Bookkeeping for Etsy Sellers
Etsy deposits arrive net of listing fees, transaction fees, offsite ad charges, and payment processing costs — making it nearly impossible to know your true revenue without dissecting every deposit. Simple Books Now gives Etsy sellers a clear monthly picture of gross sales, platform costs, and actual take-home profit. As a Federally authorized Enrolled Agent, Luisa also ensures your self-employment taxes, estimated payments, and Schedule C deductions are handled correctly from the start.
Book a Free ConsultationEtsy's fee structure is among the most layered of any marketplace: 20-cent listing fees per item, a 6.5% transaction fee on the sale price plus shipping, a 3% + 25-cent payment processing fee, and offsite ads charges of 12–15% when Etsy markets your listings externally. Each of these hits your deposit as a deduction, and when you add in the Star Seller shipping label costs and pattern subscriptions, the gap between your gross revenue and your bank deposit can be striking. Clean Etsy bookkeeping requires separating all of these costs into the correct expense categories so your P&L actually tells the story of your shop's financial health.
Most Etsy sellers are sole proprietors or single-member LLCs, which means all of their shop income flows directly to a Schedule C and is subject to self-employment tax — roughly 15.3% on net earnings before income tax. An Enrolled Agent-backed bookkeeper doesn't just track your expenses; she structures your books to maximize your legitimate deductions (home office, materials, packaging, photography, software, shipping supplies) and sets your quarterly estimated payment schedule so you're never hit with an underpayment penalty at tax time.
The Financial Challenges We Solve
Etsy Fee Categorization Complexity
Listing fees, transaction fees, payment processing fees, and offsite ad charges each belong in a different expense category — but Etsy deducts them all from the same deposit without clear separation. Sellers who book the deposit as pure revenue are significantly overstating profit and will face a tax surprise.
Shipping Income & Cost Mismatches
Etsy collects shipping fees from buyers and pays you that amount, but you pay postage separately — and the two amounts rarely match perfectly due to rate variations and packaging weight estimates. Properly recording shipping revenue and shipping expense as separate line items is essential for an accurate P&L.
Materials & Supply COGS Tracking
Handmade sellers buy raw materials in bulk but use them across many different products over time, making cost of goods sold difficult to calculate without a materials tracking system. Undercosting your products leads to pricing too low; overcosting leads to overestimated deductions — both are problems that clean bookkeeping solves.
Quarterly Estimated Tax Underpayment
Etsy doesn't withhold any taxes from your payments, making sellers personally responsible for quarterly estimated payments to the IRS. Without accurate monthly books showing your net profit, most sellers either guess at their estimates or skip them entirely — resulting in IRS underpayment penalties and a large April bill.
Sales Tax on Etsy Orders — Who Owes What?
Etsy collects and remits sales tax on behalf of sellers in states where it has a marketplace facilitator obligation — but not in every state, and not always correctly. Sellers need to understand which states they're responsible for directly and how Etsy's remittances are documented to avoid double-paying or under-filing.
More Than a Bookkeeper — A Federally authorized Enrolled Agent
Most bookkeepers record transactions and hand you a report. Simple Books Now does that — and more. Luisa is a Federally authorized Enrolled Agent: the highest credential the IRS grants. She can represent you in audits, file your returns, and negotiate directly with the IRS — with year-round tax strategy built into your bookkeeping from day one.
For a business owner in your industry, that means one professional who understands your numbers and handles your complete financial picture. No handoffs. No gaps. No surprises at tax time.
- Federally authorized by the IRS — represents you in audits, collections & appeals
- Bookkeeping + tax strategy in one engagement — no coordinating between vendors
- Direct access to Luisa — no junior staff
- Flat monthly rate — no hourly billing surprises
- Works with clients in all 50 states
- Books delivered by the 15th of each month
- Year-round availability, not just at tax time
Everything We Handle for Your Business
Bookkeeping
Monthly reconciliation, clean financials, and reports delivered every month.
Learn more →Tax Resolution
IRS notices, back taxes, audits, and payment plans — handled directly by our EA.
Learn more →Catch-Up Bookkeeping
Behind on your books? We'll get you caught up at a fixed project price.
Learn more →Bookkeeping FAQ
We use your monthly Etsy payment account CSV to extract gross sales, each fee category, refunds, and your net deposit separately. This lets us post gross revenue to an income account and each Etsy fee to the correct expense account — giving you a P&L that shows what you actually earned and what Etsy charged you for the privilege.
Common deductible expenses include raw materials and supplies, packaging, postage and shipping labels, Etsy fees, photography equipment and props, a dedicated portion of your home used exclusively for your craft, software and subscriptions, and professional development. As an Enrolled Agent, Luisa reviews your specific situation to ensure you're capturing every legitimate deduction without claiming anything that would invite scrutiny.
A conservative rule of thumb is 25–30% of your net profit set aside for combined self-employment and income taxes, though your exact rate depends on your total household income and filing status. We calculate your quarterly estimated payment amounts based on your actual monthly profit so you're paying the right amount at the right time rather than guessing.
Etsy remits sales tax as a marketplace facilitator in most U.S. states, which means they collect and pay it on your behalf in those states. However, there are still situations where you may have independent obligations — particularly if you make direct sales outside Etsy, sell at craft fairs, or operate in states where Etsy's facilitator coverage has gaps. We review your full sales picture to make sure nothing falls through the cracks.
Yes — digital downloads and physical handmade goods have different cost structures and potentially different sales tax treatment depending on the state. Digital products typically have zero COGS and may be taxed differently than physical goods in some jurisdictions. We set up your chart of accounts to track each product type separately so your margins are clear and your tax reporting is accurate.
Ready to Get Your Etsy Shop's Books in Order?
Schedule a free consultation with Luisa — a Federally authorized Enrolled Agent who knows Etsy's fee structure and what Etsy sellers can legitimately deduct to keep more of what they make.
Book a Free ConsultationNo obligation · 30-minute call · Federally authorized Enrolled Agent