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.
This result came from our books cleanup services for ecommerce brands. See more client results.
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.
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