Ecommerce clients break the habits that work everywhere else in a practice. The bank feed lies, the revenue figure the client quotes is gross of fees they have never seen itemized, and the inventory question decides their tax method. What follows are the questions that come up in the first month of every seller engagement, answered directly.
Why doesn’t the bank deposit match the client’s sales?
Because a marketplace deposit is net, not gross. Amazon, Walmart, Shopify and TikTok Shop each settle on their own cycle and subtract referral fees, fulfillment fees, storage, refunds, advertising and reserves before the money moves, so a $48,000 sales month can arrive as a $31,000 deposit split across two settlements that straddle the period end.
Booking the deposit as revenue understates sales and hides every expense line inside it. The correct treatment splits each settlement into its components and books them gross, with the deposit as the net result. That single decision resolves most of what looks like reconciliation chaos on a new seller file.
Cash or accrual?
If the client carries inventory and does not qualify for the small business taxpayer exception, accrual, and it is not optional. IRS Publication 538 states it directly: “If you must account for an inventory in your business, you must use an accrual method of accounting for your purchases and sales.”
The exception is generous and most sellers fit inside it. For tax years beginning in 2026, Revenue Procedure 2025-32 sets the section 448(c) gross receipts test at $32,000,000 of average annual gross receipts over the prior three years. The 2025 Schedule C instructions set the equivalent figure at $31 million for tax year 2025.
One trap to know about. Publication 538’s current revision is January 2022 and still prints “$26 million or less (indexed for inflation)” in two places. The publication is right about the mechanism and five years stale on the number. Cite the revenue procedure, not the publication, for the dollar figure.
Does a small seller have to carry inventory on the books at all?
No, but the alternative is a method election, not an absence of one. Publication 538: “If you are a small business taxpayer, you can choose not to keep an inventory, but you must still use a method of accounting for inventory that clearly reflects income.”
Section 471(c) is what makes this work. Treasury Decision 9942 describes it as the “section 471(c) NIMS inventory method,” treating inventory as non-incidental materials and supplies, and notes that it “greatly expanded the availability of this method of accounting to taxpayers in all types of trades or businesses, including producers and resellers.” Taxpayers using it “are eligible to use the overall cash method of accounting for purchases and sales of merchandise, rather than being required to use an accrual method.”
Be careful with the reverse case. Publication 538 again: “If, however, you choose to keep an inventory, you generally must use an accrual method of accounting and value the inventory each year to determine your cost of goods sold.” A client who wants inventory on the balance sheet for lender or buyer reasons has chosen accrual by doing so.
Who owes the sales tax when the marketplace collects it?
The marketplace remits it, and the seller frequently still has to register and file. Every state with a sales tax now has a marketplace facilitator law, a point the Tax Foundation made in November 2023: “every state that imposes a sales tax has adopted a means of taxing marketplace facilitators.” Missouri was last, effective January 1, 2023.
Registration survives collection in some states. The New York State Department of Taxation and Finance, on a page updated January 15, 2026, answers whether a seller selling only through marketplaces must register: “Yes. You still need to apply for a Certificate of Authority to be a sales tax vendor and file periodic returns even if the tax was collected for you.”
States also split on whether marketplace-facilitated sales count toward the client’s own economic nexus threshold. Washington and Missouri say they do. Pennsylvania says a remote seller “should use only its direct sales and those sales made through a marketplace facilitator that does not collect sales tax on its behalf.” There is no safe general rule here, only a state-by-state answer. Send clients to the relevant Department of Revenue and, for anything contested, to a sales tax specialist.
What do I do with the 1099-K?
Reconcile it, expect it not to tie, and document why. The form reports gross payment volume, typically before refunds and often before some fee categories, so it will exceed the revenue figure on a correctly prepared return in most cases.
The reconciliation from 1099-K gross to book revenue is a workpaper you will produce every year for every seller client. Build it once as a template. It is also the first thing a notice will ask about.
How do I get COGS at the SKU level?
The client has to supply unit costs, and the tooling calculates from there. No integration invents a cost; it applies the costs you load against the units the marketplace says shipped, under whatever costing method you choose.
Method matters more for sellers than for most small clients, because unit costs move with freight, duty and supplier changes across a year. FIFO, periodic average and batch costing each produce defensible but different margins on the same units. Pick one, document it, and hold it constant. Publication 538 requires that “Your inventory practices must be consistent from year to year.”
What tools will the client already be using?
Some combination of a settlement-to-ledger connector and a profitability dashboard. The connectors most commonly encountered are A2X, ConnectBooks, Webgility, Synder and Bookkeep, which differ mainly in whether they post summarized journal entries or itemized transaction detail, and in whether they maintain an inventory subledger or only move data.
Ask which posting mode is configured before you touch the file. Summarized and itemized produce materially different general ledgers, and switching mid-year creates a comparability problem you will have to explain.
How far back should the cleanup go?
To the start of the last unfiled tax year at minimum, and to the last clean reconciled period if one exists. Scoping past that is a business decision rather than a compliance one, unless there is an amended return or a due diligence process in play.
Price the cleanup separately from the monthly engagement and quote it after you have seen one settlement file. Sellers routinely underestimate the state of their own records, not out of evasiveness but because the marketplace dashboard looked fine.
Is this practice area worth entering?
The supply side says yes. The AICPA’s 2025 Trends report, released October 27, 2025, counted 55,152 combined bachelor’s and master’s accounting graduates in 2023 to 2024, down 6.6 percent year over year, with new CPA exam candidates falling from 42,626 in 2023 to 28,082 in 2024. The Bureau of Labor Statistics projects about 115,300 openings a year for accountants and auditors over 2025 to 2035.
Fewer practitioners are entering the profession at the same time that a category of client with genuinely unusual accounting needs keeps growing. Specialization is defensible under those conditions in a way that general bookkeeping is not.
One thing to set expectations on early
Tell the client their reported profit will probably drop after the first proper close. Gross-basis revenue with fees itemized and real COGS applied usually produces a smaller number than the marketplace dashboard implied, and a seller who has not been warned will assume you made a mistake.
Nothing here is tax advice for a specific taxpayer. Verify current thresholds against IRS guidance and current nexus rules against the relevant state before advising anyone.
