CPA for Amazon, Shopify and E-commerce Sellers in Los Angeles

Situations We Handle

Settlements, payouts and Form 1099-K. A marketplace pays out what is left after its fees, refunds and reserves, so a seller who books the deposit as revenue understates sales and loses the fees as a deduction. We record each settlement and payout as gross sales, fees, refunds, reserves and the sales tax the platform collected, in a clearing account for each channel, and reconcile the totals on each Form 1099-K, which a payment app or online marketplace issues once payments for goods or services exceed $20,000 and 200 transactions, to the books before the return is filed. See Bookkeeping.

Inventory and cost of goods sold. A small business taxpayer, one with average annual gross receipts for the three prior tax years of $31 million or less for 2025 returns, $32 million for tax years beginning in 2026, may treat inventory as non-incidental materials and supplies and deduct the cost when the items are first used or consumed, or follow the treatment in its financial statements; otherwise an accrual method is required for purchases and sales of inventory. We set the method with the owner, apply it the same way across every channel, and carry purchases, the year-end count and cost of goods sold into Part III of Schedule C or the company return.

The seller's permit and the marketplace facilitator rules. Since October 1, 2019 a marketplace facilitator such as Amazon, Walmart, Etsy or eBay is the retailer for the sales it facilitates for delivery into California and collects, reports and pays the tax on them. A seller whose California sales all go through a registered facilitator is not required to hold a seller's permit; a seller who also sells direct to California customers, or who has inventory in California, including stock at a third party's California fulfillment center, must register. A registered marketplace seller reports its total sales, including marketplace sales, and deducts the facilitated sales as "other", keeping documentation that the facilitator is registered and its permit number. A seller's permit has no fee, though the CDTFA may require a security deposit, and a business with an office, warehouse or other place of business in California, even a temporary one, is engaged in business here. The books separate California sales by channel and the tax collected on each, so the return the CDTFA requires can be prepared from them on the filing frequency it assigns; a seller whose tax averages $17,000 or more a month is placed on quarterly prepayments due the 24th of the following month, with the quarterly return due the last day of the month after the quarter.

The $500,000 threshold and district taxes. A retailer whose sales of tangible merchandise for delivery into California exceed $500,000 in the preceding or current calendar year, counting marketplace-facilitated sales and sales by related persons, is engaged in business in every taxing district in the state and collects each district's use tax; below that figure it collects district tax only where it has a physical presence. The statewide base rate is 7.25 percent; with district taxes the City of Los Angeles rate is 10.25 percent from October 1, 2026, Burbank and Glendale 11 percent, Calabasas 11.25 percent, Thousand Oaks 7.25 percent and Irvine 7.75 percent. Shipping on a taxable sale is not taxable only when the goods go by common carrier, contract carrier or US Mail, the charge is separately stated, and it does not exceed the actual cost; handling is taxable, a combined shipping and handling charge is taxable on the handling portion, and without records of the actual delivery cost the whole charge is taxable. This page covers California; other states set their own thresholds, by sales, by transactions or both.

Buying for resale. A resale certificate given to a supplier states the buyer's name and address, its seller's permit number or an explanation of why none is required, a description of the goods, the words "for resale", the date and a signature; a marketplace seller without a permit may explain that all of its sales go through a registered facilitator and give the facilitator's permit number. We keep the certificates with the purchase records so the inventory purchases on the return are supported.

The entity, payroll and the owner's return. A sole proprietor reports the store on Schedule C ($1,100–$1,800 for the return). An LLC pays California's $800 annual tax and, from $250,000 of total California income, the LLC fee of $900, $2,500, $6,000 or $11,790 by tier, and an LLC or corporation that elects S status pays 1.5 percent of its net income with an $800 minimum, pays its owner reasonable compensation through payroll, and files Form 1120-S with Form 100S. A seller in the City of Los Angeles holds a Business Tax Registration Certificate and pays $1.27 per $1,000 of gross receipts on retail sales and $1.01 per $1,000 on wholesale sales, keeping the two apart; a registered business with worldwide gross receipts of $100,000 or less pays no tax when it renews on time, and the renewal is due by the last day of February. We compare the structures with the store's figures, run payroll for warehouse staff or the owner's salary, and prepare the company's return and the owner's return together. See Business Formation and Business Tax Preparation.