Seattle Shopify and Amazon LLC, mixed personal and business, wrong COGS, 4-state sales tax issues. Rebuilt in 2 weeks. $24K tax saved.
01The Situation
A Seattle Shopify and Amazon seller had mixed personal and business expenses and COGS calculated using the wrong method for 2 years. His reported gross margin of 38% was flagged by his tax preparer as too high for his product category. That one observation opened a 2-year cleanup that saved him $24K.
02What We Did
We separated $42K in personal expenses, corrected COGS from incorrect average cost to actual cost per invoices ($124K restatement), and reclassified $28K in Amazon FBA fees. Voluntary disclosure filed in CA, TX, FL, and WA with all penalties waived.
Breakdown
| Issue Found | Amount | Tax Impact | Action Taken | Status |
|---|---|---|---|---|
| Personal expenses removed | $42K | Small deduction reduction | Removed and documented | |
| COGS restated to actual cost | $124K higher COGS | $24.8K tax reduction | Amended returns filed | |
| 4-state nexus resolved | $18.4K potential liability | Penalties waived via VDA | VDA filed all 4 states | |
| NET TAX POSITION | $24K saved | After all adjustments | Clean returns filed |
The seller repriced two product lines upward using the correct gross margin figure. That ongoing benefit will outperform the one-time tax saving within a year.
Want results like these?
Book a free consultation — we'll tell you exactly what we'd do.