Etsy Bookkeeping & Accounting:Tax Prep Made Simple
Track every sale, fee, and expense so your tax return is accurate and your profit is clear. This guide shows a clean monthly workflow Etsy sellers can keep up with.
$Quick Answer: What Etsy Bookkeeping Actually Is
Etsy bookkeeping means recording gross sales, all Etsy fees, refunds, taxes collected, and business expenses each month. The goal is to reconcile Etsy payouts to your bank deposits and produce a clean profit and loss report you can use for taxes and pricing decisions.
- Record gross sales (not just payouts)
- Separate Etsy fees from income
- Track taxes collected as liabilities
- Reconcile deposits monthly
The Etsy Bookkeeping Basics
If you track these three things, your books stay clean
Bookkeeping vs. Accounting
Bookkeeping records transactions. Accounting turns those records into insights and tax-ready reports. Start with bookkeeping; upgrade to accounting as you scale.
Cash vs. Accrual
Most Etsy sellers use cash basis because it is simple. Accrual can be useful if you carry a lot of inventory or want deeper analysis.
Best Etsy Reports to Use
Use the Etsy Monthly Statement or CSV export to capture gross sales, fees, and taxes collected. Use payouts to reconcile deposits.
What to Record From Etsy Each Month
Use the monthly statement as your single source of truth
| Record | Where It Shows Up | How to Record It | Why It Matters |
|---|---|---|---|
| Gross sales | Etsy monthly statement | Income | Shows true revenue before fees |
| Etsy fees | Etsy statement or CSV | Expense | Reduces taxable income |
| Sales tax/VAT collected | Etsy statement | Liability | Not your income |
| Refunds | Orders or statement | Contra income | Keeps revenue accurate |
| Shipping labels | Etsy labels report | Expense | Improves margin accuracy |
Monthly Etsy Bookkeeping Workflow
A 15-30 minute process you can repeat
Separate Business Finances
Route Etsy payouts to a dedicated bank account and pay business expenses from that account.
- • Dedicated bank account
- • Business card for expenses
- • Simple audit trail
Import Etsy Monthly Data
Use the monthly statement or CSV to capture gross sales, fees, refunds, and taxes collected.
- • Record gross sales
- • Record Etsy fees
- • Record taxes collected
Categorize Expenses
Use consistent categories so your profit and loss report is usable at tax time.
- • COGS materials and packaging
- • Marketing and ads
- • Software and tools
Reconcile Deposits
Match Etsy payouts to bank deposits and confirm nothing is missing.
- • Match payouts to deposits
- • Check for missing fees
- • Confirm refunds
Tax Prep Checklist for Etsy Sellers
What to gather before filing
- Gross sales totals for the year
- Etsy fee totals (listing, transaction, payment processing)
- Ad spend and marketing costs
- Shipping and packaging expenses
- Inventory or materials used (COGS)
- Home office and internet documentation (if applicable)
- Mileage log for sourcing or shipping runs
- Any marketplace tax forms received
When to Hire an Etsy Bookkeeper
A simple decision rule for growing shops
If you are processing 100+ orders per month, selling on multiple channels, or falling behind on monthly reconciliation, it is worth hiring an Etsy bookkeeper. A good bookkeeper will clean up past months, keep your categories consistent, and deliver monthly profit and loss reports you can trust.
- You want clean books without spending your weekends on receipts
- You need reliable profit numbers for pricing decisions
- You plan to scale ads, inventory, or new product lines
Etsy Bookkeeping Dos and Don'ts
❌Don't Do This
- •Treat Etsy deposits as revenue
- •Mix personal and business expenses
- •Ignore sales tax/VAT collected
- •Wait until tax season to clean up
- •Skip COGS when pricing products
✅Do This Instead
- •Keep receipts and invoices in one place
- •Reconcile Etsy payouts every month
- •Track fees and refunds separately from income
- •Review your P&L before changing prices
- •Use a consistent chart of accounts
Frequently Asked Questions
This guide is for educational purposes only and is not tax, legal, or financial advice. Consult a qualified tax professional for guidance specific to your situation.
Ready to Grow Your Etsy Shop With Better Data?
Use Insight Agent to track trends, optimize listings, and make smarter pricing decisions once your bookkeeping is clean.