Managing taxes is a key responsibility for US online sellers. Whether you sell handmade items, dropship products, or run a digital storefront, staying compliant with federal and state tax regulations is essential. Accurate filing not only keeps your business legal—it also helps you stay on top of your finances. If you’re using accounting services in the US, they’ll typically handle these forms on your behalf, but it’s still important to understand what you need to file.
Below is a breakdown of the key tax forms online sellers should know about.
This is one of the most important forms for sole proprietors and single-member LLCs. You’ll report your:
Gross income from online sales
Business expenses (like shipping, supplies, advertising)
Net profit or loss
Form Schedule C is attached to your personal tax return (Form 1040). Keeping organized financial records is essential for completing this form accurately.
If you receive payments through third-party processors such as marketplaces or payment apps, you might get a 1099-K. As of 2025, the IRS requires payment processors to issue this form to sellers who exceed $20,000 in gross payments and 200 transactions in a calendar year.
This form reports total payment volume—not your actual income—so be sure to reconcile this with your own accounting records when filing.
If you’ve hired freelancers, virtual assistants, or any independent contractors and paid them $600 or more, you must issue Form 1099-NEC for nonemployee compensation.
If you’ve made other payments such as rent or prizes, you may need to use Form 1099-MISC. These forms help the IRS track who is receiving business-related payments and ensure they report it as income.
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Online sellers are typically considered self-employed, which means taxes aren’t automatically withheld from your income. If you expect to owe at least $1,000 in taxes, the IRS requires you to file quarterly estimated tax payments using Form 1040-ES.
Estimated payments are due in April, June, September, and January. Underpaying or missing deadlines can result in penalties.
If you have nexus in a state (a physical presence or a certain volume of sales), you’re responsible for collecting and remitting sales tax. This means you’ll need to:
Register for a sales tax permit with that state
File periodic sales tax returns (monthly, quarterly, or annually)
Each state has its own rules and deadlines, so it’s important to check directly with the state’s Department of Revenue.
If you employ others, there are additional federal and state filing obligations. Key forms include:
Form 941: Reports federal payroll taxes quarterly
Form W-2: Issued to employees at year-end
State payroll forms: Vary by location and are required for withholding and unemployment taxes
Online sellers with employees must also register for employer accounts with their state’s tax agency.
For US online sellers, tax compliance goes beyond just filing an income tax return. You may need to handle multiple forms including Schedule C, 1099-K, 1099-NEC, 1040-ES, and state-level sales tax returns. The specific forms required depend on the size of your business, the platforms you use, and whether you hire others.
Counto is the trusted outsourced provider of accounting, tax preparation and CFO services for SMEs and ecommerce businesses. Get accounting plans that combine bookkeeping with corporate tax filing to help you stay compliant at an affordable price. To learn more, speak to us directly on our chatbot, email [email protected], or use our contact form. to get started.
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