How to Prepare E-Commerce Financial Statements for Tax Filing
May 24, 2025
In today’s rapidly growing e-commerce sector, businesses need to stay on top of their financial obligations, particularly when it comes to tax filing. With global e-commerce sales projected to surpass $6.86 trillion by 2025, (Source: SellersCommerce) the stakes are high for online retailers to maintain accurate financial records.
Whether you're running a boutique online store or a large-scale e-commerce platform, preparing your financial statements properly for tax filing is important.
In this article, we’ll walk you through how to prepare your e-commerce financials effectively. This will help ensure your business is compliant and positioned to maximize potential tax savings. So, let's get started.
1) Gather All Business Records
To prepare accurate financial statements for tax filing, you’ll need to collect the following records:
Sales Reports: Download detailed sales reports from all online platforms you use (Shopify, Amazon, Etsy, etc.). These reports reflect your total revenue and transaction history.
Payment Processor Reports: Collect reports from payment gateways like PayPal, Stripe, or credit card processors. These show how and when payments were received.
Bank Statements: Retrieve your business bank account statements. These help verify income deposits and expense payments.
Expense Receipts and Bills: Organize receipts for all business-related expenses, such as marketing costs, software fees, shipping, and operational expenses.
Inventory Records: Prepare records that track your inventory purchases, sales, and remaining stock. This is essential for calculating your cost of goods sold (COGS).
Loan Documents: If you have business loans, gather the loan agreements, payment history, and interest details. This will ensure all liabilities are correctly recorded.
2) List All Sales Income
After gathering your records, it’s time to break down your sales figures accurately for tax filing. You need to account for every aspect of your revenue. Here’s how to list your sales income step by step:
Total Sales Before Any Deductions
Start by calculating your total sales. This figure represents the full amount customers paid before any refunds, returns, or discounts. You can pull this from your online sales reports. It gives you a clear picture of your total revenue.
Refunds or Returns Given to Customers
Next, subtract any refunds or returns. If a customer returns an item and receives their money back, those amounts reduce your overall income. Carefully track these figures to ensure your sales totals reflect the actual income your business kept.
Discounts or Coupons Used
Include the total value of any discounts or coupon codes applied. These reduce the total sales income, whether you offered seasonal promotions or first-time purchase discounts. You’ll need to track these accurately to reflect the true revenue.
Final Sales After Removing Returns and Discounts
After adjusting for returns and discounts, calculate your net sales. This is the figure that shows your true business income. It reflects the actual amount your business earned after all deductions, and this is the number to use for tax filing.
3) Calculate Product Costs
To figure out your product costs, start with the value of the inventory you had at the beginning of the year. Then, add what you spent on new stock during the year, including any shipping and packaging costs.
After that, subtract the value of the inventory still left at the end of the year.
Use this formula:
Product Costs = Starting Inventory + Purchases - Ending Inventory
This gives you the total cost of goods sold, which helps you see how much you spent and how much you earned.
4) Record Business Expenses
Carefully tracking your business expenses helps reduce your taxable income and keeps your financial records accurate. Here’s what to include:
Advertising and Marketing Costs: Expenses for promoting your products, such as social media ads, influencer partnerships, or promotional campaigns.
Website and Software Fees: Monthly or annual fees for e-commerce platforms, website hosting, apps, or software tools used to run your store.
Payment Processing Fees: Charges from platforms like PayPal, Stripe, or credit card companies for handling customer transactions.
Shipping and Delivery Costs: Costs involved in sending products to customers, including packaging materials, courier charges, and postage.
Rent and Utility Bills: Expenses for maintaining a physical space like an office or storage unit, along with electricity, internet, and other utility services.
Employee or Contractor Payments: Salaries, wages, or payments made to staff, freelancers, or contractors working for your business.
Professional Services: Fees paid to lawyers, accountants, tax professionals, or consultants providing business-related services.
5) Prepare Financial Reports
After organizing your records and expenses, the next step is to create financial reports. These reports are not just paperwork; they provide a clear and structured view of your business performance. They help you meet tax requirements and support better financial decisions for your business.
Profit and Loss Report (Income Statement)
The Profit and Loss Report shows how your business performed over a specific period. It lists your total sales, product costs, and operating expenses. The report ends with your final profit, showing exactly how much your business earned after covering all necessary costs.
Business Balance Sheet
The Business Balance Sheet provides a summary of your company’s financial position at a particular point in time. It lists your assets, such as cash, inventory, or equipment. It also includes your liabilities, like loans or unpaid bills. What remains after subtracting liabilities from assets reflects your business equity, which is the value left for the owner.
Cash Flow Report (Optional)
A Cash Flow Report helps track how money moves in and out of your business. It records incoming payments from customers and outgoing expenses like bills and supplier payments. This report helps you manage your cash effectively and ensures that you can meet financial obligations without disruption.
6) Check and Match All Accounts
Before finalizing your financial statements, it’s important to verify that everything aligns correctly. This step ensures accuracy and protects your business from errors that could raise questions during tax filing.
Start by comparing your internal records with your bank statements. Every sale, expense, and payment should have a matching entry. Look closely for any missing transactions — even small amounts can affect your reports.
Be mindful of duplicate entries that can overstate your income or expenses. These often happen when the same transaction gets recorded from different sources, like payment processors and bank feeds.
Also, make sure all applicable fees have been included. Payment processing charges, bank fees, or subscription costs should not be overlooked. They directly affect your profit calculations and tax reporting. Reviewing your accounts thoroughly gives you confidence in your numbers and ensures your financial reports are both accurate and complete.
7) Look for Tax Deductions
When preparing for tax season, don’t miss out on potential deductions that could lower your taxable income. Florida allows businesses to deduct several types of expenses, and identifying them can lead to significant savings. Here’s what to look for:
Home Office Use
If you use part of your home exclusively for business purposes, you may qualify for a home office deduction. This can include expenses such as rent, utilities, and even a portion of your internet costs, all tied to your home-based workspace.
Business Travel or Mileage
Any travel related to your business is typically deductible. This includes mileage driven for business purposes, as well as travel expenses like lodging, airfare, and meals when attending conferences, meetings, or client visits.
Depreciation of Business Equipment
If your business owns equipment like computers, office furniture, or machinery, you can deduct the depreciation over time. This helps offset the cost of these assets and reduces your overall tax liability.
Business-Related Subscriptions or Tools
Many of the subscriptions and tools you use to run your business are tax-deductible. This can include software subscriptions, industry-related publications, or marketing tools that are important for your operations.
Upgrade your understanding with the related resources:
Want Help with Tax Filing for Your Florida E-Commerce Business? Apex Advisor Group Is Here for You
Managing tax filing for your Florida e-commerce business can be a difficult task. However, with professional support, you can ensure that your deductions are maximized, your records are accurate, and your business meets all necessary requirements.
Apex Advisor Group specializes in assisting businesses like yours with tax preparation and financial management. Our team of professionals is ready to provide necessary support, helping your business stay on solid financial ground.
Whether you need assistance with tax strategy, deductions, or preparing your return, we offer the expertise to ease the process. Let us handle the details, so you can focus on growing your business properly. So, reach out today without hesitation and make tax filing one less task to worry about.