Let’s be real. Tax season isn’t exactly the highlight of your year. If you’re an Amazon, eBay, Shopify, or Etsy seller, you’re already juggling inventory, shipping, and customer service. The last thing you need is a tax nightmare because of messy records or IRS red flags.
The good news? You can avoid the stress. With the right checklist, you can stay compliant, maximize deductions, and make tax season a breeze.
At Insogna CPA, a trusted CPA firm in Austin, Texas, we help e-commerce sellers stay organized, reduce their tax burden, and avoid costly mistakes. Follow this step-by-step checklist, and you’ll be IRS audit-proof and tax-season ready.
1. Confirm Your 1099-K Matches Your Reported Income
If you process payments through PayPal, Stripe, Amazon, or Shopify Payments, you’ll receive a Form 1099-K, which reports your total sales to the IRS. And starting in 2024, the reporting threshold dropped to just $600.
What This Means:
- More sellers will now receive IRS-reported 1099-K forms.
- If your tax return doesn’t match what’s on your 1099-K, expect an IRS inquiry.
- Even cash and Venmo sales need to be reported—the IRS is watching.
Pro Tip: Not sure if your numbers match? A tax advisor in Austin can help you reconcile everything before filing.
2. Verify Your Inventory Records in QuickBooks or Your Accounting Software
Your cost of goods sold (COGS) deduction is based on accurate inventory records. If your numbers don’t add up, the IRS might question your expenses.
What to Do:
✔ Ensure your inventory purchases match supplier invoices.
✔ Track ending inventory values and confirm they match your books.
✔ Document damaged, expired, or lost inventory—those losses can be tax-deductible!
Pro Tip: Selling on Amazon FBA? Check your storage & fulfillment reports—multi-state storage could mean unexpected sales tax obligations. A CPA in Austin, Texas can help you navigate it.
3. Reconcile All Business Expenses & Deductions
One of the easiest ways to overpay on taxes? Missing out on deductions. But claiming expenses without proper documentation? That’s an IRS red flag.
What to Track:
✔ Advertising & marketing expenses (Facebook, Google Ads, influencer sponsorships)
✔ Software subscriptions (Shopify, QuickBooks, Canva, etc.)
✔ Shipping & packaging costs (postage, boxes, labels, fulfillment fees)
✔ Home office deductions (if you run your business from home)
Pro Tip: If your books are a mess, don’t panic. A small business CPA in Austin can clean things up before tax season hits.
4. Double-Check Your Sales Tax Filings
If you sell in multiple states, you might owe sales tax in more places than you think.
What to Do:
✔ Check where you have sales tax nexus (Amazon FBA? High sales in certain states?).
✔ Make sure you’ve collected and remitted the correct sales tax amounts.
✔ Confirm that you’ve filed state sales tax returns where required.
Pro Tip: A CPA firm in Austin, Texas can help you stay compliant with multi-state sales tax laws so you don’t get hit with penalties.
5. Review Owner Disbursements & Payouts
How you pay yourself from your business matters—for taxes and compliance.
What to Do:
✔ If you have an LLC, make sure owner draws are tracked correctly.
✔ If you have an S-Corp, confirm you’ve paid yourself a reasonable salary (yes, the IRS checks this).
✔ Ensure payroll taxes were properly withheld and paid.
Pro Tip: Not sure if your business structure is tax-efficient? A CPA in Austin, Texas can help you optimize your setup to lower your taxes.
Let’s Make Tax Season Stress-Free
Look, you didn’t start your e-commerce business to stress about taxes but getting them right can save you thousands and keep you audit-proof.
At Insogna CPA, we specialize in e-commerce tax strategy, bookkeeping, and compliance for online sellers. Whether you need help reconciling your sales, filing taxes, or avoiding IRS headaches, we’ve got you covered.
Let Insogna CPA Handle Your Tax Prep!
Want to focus on growing your business instead of stressing over taxes? Schedule a consultation with Insogna CPA, your go-to Austin small business accountant, today!