Introduction
In 2025, many eBay sellers are not selling on eBay alone. With Shopify, Amazon, Walmart, Etsy, and other platforms in play, multi-channel e-commerce is the new standard. But as your brand grows, so does the complexity of sourcing and inventory tracking especially when it comes to taxes.
This blog covers how to source products efficiently and remain IRS-compliant when selling across multiple channels, with eBay as a core platform.
IRS Tax Codes Relevant to Multi-Channel Inventory Sourcing
- IRC § 61(a): All gross receipts across channels must be reported
- IRC § 471: Rules for inventory valuation methods (FIFO, LIFO, Cost)
- IRC § 162(a): Deductible ordinary and necessary business expenses
- IRC § 263A: Capitalization of direct and indirect inventory costs
- IRC § 6001: Obligates recordkeeping of all sourcing and COGS activities
Required IRS Forms for Compliance
- Schedule C (Form 1040): Report income and business expenses
- Form 4562: Depreciation on sourcing-related equipment
- Form 1125-A: Required for corporations reporting cost of goods sold
- Form 1040-ES: For estimated quarterly tax payments
- Form 1099-K: Issued by eBay, Shopify, Amazon, and others when gross payments exceed $600
Example: Multi-Channel Seller with Centralized Sourcing
Seller: Leo operates a brand selling kitchenware through eBay, Amazon, and Shopify
- 2025 Total Revenue: $450,000
- eBay: $180,000
- Amazon: $170,000
- Shopify: $100,000
- Annual Inventory Purchase (COGS): $210,000
- Shipping & Fulfillment: $30,000
- Advertising: $25,000
- Net Profit: $185,000
Strategy:
Leo uses centralized sourcing via a U.S. wholesaler and imports select SKUs from India. He tracks inventory using FIFO under IRC § 471. A single inventory management tool (connected to all channels) helps him avoid double-counting. He deducts all supplier costs, freight, and customs duties under IRC § 162(a) and § 263A. Quarterly taxes are paid via Form 1040-ES.
Step-by-Step Compliance Plan for Multi-Channel Sellers
Centralize Inventory Data
- Use tools like Zoho Inventory, QuickBooks Commerce, or DEAR Inventory
- Maintain uniform SKUs across platforms
Maintain Accurate Cost Records for Every Product
- Record supplier invoices, shipping costs, and customs fees
- Track SKU-level COGS in one system
Choose and Stick to a Valuation Method
- FIFO or cost method is the most common
- Must stay consistent per IRC § 471
Deduct All Sourcing-Related Expenses
- Travel to suppliers, packaging, inspection, and warehousing
- Deduct under IRC § 162(a)
Capitalize Where Required
- If you’re manufacturing, IRC § 263A may require capitalization of indirect costs
Make Timely Estimated Payments
- Use Form 1040-ES
- Base payments on expected year-end profit
Review All 1099-Ks and Reconcile with Internal Reports
- Download reports from all platforms
- Ensure all income is captured without duplication
Conclusion
Sourcing products for a multi-channel eBay business doesn’t just require supply chain efficiency it demands tax clarity. As your brand grows, so do your IRS responsibilities. Build sourcing systems that support scale and compliance to avoid future penalties and improve profitability.
Call to Action
Running a multi-channel eBay business and struggling with inventory tracking and IRS compliance?
Schedule a meeting with Anshul Goyal, CPA EA FCA, a U.S.-licensed Certified Public Accountant, IRS-authorized Enrolled Agent, and cross-border tax expert. He helps American entrepreneurs and Indians in the U.S. align sourcing, bookkeeping, and taxes to scale confidently.
- Schedule a meeting: https://calendly.com/anshulcpa/
- Email: anshul@kkca.io
- Website: www.kkca.io
About Our CPA
Anshul Goyal, CPA EA FCA, is an international tax expert with 15+ years of experience serving e-commerce sellers. He has represented clients before the IRS, advised on global sourcing strategies, and helped businesses save over $200 million in taxes.
Disclaimer
This content is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax advisor for guidance on your individual situation.
FAQs (Top 5 High-Searched Questions)
1. How do I track inventory across multiple platforms like eBay and Shopify?
Use an inventory management system that integrates all sales channels and maintains SKU-level COGS.
2. Are sourcing and shipping costs tax-deductible?
Yes. Under IRC § 162(a), all ordinary and necessary business expenses can be deducted.
3. Do I need to report income from each platform separately?
No. Combine all income and report it on Schedule C. However, track each source for accurate bookkeeping.
4. What is the best inventory method for taxes?
Most sellers use FIFO or the cost method under IRC § 471. Stick to one method for consistency.
5. What happens if I miss including income from one platform?
You may face IRS penalties and audits. Use 1099-Ks and internal reports to ensure full disclosure.