Keep it simple and keep it regular
If you resell online as a sole proprietor or single-member LLC, your business income and deductions are reported on IRS Schedule C (Form 1040).
The key to low-stress tax filing is keeping track of your business deductions as they happen, rather than digging through shoeboxes of receipts in April.
Core deductible expense categories
1. Cost of Goods Sold (COGS): What you paid for inventory that actually sold during the tax year.
2. Packaging & Shipping Supplies: Boxes, poly mailers, bubble wrap, thermal labels, and packing tape.
3. Postage & Shipping Shortages: Any out-of-pocket shipping charges not covered by buyer-paid shipping.
4. Business Mileage: Miles driven to thrift stores, estate sales, auctions, post offices, and supply runs.
5. Equipment & Software: Label printers, shipping scales, photographic lighting, and business software subscriptions.
6. Storage & Workspace: Dedicated storage unit rental fees or qualified home office deductions.
Keeping your expenses organized throughout the year makes tax preparation simple and ensures you don't leave valuable deductions behind.