Shopify and Amazon sellers track every eligible deduction so they don’t leave money on the table.
3. Use a SEP IRA to Cut Taxes & Save for the Future
Want to lower your taxable income and build long-term wealth? A SEP IRA (Simplified Employee Pension Plan) lets you:
✔ Deduct up to 25% of your income (or $66,000 per year)
✔ Reduce your taxable income immediately
✔ Keep more of your profits instead of handing them to the IRS
Why this matters: Instead of cutting a bigger check to the IRS, you’re investing in your own future—tax-free.
Not sure how to set up a SEP IRA? Insogna CPA, a trusted tax advisor in Austin, can help you open a tax-saving retirement account that fits your business.
4. Work With a Tax Expert Who Knows E-Commerce
Even if you automate your finances, you still need a strategy. That’s where working with a specialized CPA in Austin, Texas makes all the difference.
At Insogna CPA, we help eCommerce sellers:
✔ Plan ahead for taxes so they’re never caught off guard
✔ Track expenses properly to maximize deductions
✔ Set up SEP IRAs & other tax-saving strategies
Let’s Make Sure Taxes Don’t Drain Your Cash Flow
Reinvesting in your business is smart but if you’re not planning for taxes, you’re setting yourself up for a financial headache.
Let’s fix that.
Schedule a consultation with Insogna CPA today, and let’s create a tax plan that protects your cash flow while helping you grow.
Whether you need a small business CPA in Austin, an Austin, TX accountant, or an Austin accounting service that specializes in eCommerce, we’ve got you covered. Let’s build a smarter tax strategy together!