1099 Archives - Seller Ledger

Consignment accounting

Seller Ledger on May 8, 2026

A while back, we wrote a pretty in-depth blog post about consignment sales and 1099ks. Since then, we’ve had a number of questions from customers about how to properly track consignment sales in Seller Ledger. And we’ve added a LOT of functionality to make that easier, so let’s dive right in.

It’s not inventory

The first thing to realize when dealing with consignment sales, is that, even if you are temporarily taking possession of the items to sell, they do not count as inventory because they never belong to you. While this may seem odd, it’s actually pretty freeing from a trackign perspective.

Instead, all you need to do is keep track of the consignment items that sell, and the net profit from each of those sales, and how much you owe to the consignor.

Fortunately, Seller Ledger automates most of that.

Net profit of each sale

Most consignees (the people doing the selling on behalf of someone else,) negotiate payment terms based on the money earned AFTER subtracting costs like shipping and fees. Normally, this requires a lot of time spent in spreadsheets. But for many online sales channels, Seller Ledger does this for you automatically. We import the sale price, any shipping label costs, order-related fees – everything. See how we do it for eBay, Amazon, Walmart and other platforms.

In this case, let’s say you were doing a 50/50 split with the consignor. That would mean sending her/him $15.74.

Categorizing consignor payments

As mentioned earlier, the items you sell on behalf of your consignor do not count as inventory. Then the question becomes, how do you treat those payments? As mentioned in that prior blog post, the most common category we see used is “Commissions & fees.” By making sure each of those payments gets categorized that way, you have legitimate expenses to reduce your taxable income from consignment sales that may show up on your 1099k.

Frequency of payments

The odds are, you don’t want to have to be sending lots of small to midsize payments to a consignor, especially if you start scaling the your consignment business. It would be better to keep track of what you owe each consignor and then send them payment on a regular basis when the amount owed hits a certain level. So how do you do that?

Well, it’s pretty easy. The phrase “how much you owe” should provide a clue. We just need to create a new “accounts payable” liability account that will keep track of how much you owe, and then when you pay it.

Tracking consignment commissions owed

To start, to go the Settings -> Accounts in your Seller Ledger account (or click “Manage accounts” on your Dashboard):

Scroll down the page a bit and click the button to “Add Liability Account.” Then, select “Accounts Payable” as the Account Type, pick a name and, optionally, a start date and opening balance.

If you sell items for more than one consignor, you might think about creating an account for each one of them. But as you’ll see, you can track all of your consignor payments in a single account too.

Now that you have created an account for tracking consignment amounts owed, click into it from your Seller Ledger dashboard to see options for recording bills and payments. Each time you have an item sell, and you calculate the commission based on the net profits we outlined earlier, simply click the button to “Record a bill” and enter the details for that commission amount. Don’t forget to categorize the amount owed as “Commission and fees.”

As you sell more items for this consignor, continue to record those commissions within this account. You will see your account balance grow over time:

Tracking commission payments

Now, when it comes time to send a payment to your consignor, you have a couple of choices on how to do it. If you have a linked bank account where your payment is imported, you can categorize the payment amount as “Transfer: Consignment: Joes Garage”. Or, if you don’t have a linked bank account, just click into this account, click the “Make a Payment” button, and record the payment details. Because we have multiple commissions to be paid out, we can click the “Apply to balance” option.

Click “Record Payment” and voila – you have paid all of the outstanding money owed to your consignor. And better yet, you get to determine how often you make those payements.

Accounting for Etsy sales tax

Seller Ledger on February 17, 2026

While we have alluded to this in other posts, a question from a customer reminded us that we could be more explicit about sales tax and Etsy.

In a nutshell, as a marketplace facilitator, Etsy takes on the responsibility of both collecting sales tax from buyers and remitting it to the state. But, those amounts do show up in your Etsy transactions. So how does one account for them?

Sales tax is a liability…not income or expense

When sales tax is collected from a customer, it is not considered income. It becomes a “liability”, accounting jargon for “owing money to someone else.” In this case, it is money owed to the state. And that is how Seller Ledger treats the sales tax that is collected. It becomes money you owe to the state. When Etsy remits that money to the state, the “liability” gets offset.

This means that sales tax will not impact your profit and loss total, which determines your income tax owed.

