Story: An Etsy Crafter Who Fixed Her Mess Before Tax Time
- Lauren Twitchell
- Nov 5, 2025
- 3 min read
Some stories don’t start with success—they start with panic.
That’s exactly how Sarah (name changed for privacy) felt last February when she realized her Etsy shop’s numbers didn’t add up. Her dashboard showed over $14,000 in sales for the year, but her bank statements told a different story. Fees, refunds, and shipping costs were scattered across months with no rhyme or reason.
The worst part? She hadn’t opened a single Etsy monthly statement since July.
1. “I Thought I Was Doing Okay…”
Sarah sold handmade candles from her home in Mount Dora, Florida. She loved creating—wax melts, holiday bundles, personalized labels—but bookkeeping? Not so much.
Her system was simple:
She’d check her Etsy payouts every few weeks.
Record what hit her bank account as “income.”
And assume it was close enough.
That worked fine—until tax season rolled around.
Her tax preparer asked for a Profit & Loss statement. Sarah froze. She had no idea how to produce one. The numbers in her Etsy reports didn’t match what she had in her bank, and her receipts were shoved in a shoebox under her desk.
2. The Wake-Up Call
When her preparer mentioned that her Etsy 1099-K would report gross sales, not net deposits, everything clicked.
“Wait—so the IRS thinks I made fourteen thousand dollars, but my bank only shows eleven?”
Exactly.
And that gap—those missing fees, refunds, and shipping costs—wasn’t just confusion. It was a potential audit trigger.
She reached out to me at Zero Fluff Books, exhausted and embarrassed.
But here’s the thing: this kind of mess is more common than most people think. Etsy’s system is designed to automate payments—not to make bookkeeping simple.
3. Step 1: Start With the Etsy Statements
We began by downloading her Etsy monthly statements from January through December.
Each one showed:
Total sales
Etsy fees and processing charges
Shipping label costs
Refunds and taxes collected
Then we pulled her bank statements for the same months.
By comparing the two, we were able to match every deposit to its corresponding Etsy payout. The first discovery? Etsy had issued several small deposits that she never noticed—ones that crossed over month-end and didn’t match her “rounded” income numbers.
4. Step 2: Track the Real Costs
Next, we created an Excel sheet (because simplicity wins) that listed:
| Month | Gross Sales | Etsy Fees | Labels | Refunds | Net Deposit |
| Jan | $1,112.44 | $89.50 | $37.10 | $-20.00 | $965.84 |
| Feb | $1,425.22 | $106.75 | $48.90 | $-0.00 | $1,269.57 |
It wasn’t glamorous—but it worked.
For the first time, she could see what happened to every dollar.
5. Step 3: Clean the Books and Reconcile
Once the spreadsheet was built, we cross-checked totals against her bank statements. Every number tied back. Every deposit matched.
When we were done, she had:
✅ 12 months of reconciled data
✅ A clean Profit & Loss statement
✅ A clear breakdown of deductible expenses (fees, shipping, ads)
✅ Peace of mind
6. “I Finally Feel Like I Understand My Own Business.”
After cleanup, Sarah didn’t just get organized—she got confident.
She started tracking sales and fees monthly. She adjusted her product pricing to account for Etsy’s transaction costs. She even began setting aside money for taxes based on her real profit, not just deposits.
And when her tax preparer asked for her records the next year?
“I had it all in a single folder,” she told me. “No panic, no tears, just numbers that made sense.”
That’s the win I want for every small business owner.
7. The Lesson Every Etsy Seller Can Learn
Most small shop owners don’t fail because they’re lazy—they fail because bookkeeping feels overwhelming.
But here’s the truth: you don’t have to be perfect, you just have to be consistent.
Start today:
Download your latest Etsy statement.
Compare it to your most recent deposit.
Record both numbers side by side.
Do that once a month, and you’ll always know where your money’s going.
8. Ready to Fix Your Books Before Tax Time?
If you’re nodding along thinking that’s me, you’re not alone.
At Zero Fluff Books, our Cleanup Packages are made for sellers like you—creatives who just want to get back in control before year-end.
We’ll:
Rebuild your sales and expense records.
Reconcile your Etsy payouts with your bank.
Deliver a clean, audit-ready Profit & Loss statement.
Don’t wait until tax season panic hits. Start fresh now—so you can focus on what you love: creating.
Clean books aren’t just about taxes—they’re about freedom.When your numbers make sense, you can make better decisions, charge what you’re worth, and grow with confidence.
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