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How To Know If Your Etsy shop is Really Making A Profit

Business finances are not always the most enjoyable business activity if you are a creative person, but making sure you know your financial numbers is vital to run a successful, and profitable, Etsy shop. So here is a series of posts to help any Etsy seller get on top of their Etsy financials so they can workout their Etsy earnings and the Etsy seller fees they will be charged.
Business finances are not always the most enjoyable business activity if you are a creative person, but making sure you know your financial numbers is vital to run a successful, and profitable, Etsy shop. So here is a series of posts to help any Etsy seller get on top of their Etsy financials so they can workout their Etsy earnings and the Etsy seller fees they will be charged. #handmadebusiness #craftbusiness #creativebusiness #bloomsolopreneur

Business finances are not always the most enjoyable business activity if you are a creative person, but making sure you know your financial numbers is vital to run a successful, and profitable, Etsy shop. So here is a series of posts to help any Etsy seller get on top of their Etsy financials so they can work out their Etsy earnings and the Etsy seller fees they will be charged.

  1. How much does Etsy cost?
  2. What do Etsy’s revenue figures mean?
  3. How to know if you are really making a profit on Etsy 
  4. How to make Bookkeeping easy for your Etsy shop

In this post, I explain how all the Etsy Sales and Fees figures are calculated and finally how to do your bookkeeping as an Etsy seller.

If you have read any of my other posts, you will know by now that I am a lover of a great spreadsheet. But I can’t stress enough that you have to keep accurate and timely financial records when running a business, that means your Etsy shop. Only then can you make educated decisions that will help grow your business. 

Knowing whether your expenses are higher than you thought, what area of revenue is performing the best, or if one function of your business costs you more than another are all questions you need to be able to quickly get a handle on.

Reliable financial data will reveal patterns that aid decision making. When you can make informed decisions, you can save money and increase revenue! 

That sounds like a recipe for success to me!

Fundamentally, you determine your profit by subtracting your business expenses from your revenue. Simple right!

Well yes, but what you include in your revenue and expenses is where the devil is in the detail.

Why do I need to do bookkeeping?

When you first start your Etsy shop, you should have something in place that records your income and expenses. This could be a spreadsheet, an online tool or go old school with a paper and pen. Assign each transaction a category, such as Etsy Sales, Materials or Office, for easy sorting and summarising at the end of the year. 

By setting up your bookkeeping system in the early days of your Etsy shop, you will save time and stress at tax time.

What do I need to record from my Etsy shop in bookkeeping?

As an Etsy seller, you might think that the amount paid into your bank from Etsy is your Etsy income and that is all you need to record. Unfortunately, that number is net of a lot of fees, so from a tax and business perspective, it is not the full picture for your income! 

You need to know the total fees and taxes so that you can get a gross sales figure. This will help you come tax time and will help make reliable decisions for your business based on real numbers.

Unfortunately, Etsy does not make it easy for you to get the figures you need. However, they do provide sellers with monthly reports that you can download. From there, you can extract and extrapolate the information to get the information you need. 

The best thing to do if you want to get serious about your accounts is to use the monthly report information they provide. Use it to record all your sales and fee information every month. Keeping track monthly will give you a good insight on how your business is growing rather than waiting until the end of the year.

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Hi there lovely

I’m Nicola, lover of all things colourful and a garden obsessed planning addict!

My main goal is to help overwhelmed creative solopreneurs gain confidence, business skills and a whole heap of motivation so that they can set forth on their creative adventures with all of the tools they need to build a profitable online business.

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