How Etsy reports sales tax

Here’s where it gets a bit interesting. Other marketplaces, like eBay and Amazon, indicate that sales tax is both collected and remitted on the order. In those cases, Seller Ledger creates entries for both the sales tax collected and the sales tax paid, right in the order itself. That means that sales tax does not impact the order total, because anything collected is also subtracted out.

Etsy, on the other hand, includes sales tax in the total order amount. For example, if you click into your Etsy account from your Seller Ledger dashboard, and expand an order where sales tax was collected, you’ll see something like the following:

Notice that the total amount of the order includes the sales tax collected.

It turns out that Etsy then provides a separate transaction for the sales tax remitted. As you can see above this order, there is a separate remittance transaction for the same amount.

As we mentioned before, this doesn’t impact your profit and loss one way of the other. But it can make it harder to reconcile numbers from different places, especially when 1099s come out. And if you’re interesting in more potentials sources of confusion on Etsy numbers, check out this post.

1099-K Reporting Limit Increased: 2025

Seller Ledger on July 14, 2025

Some good news for small eCommerce sellers! Congress, in the new One Big Beautiful Act, has restored the original 1099-K reporting threshold to $20,000 and 200 transactions in a year.

As a reminder, as part of the American Rescue Plan of 2021, the plan was to lower the reporting threshold to $600, though the IRS repeatedly delayed that, choosing slightly lower amounts in successive years. Well, the moving target is no more.

If you’re an eCommerce business seller, it was always necessary to file a tax return to report your profits, regardless of what 1099-Ks you received. However, lowering the reporting threshold to $600 was starting to catch a LOT of individuals simply selling their personal items, which was a big unintended consequence of the original idea.

While we don’t know the impact, it’s been clear for years that eBay has been pretty vocal in advocating against the lower threshold.

Hopefully, end of year taxes just got a bit easier for small eCommerce sellers!

eBay 1099-K doesn’t match

Seller Ledger on February 5, 2025

One of the most interesting things that happens during tax season is that people tend to start paying much closer attention to their numbers than during the rest of the year. There are LOTS of cases where different sources provide different numbers.

But perhaps the most frustrating cases come when a single company reports different numbers in different places. We recently shared this example from Etsy. Even eBay, one of the oldest eCommerce marketplaces, is not immune.

In this article, we’re going to explain by eBay’s 1099-K doesn’t match the financial statements they provide to sellers.

Deeper dive into seller financial statements

If you pull down any statement from your eBay account (which eBay explains how to access here), at the top under the Transaction summary section, you’ll see a total for all orders and refunds for the period.

But, notice the language in parentheses. In both cases, they are adjusting for fees. If you scroll down in your statement, you come to the Orders section:

You’ll see the sale price of the item sold, in this case $19.99, and it’s shown as a positive number (and in green.) Below it, you will see the final value fees amount, in this case $2.67, and it’s shown as a negative number.

eBay then adds those two numbers together to get what they call a “Net Total” for this sale. That amount represents the change in your eBay seller account balance as a result of this order. In this case, eBay is going to add $17.32 to your account.

And if you scroll to the bottom of the Orders section, you’ll see a Total Orders amount that equals the sum of all of these Net Total amounts from all of your orders. And that Total Orders amount will match exactly the Orders total shown at the very top of the statement.

You will find the same thing to be true of the refunds.

This all makes sense…until you get to the form 1099-K.

According to eBay’s own guidance, the gross amount reported on your 1099-K…

“does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts.”

That means your 1099-K is never going to match the totals in your financial statements.

But that’s ok. A good way to think about your monthly financial statements from eBay is the same way you would look at the statements you get from your bank. They simply explain everything that has caused a change in balance for that account. They do not give you perfect information for reporting and filing taxes. For example, your bank account will show all of your eBay payouts as deposits. But adding up those payouts up won’t match your 1099-K or give you enough information to file. There’s too much detail missing.

So how do I match my eBay 1099-K?

From that same article, eBay points customers to another part of the website to better verify 1099-k balances. They have created a “1099-K detailed report” that you can download.

As we’ve written before, the 1099-K is an “informational” document, but is not meant to be the definitive source of financial information for your tax return. It provides no information about refunds, fees, cost of goods sold or operating expenses. It is up to you, the seller, to make sure that you are filing an accurate tax return that ensures you are only paying tax on your profits.

If you want a really deep dive into eBay’s 1099-K math, check out our eBay 1099-K guide.

