How One Etsy Jewelry Seller Found Her True Profit (After Bookkeeping Cleanup)
- Lauren Twitchell
- 4 days ago
- 3 min read
Numbers tell stories. And for Etsy sellers, those stories can be surprising—sometimes in good ways, sometimes not.
Take Sarah (name changed), a jewelry maker who had been selling on Etsy for three years. She was talented, her designs were beautiful, and her sales notifications made her feel like her business was thriving.
But when she sat down at tax time, she felt like something was off. Her bank deposits didn’t match her Etsy reports, her supply costs weren’t showing anywhere, and her “profit” felt more like a guess.
That’s when she came to Zero Fluff Books for a cleanup. And what we found changed how she looked at her business forever.
The Assumption: “I’m Making $2,000 a Month”
Sarah had been selling consistently. Every month, Etsy was depositing around $2,000 into her account. She assumed that meant she was making $2,000 in sales—and most of that was profit.
She wasn’t trying to cheat the system. She just didn’t know how Etsy’s bookkeeping really worked.
The Reality: $2,500 in Sales, $500 in Fees
When we pulled her Etsy reports, the truth came out:
Gross sales: $2,500
Etsy fees: $500
Net deposits: $2,000
Sarah had been recording deposits as “income.” That meant her books showed $2,000 income, $0 fees. On paper, she was underreporting income to the IRS and missing $500 in deductible expenses every month.
Over a year, that’s:
$6,000 in income underreported
$6,000 in missed expenses
A tax return that didn’t match Etsy’s 1099-K
That’s not just messy bookkeeping—it’s an IRS red flag.
The Hidden Problem: No COGS Tracking
On top of fees, Sarah wasn’t tracking her cost of goods sold (COGS). Her beads, clasps, and packaging were all getting lumped into “supplies,” but never matched to sales.
The result? She thought her $30 necklaces were nearly all profit, when in reality:
Sale price: $30
COGS: $8
After fees: $22
Real profit: $14
That’s less than half of what she thought.
The Emotional Toll
Sarah wasn’t just making bookkeeping mistakes—she was making decisions based on the wrong numbers.
She underpriced her jewelry, thinking she had more margin.
She overpaid in taxes, because she wasn’t deducting fees.
She felt constant stress, because her money never seemed to stretch as far as it “should.”
Like many Etsy sellers, she thought bookkeeping was something she could wing until the end of the year. But the cleanup showed her that guesswork was costing her thousands.
The Cleanup Process
Here’s what we did to fix it:
Pulled Etsy Reports
We started with Etsy’s monthly statements, which break down gross sales, fees, and deposits.
Rebuilt Income Records
Instead of recording $2,000 deposits, we logged $2,500 sales and $500 fees. Now her books matched reality (and the IRS 1099-K).
Tracked COGS
We built a simple tracker for beads, clasps, and packaging. Each sale now had a cost assigned.
Reconciled to Bank
Etsy’s reports were matched to her bank deposits so everything lined up cleanly.
The Results
After the cleanup, Sarah had her first clear picture of profit:
Gross monthly sales: $2,500
Etsy fees: $500
COGS: $600
Real profit: $1,400
Not $2,000 like she thought.
And while that was a shock at first, it gave her the power to:
Adjust her pricing to cover costs.
Deduct all her expenses correctly at tax time.
Finally know where her money was going.
The Lesson for Etsy Sellers
Sarah’s story is not unique. Most Etsy sellers:
Record deposits as income.
Ignore fees.
Skip COGS tracking.
And that leads to overpaying taxes, underpricing products, and constant financial stress.
The fix isn’t complicated. It’s cleanup + a system. And once you see your numbers clearly, you can finally make confident business decisions.
Final Word
Bookkeeping isn’t the sexy part of running an Etsy shop—but it’s the difference between a business that survives and one that thrives.
Sarah’s cleanup gave her clarity. And clarity gave her control.
👉 If you see yourself in this story, don’t wait until tax time. Talk to us at Zero Fluff Books. We’ll take the mess, clean it up, and hand you back clarity—so you can focus on creating, not stressing.
No judgment. No fluff. Just clean books.
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