Introduction
Starting a new Shopify store in 2025 is exciting but without the right tax strategy, it could also be expensive. Many new sellers delay bookkeeping, skip estimated tax payments, or miss out on deductions simply because no one told them.
This blog gives new Shopify sellers a complete, beginner-friendly tax roadmap built to avoid penalties and increase profitability.
IRS Tax Codes for New Shopify Sellers
- IRC § 61(a): All income is taxable, including from Shopify
- IRC § 162(a): Business expenses are deductible when ordinary and necessary
- IRC § 1402: Self-employment income is taxable
- IRC § 6001: Requires all businesses to maintain accurate records
- IRC § 6654: Penalty for underpayment of estimated taxes
IRS Forms to Watch From Day One
- Schedule C (Form 1040): To report business income and deductions
- Schedule SE (Form 1040): To report self-employment tax
- Form 1099-K: Issued by Shopify Payments (over $600)
- Form 1040-ES: For estimated quarterly taxes
- Form 4562: To depreciate business equipment
Example: New Seller Tax Mistakes and How to Avoid Them
Seller: Emily launched her Shopify store in March 2025, selling customized stationery.
- 2025 Revenue: $28,000
- Expenses: $12,000
- Net Profit: $16,000
- Mistake: Didn’t pay quarterly estimated taxes
- Outcome: IRS penalty under IRC § 6654 and cash flow issues during tax season
Step-by-Step Tax Strategy for New Shopify Stores
Open a Business Bank Account
- Keep personal and business expenses separate
- Makes IRS audits and bookkeeping easier
Track All Income & Expenses From Day One
- Use QuickBooks or Wave
- Save digital receipts for all business purchases
Report on Schedule C
- Claim ordinary expenses (supplies, hosting, marketing, etc.) under IRC § 162(a)
Set Aside 20-30% for Estimated Taxes
- Use Form 1040-ES to pay quarterly
- Avoid underpayment penalties under IRC § 6654
Depreciate Business Tools or Equipment
- Printers, lighting, cameras over $2,500 may be depreciated (Form 4562)
Register for Sales Tax if Required
- Depends on your state and product type
- Shopify provides tools for sales tax setup
Conclusion
The tax clock starts the moment you launch. With the right strategy, you’ll save money, reduce stress, and grow with confidence. Don’t wait until tax season to realize what you should’ve done in month one.
Call to Action
Starting your first Shopify store?
Schedule a meeting with Anshul Goyal, CPA EA FCA, a U.S. Certified Public Accountant, IRS-authorized Enrolled Agent, and cross-border tax expert helping new sellers launch smart.
- Schedule: https://calendly.com/anshulcpa/
- Email: anshul@kkca.io
- Website: www.kkca.io
About Our CPA
Anshul Goyal, CPA EA FCA has helped 2,000+ small businesses launch and grow with full IRS compliance. With over 15 years of tax strategy experience, he’s saved clients $200M+ in tax burdens and startup missteps.
Disclaimer
This article is for educational purposes only and does not substitute legal or tax advice. Please consult a licensed CPA for personalized guidance.
FAQs
1. Do I need to report Shopify income under $30,000?
Yes. All business income is taxable under IRC § 61(a), regardless of amount.
2. Do I need to make quarterly estimated tax payments in my first year?
Yes, if you expect to owe over $1,000 in taxes.
3. Can I deduct domain and hosting fees?
Yes. They’re considered necessary business expenses under IRC § 162(a).
4. Should I get an LLC before launching on Shopify?
Not required for taxes, but it helps for liability and branding.
5. Do I still pay self-employment tax if I don’t take a salary?
Yes. All net profit on Schedule C is subject to self-employment tax.