While biased, we think bookkeeping software like Seller Ledger, that tracks all of your transactions at the detailed level, makes it much easier to see how all of these numbers add up.

Etsy 1099-K doesn’t match!

Seller Ledger on February 4, 2025

“While reviewing our tax and sales information in the Etsy dashboard, I noticed a significant discrepancy between Etsy’s reported numbers and Seller Ledger’s figures regarding total sales and income.”

Thus began a recent email exchange with a customer. And because we take accuracy rather seriously here at Seller Ledger, we dug right in immediately. Fortunately, the customer attached a screenshot of what Etsy was showing (numbers hidden for privacy.)

For those want to follow along, you can find this same information by going to:

Etsy > Finances > Legal & Tax Info > Select Tax Year

How does this compare to Seller Ledger’s data?

In order to compare directly, I pulled up this customer’s account, went to the Profit and Loss report, set the year to 2024, selected view by month, and set the channel filter to “Etsy”. This allowed me to see just the Etsy income and expense by month for the year.

And do you know what? The customer was correct. Etsy was showing different totals that Seller Ledger was. The question became, why? Was Seller Ledger wrong?

It was time to find out.

I copied the top “Income” section of the Seller Ledger profit and loss report into a spreadsheet. I then added a new row for the numbers provided in that Etsy tax screen. Lastly, I calculated the difference between the Etsy number for each month and the Total Income amount.

That’s when I noticed an interesting pattern. The numbers matched precisely in 7 of the 12 months of the year. And in the months where they didn’t match, the difference was EXACTLY the same as the “Refund” amounts shown in Seller Ledger for that month.

So Seller Ledger got the numbers exactly right. But how could the numbers be different?

In short, what is happening is that Etsy’s totals are not being reduced by order refunds. And this is a common occurrence with 1099-Ks across payment platforms, as we’ve previously written about. In fact, you can browse Etsy’s help article on the subject, and find some interesting language:

“Gross sales” may include but are not limited to:

All of your sales

Shipping

Refunds

Card processing fees

Sales tax applied using the sales tax tool

Canceled orders

May include? That doesn’t sound very definitive. But perhaps the most confusing is language around “refunds being included”.

The customer shared that someone from Etsy customer support had stated that refunds were included in the totals. But does that mean they have been reduced by the amount of the refunds? Or are they saying that the original sales (that eventually get refunded) are included in the total, but not the actual refund? In this instance, it was the latter.

After a bit more research, we found that Etsy actually does spell this out in more detail – you just have to find the right support article:

Your gross sales is the total amount your buyers have paid you, for the entire year, without subtracting expenses, such as:

Fees

Refunds

Shipping costs

In general, we have found that platforms, when reporting Gross Sales, include all of the original sales, whether they get refunded or not, and do not subtract out the refunds when they happen.

Lessons learned

For me, there a few interesting learnings here:

No matter how much the IRS and eCommerce platforms try to explain what goes into 1099-K numbers, any time you see different numbers in different places, it causes concern.
Regardless of what you may read or be told about how numbers are calculated, there is simply no substitute for verifying them yourself. Math is your friend if you know how to use it.
The best thing you can do to be prepared for any questions around numbers is to have a detailed accounting or bookkeeping solution that allows you to drill down on any totals to the underlying transactions and their components. This is exactly what Seller Ledger does, and why it took mere moments to figure out what was going on in this case.

I also want to give a shout out to the customer who worked with us on this case (you know who you are:), for being patient and sharing where they got the original source data so that we could share this experience and learning with others.

1099-K threshold for 2024 confirmed at $5,000

Seller Ledger on November 28, 2024

Earlier this week, the IRS confirmed that the 1099-K reporting threshold for 2024 will indeed remain at $5,000, “regardless of the number of such transactions.”

As a reminder, payment platforms must report “gross amount of aggregate payments” in excess of that threshold. If you sold more than $5,000 using any payment platform, you should expect to receive a 1099-K from said platform.

The IRS further explained that the threshold for 2025 will drop to $2,500, before finally reaching $600 on 2026.

We’ve previously written about some of the confusing scenarios around 1099-Ks, so if you haven’t yet seen them, we envite you to check them out. And for eBay sellers, check out our eBay 1099-K guide for a deep dive into all of the math.

