Quick answer
Inventory/ad prepayments/payout cycles make profit and cash diverge. Sales tax/VAT/income tax follow local rules; platform collection doesn't remove filing duties.
Why it matters
Positive profit can still run out of cash due to inventory.
Keep fee/refund records.
Step by step
- Confirm price/shipping/materials/labor/packaging.
- Subtract listing/transaction/payment/offsite ads.
- Calculate net profit/margin before free shipping/discounts.
- Spot-check real orders; don't treat Etsy revenue as profit.
- Keep fee/refund/ad records for tax filing.
Common mistakes
- Treating Etsy revenue as profit.
- Omitting offsite ads/payment fixed fee/packaging.
- Free shipping not baked into price.
- Increasing ads while losing money.
Checklist
- Price/shipping/materials/labor/packaging confirmed.
- Listing/transaction/payment/ad fees deducted.
- Net profit/margin positive.
- Real-order spot check.
- Fee/refund/tax records kept.
Key facts
- Keep fee/refund records.
- Consult local tax rules.
FAQ
Why is cash tight when Etsy taxes is positive?
Inventory/ad prepayments/payout cycles make profit and cash diverge. Sales tax/VAT/income tax follow local rules; platform collection doesn't remove filing duties.
How long does it take?
Usually 1-3 minutes; for intermittent issues, run 30 seconds and retest elsewhere.
Is data uploaded?
Runs locally and does not upload video/audio; extensions may still read the page.
Source: IRS