What bookkeeping software should I use for Etsy sales (QuickBooks vs Xero)?

Hi! For most US-based Etsy sellers, QuickBooks Online tends to be the easiest “set it up once and keep it moving” option—mainly because it has a built-in Etsy connector (and lots of US tax pros are used to QuickBooks). Xero can be just as solid, but Etsy syncing is more commonly done through add-on apps, so it’s great if you already like Xero’s workflow and don’t mind a connector subscription.

If you want the simplest decision rule:

• Pick QuickBooks Online if you want the most common setup for US bookkeeping/tax time, easy bank feeds, and straightforward reporting for a Schedule C-prep workflow.
• Pick Xero if you prefer its interface and reporting style (many people find it cleaner), and you’re okay using an Etsy-to-Xero integration to handle Etsy’s fees/payouts correctly.

A big “gotcha” with Etsy bookkeeping (in any software) is that Etsy deposits/payouts are not the same thing as sales. Etsy takes out transaction fees, payment processing, shipping labels, ads, refunds, etc., and then pays you the net. Whichever system you choose, make sure your setup records:

1. Gross sales (what the customer paid)
2. Etsy fees/ads/shipping labels/refunds as expenses (or offsets)
3. Payouts as transfers from an “Etsy clearing” account into your bank (so reconciliation is painless)

If you want to keep it genuinely low-stress, here are two simple setups that work well:

Option A (most common): QuickBooks Online + Etsy connector + bank feed

• Use the Etsy connector to bring in orders/fees.
• Connect your business checking/credit card so expenses flow in automatically.
• Reconcile payouts monthly so your Etsy clearing account always ties out.

Option B (cleanest books for Etsy payouts): Xero or QuickBooks + a payout/settlement app

• Use a connector that posts Etsy activity in a way that matches Etsy payout batches (often daily or per payout summary).
• This is especially helpful if you have lots of orders and don’t want a million individual entries.

For “what to set aside for taxes,” the simplest method (without getting complicated) is:

• Keep a separate tax savings bank account, and after each Etsy payout, move a consistent percentage of your profit (or a conservative percentage of your payouts if you don’t know profit yet). Then true it up quarterly once you see real numbers.

If you tell me (1) your rough monthly Etsy sales volume (like “10 orders/month” vs “300 orders/month”), (2) whether you run Etsy Ads, and (3) whether you have inventory/COGS to track, I can point you to the simplest setup that won’t bite you at tax time.