Tax and bookkeeping built for online sellers

Multi-state sales tax nexus

After South Dakota v. Wayfair, selling into a state can create sales tax obligations even without a physical presence. Economic nexus thresholds vary by state. Amazon FBA creates physical nexus in every state where inventory is stored — which is often more states than sellers realize.

Inventory accounting

E-commerce businesses need to track cost of goods sold (COGS) accurately. Whether you use FIFO, LIFO, or weighted average cost affects your taxable income. Amazon and Shopify do not produce COGS figures — you need a bookkeeping system that does.

Platform fee reconciliation

Amazon, Shopify, PayPal, and Stripe all deduct fees before depositing funds. Reconciling gross sales against net deposits — and categorizing platform fees, refunds, and chargebacks correctly — is time-consuming and easy to get wrong.

Self-employment tax on net income

Online sellers operating as sole proprietors or single-member LLCs pay self-employment tax on all net income. An S-corp election can reduce this significantly once net income is consistently above $60,000–$80,000.

International sales and VAT

Selling to customers in the EU, UK, or Canada creates VAT and GST obligations. These are separate from US income tax and require registration in foreign jurisdictions — something most US accountants do not handle.

Home office and business deductions

Many online sellers operate from home. The home office deduction, vehicle use, and business equipment purchases are legitimate deductions — but they need to be documented correctly to survive IRS scrutiny.

Quarterly estimated taxes

E-commerce income is not subject to withholding. Sellers who do not make quarterly estimated tax payments face underpayment penalties. Cash flow planning around tax payments is essential for growing sellers.

Entity structure as the business scales

Many sellers start as sole proprietors. As revenue grows, the right entity structure — LLC, S-corp, or C-corp — depends on income level, growth plans, and whether you have investors or plan to sell the business.

When:

Net income exceeds $60,000

Evaluate S-corp election to reduce self-employment tax

When:

Selling into 5+ states

Conduct a nexus analysis and register for sales tax where required

When:

Using Amazon FBA

Identify which states have your inventory — each creates physical nexus

When:

Large inventory purchase planned

Review COGS impact and cash flow before committing

When:

Profitable year with cash available

Maximize retirement contributions before year-end

When:

Considering selling the business

Review entity structure — C-corp vs. S-corp has major capital gains implications