One post tagged with "Etsy"

Hand-stitched ledgers beat tangled spreadsheets—especially when every cent counts.

For the artists, makers, and curators on Etsy, passion drives the business. But as your shop grows, financial clarity becomes just as important as creative vision. Juggling fees, tracking material costs, and preparing for taxes can feel overwhelming, pulling you away from the workbench.

What if you could manage your shop’s finances with the same care and precision you put into your products? This guide introduces a plain-text accounting workflow using Beancount, an open-source engine designed for accuracy and control. It’s a method that helps you master your numbers so you can focus on your craft.

Why Etsy Bookkeeping Is Different​

An Etsy shop has a unique financial fingerprint, with complexities that generic accounting software often misses.

• Marketplace fees everywhere: Your final payout is what’s left after Etsy takes its share. Listing fees, transaction fees, payment processing fees, and advertising costs all nibble away at every sale. Without tracking them individually, you can't know your true profit margins. (Bench)
• Platform-controlled sales tax: In a huge win for sellers, Etsy now automatically calculates, collects, and remits sales tax on your behalf in most states. However, if you sell on other channels or have a physical presence in certain states, you might still have your own sales tax obligations due to "nexus" rules. (Bench)
• Flexible payout cadence: Depending on your settings and account history, Etsy can deposit your funds daily, weekly, bi-weekly, or monthly. This flexibility can make cash flow feel unpredictable, especially when funds are held in reserve or delayed. (Etsy Help)
• Lower 1099-K thresholds: The days of flying under the tax radar are over. The IRS reporting threshold for Form 1099-K, which reports your gross sales, is set at $5,000 for 2024 and is planned to drop to just $600 by 2026. This means nearly every shop will receive an IRS form, and your books must be able to reconcile with it perfectly. (IRS)

Beancount Blueprint in Seven Quick Steps​

This plain-text blueprint will help you build a clear, accurate, and stress-free bookkeeping system.

1. Separate Channels Up Front​

If Etsy isn't your only sales channel, create separate income and expense accounts for each one. This simple separation at the top level of your chart of accounts keeps your analytics clean and makes tax time much easier.

2025-07-22 open Income:Etsy               USD
2025-07-22 open Expenses:Etsy:ListingFee   USD
2025-07-22 open Assets:Etsy:Payout         USD

2. Explode Every Payout​

Never record an Etsy deposit as a single line of income. Instead, download your monthly Payment Account CSV from your Shop Manager. Use this report to create a single Beancount transaction that "explodes" each deposit into its gross sales and individual fee components.

; weekly payout from the Etsy Payment Account CSV
2025-07-15 * "Etsy Deposit #2025-28"
  Assets:Bank:Operating             1842.77 USD
  Income:Etsy:Sales               -2100.00 USD
  Expenses:Etsy:TransactionFee        136.50 USD  ; 6.5 %
  Expenses:Etsy:PaymentProcessing      66.00 USD  ; 3 % + $0.25 per order
  Expenses:Etsy:ListingFee             14.00 USD  ; $0.20 x 70 renewals
  Assets:Etsy:Reserve                -75.73 USD

3. Track Inventory & COGS with Lots​

For sellers of physical goods, Beancount's "lots" feature is a game-changer for tracking Cost of Goods Sold (COGS). When you buy raw materials, you record them as inventory at a specific cost. When you sell a finished product, you can expense the exact cost of the materials used.

; Purchase bulk materials for inventory
2025-07-01 * "Bulk yarn purchase | Supplier XYZ"
  Assets:Inventory:ScarfBlue     500 ScarfBlue {@ 3.45 USD}
  Assets:Bank:Operating

; Record the COGS when an item sells
2025-07-20 * "Sold Blue Scarf | Order #1234"
  Expenses:COGS                  1 ScarfBlue {3.45 USD}
  Assets:Inventory:ScarfBlue

4. Pick Your Accounting Method Early​

You have two main choices:

• Cash basis: Simple and easy. You record income when the money lands in your bank and expenses when you pay for them. This works well for small, hobby-scale shops.
• Accrual basis: Provides a truer picture of profitability. You record revenue when you make the sale (not when you get paid) and expenses when you incur them. This is better for shops that buy supplies in bulk or sell made-to-order items. (Bench)

5. Automate Imports​

Save time by automating data entry. The plain-text ecosystem offers several options:

• Use bean-extract with custom rules to parse the Etsy CSV files.
• Configure a bank CSV importer to catch ad charges or shipping labels paid by credit card.
• For advanced users, write a Python script to pull reports directly from the Etsy API.

6. Reconcile Weekly​

Set aside a few minutes each week to check your numbers. Use Beancount's command-line tools to quickly validate your balances and spot any issues like released reserves, refunds, or fee adjustments before the month ends.

# Check the balance of your Etsy holding account
bean-balance books.bean "Assets:Etsy:Payout" "2025-07-21"

# Generate an income statement for the last period
bean-report books.bean income_statement -e 2025-07-21

7. Attach Source Docs​

Create a completely self-contained and auditable record by linking to source documents directly in your transaction metadata. This is perfect for supplier receipts, shipping label PDFs, or purchase orders.

2025-07-12 * "Etsy shipping label for order #4321"
  Expenses:ShippingLabel         4.25 USD
  Assets:Bank:Operating
  document: "docs/labels/2025-07-12-order4321.pdf"

Know Your Etsy Fees (U.S.)​

To get a true picture of your profit, track each fee type in its own expense account:

• Listing fee: $0.20 per item, which automatically renews every 4 months or after a sale. (Etsy)
• Transaction fee: 6.5% of the total order amount (including item price, shipping, and gift-wrapping). (Etsy)
• Payment processing fee: Varies by country, but for the U.S. it's typically 3% + $0.25 per order processed through Etsy Payments. (Etsy Help)
• Subscription (Etsy Plus): An optional $10/month for additional tools. (Bench)

Sales-Tax & Compliance Tips​

• While Etsy remits sales tax for most U.S. states, be aware that selling on other platforms or having a physical workshop can create additional tax obligations ("nexus"). Track your sales thresholds carefully. (Bench)
• Once the 1099-K thresholds apply to your shop, ensure your Income:Etsy:Sales total in Beancount reconciles to the gross amount on the form to the cent. (IRS)

Common Pitfalls (and Fixes)​

• Pitfall: Net-deposit accounting.
  • Fix: Always use the payment CSV to break deposits into gross sales, fees, and reserves.
• Pitfall: Stale inventory costs.
  • Fix: Record your supply and material purchases as inventory the moment you buy them. Don’t wait until the finished product sells.
• Pitfall: Refund blind spots.
  • Fix: When issuing a refund, log the expense and also reverse the original COGS entry to move the cost back into your inventory account.
• Pitfall: Ignoring reserve holds.
  • Fix: Open an Assets:Etsy:Reserve account to track money that Etsy is holding. This keeps your cash-flow statements honest.

Quick-Start Checklist​

• In your Shop Manager, set up monthly statements and download your first CSV.
• Clone the Beancount starter repository and sketch out your shop's chart of accounts.
• Decide on cash or accrual accounting and commit to it.
• Write a basic importer script or rules file and schedule a weekly sync.
• Reconcile your payouts, inventory levels, and bank balance every Monday.
• Generate an income statement each month and review your gross margin trends.
• Back up your .bean files using Git and an off-site storage solution.

Ready to stitch bookkeeping into your creative workflow? Install Beancount, commit your first entry, and let plain-text clarity free up more time at the workbench. Happy bean-keeping!