Inventory accounting
Most online sellers need to maintain inventory on the balance sheet: FIFO or specific-identification for most. Cash-basis doesn't exempt you from the inventory requirement when gross receipts exceed the small-business threshold. Cost of goods sold should carry freight-in, platform fulfillment charges tied to acquisition, and shrinkage from damaged or unsellable units, because that is where most sellers understate their deductions.
Reconciling the 1099-K
Payment processors and marketplaces report gross transaction volume. Refunds, chargebacks, platform commissions, advertising deducted from payouts, and sales tax the platform collected are all inside that gross number. The return has to start at the 1099-K figure and back those items out visibly, otherwise the IRS computer sees unreported income where there is none.
Multi-state sales tax nexus
Economic nexus typically triggers at $100,000 in sales or 200 transactions per state. FBA sellers have additional physical-nexus exposure in every state Amazon stores their inventory. Tracking where you cross thresholds is an annual exercise, not a one-time setup, because sales mix moves and states keep amending their rules.
Marketplace facilitator rules
Amazon, Etsy, eBay, and similar platforms collect and remit sales tax on your behalf in most states. You still owe on direct-to-consumer and wholesale sales outside the platform. Getting this wrong creates double-filing or missed filings. A seller running Shopify alongside Amazon has two different compliance pictures for the same product line.
Florida registration and filing
Florida sellers register with the Department of Revenue, collect the 6% state rate plus county surtax, and file the DR-15 on the assigned frequency. A few Florida-specific wrinkles come up for retailers:
- County surtax applies with a per-item cap on larger single sales
- Commercial rent on your warehouse or storefront carries Florida sales tax
- Resale certificates need to be current before wholesale purchases go untaxed
- Tangible personal property tax returns cover fixtures and equipment at the county level
Entity choice and owner pay
Sole-proprietor sellers pay self-employment tax on the whole margin. Once net income is consistently strong, an S corporation with a reasonable salary usually saves real money, and clean monthly books make the conversion painless instead of a reconstruction project.
Common questions
- Do I need to register in every state Amazon stores my inventory?
- Historically yes. Many states have softened this post-Wayfair, but registration is still advisable in major FBA warehouse states.
- The 1099-K is higher than what actually hit my bank. Is that a problem?
- No, it's normal. The 1099-K is gross before refunds, fees, and platform charges. The return reconciles from gross down to your real net, and that reconciliation is what prevents an IRS mismatch notice.
- Do I charge sales tax on my Shopify orders to Florida customers?
- Yes. Marketplace facilitator rules only cover marketplace sales. Orders through your own site are your responsibility to collect and remit on the DR-15.
- Can I deduct inventory when I buy it?
- Generally no. Inventory becomes a deduction as cost of goods sold when it sells. Some very small sellers can treat inventory as non-incidental materials and supplies, but that is an election with conditions, not a default.
Related
Corporation & Partnership Tax Returns
Forms 1120, 1120-S, and 1065 preparation for corporations, S-corps, and partnerships, plus owner K-1s, shareholder basis tracking, and multi-state filings.
Monthly Bookkeeping
Monthly, quarterly, and annual bookkeeping with bank reconciliations, a profit-and-loss report, and balance sheet within ten business days of month-end.
Sales Tax Planning
Florida sales tax registration and multi-state nexus filings. We handle monthly DR-15 returns and correspondence with the Florida Department of Revenue.
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