8 Major Tax Deductions Etsy Sellers Should Know About
Fabric, paint, wood, packaging, and all materials used to create products
Shipping costs, packaging materials, and postal fees
Listing fees, transaction fees, and shop subscription costs are fully deductible
Machinery, cameras, computers, and tools used for product creation
Rent, utilities, and supplies if you have a dedicated workspace
Etsy ads, social media marketing, and promotional expenses
Accounting, bookkeeping, web design, and photography services
Liability insurance and business-related insurance premiums
If you use items for both business and personal use (like your phone or home internet), you can only deduct the business percentage. Creator Ledger helps you accurately track and allocate these mixed-use expenses to maximize your legitimate deductions.
Keep Detailed Records for IRS Compliance
The IRS requires you to maintain documentation for all deductions claimed. This includes:
- Receipts and invoices for all purchases
- Mileage logs for business travel
- Bank statements showing business transactions
- Proof of business use for equipment
- Records of home office square footage and expenses
A good accounting system is your first defense against audit risk. Creator Ledger organizes all your Etsy transactions, categorizes expenses automatically, and generates tax-ready reports.