Etsy bookkeeping: untangle the fee soup and price with confidence

Six fees between the sale price and your payout

Etsy's fees are not one line — they are a soup of per-listing, per-order, and percentage charges, several in USD, and lumping them into one "Etsy fees" account hides which products actually make money. We record gross sales from the CSV order exports and map each fee type separately, so your pricing decisions rest on real per-order economics.

Etsy Payments then converts and deposits on the schedule you choose — daily, weekly, or monthly — and each deposit nets dozens of orders against accumulated fees. We reconcile deposits back to the monthly statement rather than guessing, and we track the USD-to-CAD movement separately so currency swings never masquerade as sales growth.

Materials, supplies, and COGS for handmade goods

Handmade COGS is a batching problem: you buy sterling wire and findings in bulk, turn them into forty pairs of earrings, and sell them over six months. We cost each batch — materials in, units out — so cost of goods sold matches what actually shipped, and unsold finished goods plus raw materials sit on the balance sheet at year-end, which is what the T2125 inventory lines expect.

• Materials vs supplies — silver, beads, and fabric go into product cost; sandpaper, glue, and packaging tissue are supplies expense.
• Your own labour is not COGS — a sole proprietor cannot deduct their own time, so pricing must recover it even though the books will never show it.
• Every channel counts — craft fairs, markets, and custom commissions get recorded alongside Etsy, in the same categories.

Hobby or business? Your records make the case

The CRA distinction between a hobby and a business turns on whether you operate in a commercial manner — and organized books are some of the best evidence you can have. If it is a business, income and expenses go on the T2125 and losses can offset other income; if it is a hobby, expenses are generally not deductible at all. Clean monthly records, a separate bank account, and documented pricing turn that grey zone into a defensible position.

• A dedicated bank account or card for shop money, so nothing mixes with groceries.
• Etsy CSV exports saved monthly — orders, deposits, and the fee statement.
• Receipts for materials, tools, booth fees, and shipping, captured digitally in Dext the day you get them.

Records also guard the $30,000 small-supplier threshold: it is measured across four rolling calendar quarters and across all your revenue, not just Etsy. Sellers watching only their Etsy dashboard routinely cross it late and owe GST/HST they never collected.

GST/HST on Etsy fees — give Etsy your number

Etsy charges Canadian sellers GST/HST on its fees under the simplified regime for non-resident digital businesses — and tax paid under that regime is not claimable as an input tax credit. The fix is simple and worth real money: once you are registered, add your GST/HST number in your Etsy account so the fees come through without tax, instead of paying tax you can never recover. Meanwhile, GST/HST you pay regular Canadian suppliers for materials and shipping is recoverable — if it is being captured.

On the sales side, Etsy acts as marketplace facilitator for US state sales tax, collecting and remitting on your US orders — those amounts pass through and never touch your revenue. Your exports to US buyers are zero-rated for GST/HST. When your shop grows into questions about US exposure and structure, our cross-border accounting for Etsy sellers picks up where the monthly bookkeeping ends.

Source: CRA — GST/HST for digital economy businesses.