Get your 2024 eCommerce business finances in order

It’s not too late to get your 2024 books in order. Seller Ledger can import your sales and expense history from top eCommerce platforms like eBay, Amazon, Etsy, Walmart, Shopify, Poshmark, Mercari and Whatnot, plus more than 12,000 banks and credit cards. And there’s a good chance we can help you get data back to Jan 1.

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eBay 1099-Ks are coming…electronically

Seller Ledger on November 11, 2024

Yesterday, we received the following email stating that eBay’s 1099-Ks are coming electronically for 2024.

Understandable confusion – but don’t worry

First, this email was received for a seller account that only sold personal items this year. This might raise concerns that personal sales may get reported as “taxable.” But that’s not the case – it just means you will want to properly account for them in your personal tax return, which we explain in this post about the relationship between personal sales and 1099-Ks.

Second, the seller account that received this email also sold less than $600 for all of 2024. This raises the question about the sales threshold for receiving 1099-Ks. eBay links to an article that discusses reportable criteria, so clearly not every seller will receive a 1099-K. As of the last IRS announcement, the threshold for 2024 is expected to be lowered to $5,000 in gross receipts. But, as we’ve seen before, this could still change.

As we’ve mentioned before in prior blog posts, 1099-Ks are “informational” documents designed to help identify eCommerce sales across platforms. So long as you are correctly tracking and reporting actual business profits, you should have nothing to worry about.

Get your business finances organized.

Need help making sure you only pay taxes on your net business profit? With automated bookkeeping through Seller Ledger, we pull in your detailed sales and expense information to make this as simple as possible. We also offer a 30-day free trial, no credit card required.

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Better match 1099-K amounts with US time zone support

Seller Ledger on December 29, 2023

To help eCommerce sellers better match the 1099-Ks that get filed by online payment providers, Seller Ledger today announced support for local US based time zones.

Why is this important?

When Seller Ledger imports your transaction history from different online sales channels and banks, we receive them with timestamps (which, if you’re curious, might look something like “Tue, 26 Dec 2023 15:14:01.753000000 UTC +00:00”) You may notice the “UTC” in there – that stands for Universal Time Coordinated (it used to be called Greenwich Mean Time) and it’s 5 hours ahead of EST (or 4 hours ahead during daylight savings.)

However, online marketplaces, when providing transaction totals and reports, tend to use the customer’s local time zone to calculate those totals. So, to help make sure you can match the numbers that online marketplaces are reporting (and be consistent with the IRS from year to year,) we have now added the same time zone support.

How do I change my time zone?

To change your time zone, simply go to Settings -> Business and change the time zone like you see below:

That’s it. From now on, Seller Ledger will use your local time zone when reporting transactions.

Navigating 1099-Ks for small sellers

Seller Ledger on November 7, 2023

As of the writing of this article, it appears likely that the lowered 1099-K threshold of $600 in gross payment amount will go into effect for tax year 2023. This is causing much anxiety among small sellers, and with good reason.

Update

Shortly after posting this article, the IRS once again delayed implementation of a lowered sales threshold.

To help illustrate how much confusion and complexity is about to be created for small online sellers, we did research to identify some pretty common scenarios sellers might encounter that make for very interesting 1099-Ks and tax returns.

For example:

Inconsistent Gross Amount calculations

1099-Ks have been around since 2011. But did you know that, after 12 years, different platforms are still using different calculations in terms of what gets included in the Box 1 amount? See several examples as we look at the treatment of sales tax. Or check out our eBay 1099-K guide to see how even eBay provides different numbers in different places.

Selling personal items among your business inventory

Do you track your personal sales separately from your business sales? Because eBay, Poshmark and others don’t. You get a single 1099-K for all sales on each platform. Yet what if you sold some personal items at a loss? Personal items don’t get treated the same as normal business sales. We took a deep dive into this scenario, to help walk sellers through what to do.

Consignment sales

As a reseller of someone else’s items, you may be collecting the full amount of the sale, which will be reported on your 1099-K. Except your income is really only the commission you receive from the sale. How are you supposed to account for this? Learn more as we share what we’ve uncovered.

Don’t stress

Our intent in pulling these example together is not to increase fear or anxiety. We believe there is ample evidence that the entire situation is imperfect, and what the IRS cares the most about is that you pay the correct amount of tax that your business owes. With reasonable bookkeeping, it shouldn’t be too hard to handle these scenarios. At Seller Ledger, we pull in your detailed sales and expense information to make this as simple as possible. We also offer a 30-day free trial, no credit card required.

