Bookkeeping Mistakes Etsy Sellers Should Avoid
Running an Etsy shop is exciting—you get to turn your creativity into income. But many sellers quickly realize that selling online also comes with financial responsibilities. Bookkeeping isn’t just about tracking numbers; it’s about protecting your profit, reducing stress at tax time, and keeping your shop sustainable.
Unfortunately, too many Etsy sellers make bookkeeping mistakes that cost them money (and sleep). Let’s break down the top mistakes to avoid—so you can stay organized and focused on growing your shop.
1. Mixing Personal and Business Finances
One of the biggest mistakes Etsy sellers make is running everything through one personal bank account. When business and personal expenses mix, it’s hard to know how much money your shop is actually making.
Why this matters:
Creates confusion during tax season
Increases the risk of missed deductions
Makes it harder to track your shop’s real profit
Solution:
Open a separate bank account for your Etsy business. It doesn’t have to be fancy—just having all business income and expenses flow through one account will make bookkeeping 10x easier.
2. Not Tracking Every Expense
Many Etsy sellers only track their sales but forget about the costs—supplies, Etsy fees, packaging, shipping, software, marketing, and more. Missing these expenses means you’re overpaying on taxes and underestimating your profit.
Solution:
Create a habit of recording every single expense as soon as it happens. A bookkeeping spreadsheet or software makes this easy.
3. Ignoring Etsy Fees
Etsy fees add up quickly—listing fees, transaction fees, and payment processing fees all chip away at your profit. Too many sellers look only at their “deposit amount” and forget about the fees that were taken out.
Solution:
Always record your gross income (the total sales before Etsy fees) and list the fees as expenses. This gives you a true picture of your revenue and deductions.
4. Waiting Until Tax Season to Organize
If you’re scrambling at tax time to gather receipts, bank statements, and Etsy reports—you’re doing it the hard way. Waiting until the last minute causes stress and increases the chance of mistakes.
Solution:
Reconcile your books monthly. This means updating your income, expenses, and reports on a consistent schedule so tax time is smooth and stress-free.
5. Not Setting Aside Money for Taxes
Etsy sellers often get surprised by their tax bill. Unlike a regular paycheck, taxes aren’t withheld from your sales—you’re responsible for setting that money aside.
Solution:
A good rule of thumb is to set aside 20–30% of your net profit into a separate “tax savings” account. That way, when quarterly or annual taxes roll around, you’re prepared.
Final Thoughts
Bookkeeping doesn’t have to be complicated, but it does have to be consistent. By avoiding these common mistakes, Etsy sellers can:
✅ Keep more of their profit
✅ Save time and stress
✅ Feel confident about their finances
If you’re ready to simplify your Etsy bookkeeping, check out my Etsy Seller Bookkeeping Bundle —a done-for-you system with everything you need to track income, expenses, and taxes with ease.