Introduction
Are you using Shopify POS to manage in-store sales and selling products simultaneously on Amazon? Congrats you’re operating a hybrid retail model that maximizes reach. But in 2025, this dual-platform strategy comes with dual responsibilities: IRS tax compliance and state-level reporting.
Mismatched inventory, incorrect 1099-K reporting, and inconsistent accounting between platforms are top red flags for IRS audits. This blog explains how to keep your books clean, your tax filings accurate, and your business protected.
IRS Tax Code References
- IRC §162 – Deductible business expenses (POS, software, packaging)
- IRC §263A – Capitalization and inventory tracking rules
- IRC §6050W – 1099-K reporting requirements
- IRC §446 – Consistent accounting methods for businesses
- IRC §6001 – Recordkeeping obligations for all transactions
Relevant IRS Forms
- Schedule C (Form 1040) – Report income from both in-store and online sales
- Form 1099-K – Received from both Amazon and Shopify in 2025 (if each platform exceeds $600)
- Form 4562 – For depreciation of POS terminals, scanners, or inventory systems
- Form 1040-ES – For paying quarterly estimated taxes
- Form 3115 – If changing accounting methods between platforms
Example: Shopify POS Seller on Amazon
Example: Priya owns a boutique gift shop using Shopify POS in-store and sells excess inventory on Amazon FBA.
In 2024:
- In-store sales (Shopify POS): $125,000
- Online sales via Amazon: $90,000
- Expenses for both platforms: $45,000 (rent, staff, FBA fees, software)
- Received 1099-Ks from both Shopify and Amazon
Tax Strategy:
- Reports total income from both platforms on Schedule C
- Allocates expenses by platform
- Depreciates her POS system and label printer using Form 4562
- Pays quarterly tax using Form 1040-ES
Step-by-Step Compliance Guide for 2025
- Maintain Unified Bookkeeping Across Platforms
Use software like QuickBooks, A2X, or Synder to sync Amazon and Shopify data. Ensure accurate monthly income reports and expense classification. - Track Inventory Movement per Channel
Use barcode systems or inventory software to track what sells in-store vs. what ships via Amazon. This is crucial for COGS calculations under IRC §263A. - Separate Income Streams on Schedule C
Break down gross receipts from each platform. This clarifies 1099-K reconciliation and supports expense allocation if audited. - Reconcile 1099-K Reports to Actual Deposits
In 2025, Amazon and Shopify will each issue a Form 1099-K if you earn over $600. Reconcile these with your books and remove double counting. - Deduct Platform-Specific Expenses
- Shopify POS: merchant fees, receipt paper, display hardware
- Amazon: FBA fees, storage, return processing
- Common: rent, Wi-Fi, software subscriptions
- Claim Depreciation for Hardware
If your POS system, barcode scanner, or warehouse equipment cost over $2,500, depreciate via Form 4562 rather than expensing outright. - Keep Track of Returns by Platform
Returns must be tracked separately to avoid overreporting income or mismatching your inventory values. - Standardize Your Accounting Method
Under IRC §446, use the same accounting method for both platforms unless you’ve filed Form 3115 to switch. This ensures accurate year-over-year comparison. - Automate Sales Tax Reporting
Sales tax may be auto-collected by Shopify or Amazon, but you are still responsible for state-level filing and reconciliation in your nexus states. - Stay Organized with Digital Records
The IRS expects you to retain digital or physical records of all transactions, returns, supplier invoices, and reconciliation reports for at least 3 years.
Conclusion
Selling across Shopify POS and Amazon can double your revenue but also doubles your compliance load. When you split inventory, receive multiple 1099-Ks, and operate across tax jurisdictions, only organized accounting and platform-specific tracking can protect your business from misfilings or audits.
In 2025, success isn’t just about sales it’s about structure.
Call to Action
Juggling in-store and Amazon sales? Not sure how to split your inventory, reconcile 1099-Ks, or deduct cross-platform expenses?
Book a session with Anshul Goyal, CPA, EA, FCA
Anshul has helped hybrid retail sellers simplify their compliance, protect profit margins, and prepare bulletproof tax filings. In your session, you’ll get:
- Income reporting breakdown by platform
- Inventory and COGS tracking guidance
- Deduction optimization for POS and Amazon tools
- Sales tax advice for multi-state compliance
- Estimated tax planning strategies for dual-channel income
Book now: https://calendly.com/anshulcpa/
Scale smarter. Stay audit-ready. Get expert help.
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Do I need to file separate taxes for Shopify POS and Amazon?
No. Report combined income on one Schedule C, but separate records should be maintained.
2. Will I get multiple 1099-Ks if I sell on both platforms?
Yes. Each platform will issue a Form 1099-K if you exceed $600 in gross payments.
3. How do I deduct POS and Amazon expenses separately?
Tag and categorize each expense by platform. This supports deduction accuracy during audits.
4. What if I use different accounting methods for Shopify and Amazon?
You must use a consistent method under IRC §446, or file Form 3115 for a change in method.
5. Is inventory for both platforms considered together for COGS?
COGS should reflect actual movement of inventory per channel. Keep records split by source (POS vs. FBA).