Print-on-Demand Amazon? Nail Your Inventory Workflow!

Print-on-Demand Amazon

Print-on-demand (POD) on Amazon lets you sell custom merchandise without holding stock—but you still need precise inventory costing, accurate COGS reporting, and smart tax planning. In 2025, mastering your POD inventory workflow will keep your margins healthy and your tax filings clean. Here’s how to set up and optimize your POD operations end-to-end.

Tax Code References

• Inventory Valuation (IRC §§ 471 & 263A): Capitalize all direct (production) and allocable indirect (shipping, storage) costs into inventory until sold.
• Ordinary & Necessary Expenses (IRC § 162): Deduct design subscriptions, sample prints, and listing fees as business expenses.
• Section 179 Expensing (IRC § 179): Immediately expense qualifying in-house equipment (e.g., heat presses, printers).
• Bonus Depreciation (IRC § 168(k)): 100% first-year depreciation for new or used qualifying property placed in service in 2025.
• Qualified Business Income Deduction (IRC § 199A): Up to a 20% deduction on pass-through income after expenses.
• Self-Employment Tax (IRC § 1401): Net earnings—including POD profits—are subject to Social Security and Medicare taxes unless minimized via S-Corp distributions.

Relevant Forms

• Form 1040, Schedule C: Report POD gross receipts, COGS, and deductible expenses.
• Schedule SE (Form 1040): Calculate self-employment tax on net earnings.
• Form 4562: Claim Section 179 expensing and bonus depreciation for equipment.
• Form 8995/8995-A: Compute your 20% QBI deduction.
• Form 1099-K: Reconcile Amazon Payments reports with your sales records.
• Form 1040-ES: Pay quarterly estimated taxes on net income.

Detailed Example

Scenario: PrintArtCo sells custom art prints on Amazon POD in 2025.

• Units Produced: 1,000 prints
• Production Cost: $5/unit → $5,000 total
• Shipping & Packaging: $1,000
• Software Subscription: $600
• Equipment Purchase: $2,500 heat press (Section 179 eligible)
• Gross Sales: 800 units × $20 = $16,000

Tax Treatment:

1. Inventory Basis (IRC §§ 471/263A): $5,000 + $1,000 = $6,000 total; COGS = (800/1,000)×$6,000 = $4,800
2. Ending Inventory: 200 × $6 = $1,200 capitalized
3. Equipment Expensing (IRC § 179): Expense $2,500 on Form 4562
4. Ordinary Expenses (IRC § 162): Deduct $600 software subscription
5. Net Income Before QBI: $16,000 − $4,800 − $2,500 − $600 = $8,100
6. QBI Deduction (IRC § 199A): 20% × $8,100 = $1,620

Step-by-Step Inventory Workflow

1. Configure POD SKUs
   • Tag each design as a unique SKU in Seller Central and your accounting system.
2. Track Production & Shipping Costs
   • Record per-unit printing, packaging, and drop-ship fees; capitalize per IRC §§ 471/263A.
3. Perform Regular Inventory Checks
   • Between sales bursts, reconcile Amazon’s production reports with your records.
4. Allocate COGS on the Fly
   • Automate COGS calculation in your accounting software: units shipped × per-unit basis.
5. Capture Equipment Deductions
   • Elect Section 179/bonus depreciation on printers or presses via Form 4562.
6. Deduct Software & Listing Fees
   • Record POD platform subscriptions and Amazon listing/service fees on Schedule C.
7. Reconcile 1099-K Statements
   • Monthly, match Amazon Payments reports to gross receipts; adjust for refunds.
8. Pay Estimated Taxes
   • Use Form 1040-ES quarterly to cover self-employment and income tax.
9. Maintain Detailed Records
   • Keep production invoices, depreciation schedules, and reconciliation reports for four years.

Conclusion

Efficient POD inventory management under IRC §§ 471/263A, combined with strategic expensing of equipment and subscriptions, ensures accurate COGS and maximizes deductions. Implement this workflow in 2025 to boost your Amazon POD margins and simplify tax season.

Strong Call to Action

Ready to optimize your POD operations and tax savings?
Book a free strategy session with CPA Anshul Goyal for a customized inventory and tax-planning blueprint!

Disclaimer

Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant and IRS-admitted Enrolled Agent. He advises e-commerce sellers on inventory accounting and tax planning. This blog is informational and not a substitute for professional advice.

About Our CPA

With over a decade of U.S. and international tax expertise, Anshul Goyal helps print-on-demand entrepreneurs streamline their workflows, maximize deductions, and scale profitably on Amazon.

Frequently Asked Questions

1. Do I need to capitalize POD production costs?
Yes—direct and indirect costs must be capitalized under IRC §§ 471/263A until sale.

2. Can I expense my heat press immediately?
Yes—use Section 179 (Form 4562) or bonus depreciation for 100% first-year expensing.

3. How do I handle refund adjustments?
Deduct returns as negative sales and adjust COGS accordingly; reconcile 1099-K.

4. Are my software subscriptions deductible?
Yes—as ordinary and necessary business expenses under IRC § 162.

5. When should I pay estimated taxes?
Quarterly: April 15, June 15, September 15, and January 15 via Form 1040-ES.