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Make yourself heard

It is our belief that Congress does not fully understand the unnecessary complexity they have created, especially for small sellers. So, we encourage sellers to get involved and send a message to Congress. Click either of the buttons below to be taken to a place to make your voice heard:

eBay Mainstreet

1099K Fairness

If you find more interesting 1099-K scenarios that you’d like to see explored, shoot us an email at support@sellerledger.com and we’ll do out best to get to the bottom of it.

1099-Ks are inconsistent – but that’s ok

Seller Ledger on November 6, 2023

Back when we first launched, we wrote a blog post about 1099-Ks and where sellers can expect to find the amounts that make up the total in Box 1a (Gross amount of payment card/third-party network transactions.) At the time, we were referencing eBay’s calculations.

But, as we approach the end of the tax year, we’ve learned that different platforms calculate their Box 1a amounts differently, often around whether or not sales tax collected is included.

Below is a sample of our findings – if you discover more and want to pass them along, we’re happy to update the list.

Sales tax NOT included in Box 1a

For example, the following platforms indicate in their documentation that sales tax is likely NOT included in the gross amount reported to the IRS:

Ebay

In their help page, eBay states: “Additionally, Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay.”

Poshmark

This support page from Poshmark states: “Your Form 1099-K will only include income as calculated by gross sales (including fees, refunds, and cancelled orders) on the Poshmark platform.”

Etsy

Their help page is a bit less clear, stating that the gross sales includes “Sales tax collected by you.” However, just below that, they make this statement: “In some cases, Etsy collects sales tax from buyers and remits it to tax authorities on behalf of sellers. If Etsy has collected tax on your behalf, these amounts won’t appear on your 1099-K form.”

Sales tax included in Box1a

However, other platforms either don’t spell it out very clearly or imply the opposite – that sales tax collected IS included in the Box 1a amount:

Amazon

There does not appear to be an easy-to-find, definitive answer, but this thread on their discussion board indicates that sales is included.

Mercari

This page from their help center states that their Unadjusted Gross Payment combines various amounts, including: “Sales tax charged to buyer (a separately stated sales tax paid by the Buyer at the time of purchase and remitted directly to the state under Mercari’s sales tax registration)”

Square, Shopify and likely most shopping cart platforms

A quick search finds this discussion from the Shopify community stating that their 1099K had sales tax included. And another from Square users bringing up the exact same point

Creating confusion

The IRS’s own instructions for Schedule C provides a great starting point for confusion. Looking at the instructions for Line 23 (expenses for taxes and licenses,) you will find the following two statements:

You can deduct the following taxes and licenses on this line.

State and local sales taxes imposed on you as the seller of goods or services. If you collected this tax from the buyer, you must also include the amount collected in gross receipts or sales on line 1.

and

Do not deduct the following.

State and local sales taxes imposed on the buyer that you were required to collect and pay over to state or local governments. These taxes are not included in gross receipts or sales nor are they a deductible expense. However, if the state or local government allowed you to retain any part of the sales tax you collected, you must include that amount as income on line 6.

Clear as mud, right?

Adding to the confusion, there are statements from some “experts” that it’s critical to have your tax return line up with the forms that the IRS receives. But if you are a multi-channel seller, and the IRS receives multiple 1099-Ks that are based on different calculations, how are you supposed to get your amounts to line up?

It is unlikely that members of Congress understood the full potential for inconsistency when they introduced Form 1099-K for the 2011 tax year. Yet it has remained relatively unchanged for the last 12 years. And now, with the threshold for “gross amount” dropping to $600, this confusion will impact more small sellers than ever.

It doesn’t have to be a big deal

From our perspective, what’s most important is that you get to the correct amount of tax owed. That’s where good bookkeeping comes into play. If you are a multi-channel seller facing the possibility of receiving multiple 1099-Ks that included different numbers (like sales tax,) it becomes critical to have the order-level details (product price, any discounts, shipping, sales tax collected, fees charged, etc) broken out and properly categorized so that you can sub-total by any or all of them. This way, should anyone come asking, you can produce accurate reports of every total, and even drill down to the specific transactions behind them.

With Seller Ledger, we automatically import order-level details from the top online sales channels, along with banks and credit cards, to help you produce a Schedule C tax report that is accurate for your business. Anyone can try Seller Ledger free for 30-days, no credit card required.

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