Selling on Shopify or Amazon?
Here’s What You Need to Know About Sales Tax, Bookkeeping, and Tax Planning
If you run an online business using platforms like Shopify, Amazon, Etsy, or Wix, you’ve probably heard of sales tax compliance, economic nexus, and multi-state tax rules. It can get overwhelming fast.
At Velin & Associates, Inc., we work with many Shopify, Amazon, and other online sellers to ensure their bookkeeping is accurate, their sales are trackable by state, and their income taxes are planned in advance.
Here’s what you need to know — and how we can help.
What Is Sales Tax Nexus — and Why Should You Care?
Sales tax “nexus” is a term that means your business has a tax connection to a state. This connection can be established in two main ways:
- Physical nexus: You have an office, warehouse, or employees in that state.
- Economic nexus: You sell a certain amount of products into the state — typically $100,000 in sales or 200 transactions annually, even if you don’t live there.
🔍 Example:
Let’s say you sell handmade jewelry on Shopify. You’re based in California, but in 2024, you made 220 sales to buyers in Texas, totaling $85,000.
Because you exceeded the 200-transaction threshold, you may now be required to collect and remit sales tax in Texas.
We Help You Track the Right Data
Even if you’re using Shopify, Amazon, or another platform, those systems don’t always track everything correctly — or in a way that’s ready for tax filing.
That’s where Velin & Associates, Inc. comes in. We help e-commerce clients:
- Set up your books to separate taxable and non-taxable sales
- Track sales by state to identify where you might owe tax
- Maintain clean records of inventory, returns, and cost of goods sold
- Ensure your payment processor reports (like 1099-K) match your books
- Connect Shopify/Amazon sales data to QuickBooks
🔍 Example:
A Shopify seller had $450,000 in revenue across the U.S. but didn’t realize that 40% came from just five states. We helped them categorize sales by state and prepare reports for their sales tax software, while we focused on the bookkeeping and income tax planning.
Why Bookkeeping and Tax Planning Matter Even More
Sales tax is only part of your total tax responsibilities. As an e-commerce seller, you also need to pay federal and state income tax based on your net income (revenue minus expenses). That’s where we come in.
We help online sellers:
- Track all deductible expenses:
This includes website costs, shipping, software subscriptions, merchant fees (like Stripe or PayPal), and advertising. - Prepare for quarterly estimated tax payments:
So you avoid IRS penalties at year-end. - Get organized for year-end filing:
Especially if you receive 1099-K forms from Amazon, Shopify, Stripe, or PayPal.
🔍 Example:
An Amazon FBA seller thought they made $120,000. But after tracking Amazon fees, storage costs, and returns, we found their actual net income was just $74,000 — a big difference that impacted their tax bill.
Our Services for Online Sellers
At Velin & Associates, Inc., we offer:
- Bookkeeping tailored for Shopify, Amazon, Etsy, and more
- Income tax filing for small business owners
- Quarterly tax planning to stay ahead of IRS deadlines
- Financial statement preparation for business loans, tax filings, or selling your business
We provide the foundation and support you need to manage your business finances confidently.
Sales Tax Starts with Clean Books
If you’re running an online business, the best way to stay compliant (and stress-free) is to:
- Get professional help setting up your bookkeeping
- Track your sales data accurately
- Understand where you might owe sales tax
- Plan for your quarterly income taxes
- Keep organized, digital records
We work with many sellers on Shopify, Amazon, Etsy, and other platforms, and we understand the unique needs of digital entrepreneurs and e-commerce store owners.
For more information about our services, please visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.