QuickBooks for Etsy Sellers: Why Self-Employed Falls Short (and What to Use Instead in 2025)

If you sell handmade products on Etsy, chances are you’ve seen QuickBooks Self-Employed pop up in your dashboard or email inbox — especially since Etsy partnered directly with Intuit to offer a discounted version.

At first glance, it sounds ideal. Automatic Etsy import, simple expense tracking, and built-in tax filing — what’s not to love?

But here’s the thing: if you actually make your products, QuickBooks Self-Employed (QBSE) just isn’t built for you.

Why QuickBooks Self-Employed feels right… until it doesn’t

QuickBooks Self-Employed is designed for freelancers and service-based businesses — people who invoice for time, track mileage, and need basic expense categories.

If you’re a maker, that’s only half the picture. You’re also dealing with raw materials, production runs, stock levels, and Cost of Goods Sold (COGS) — things QBSE can’t really handle.

👇 If you’re wondering what QuickBooks can do for inventory — and where it really hits the wall — we’ve broken it all down in our guide to tracking inventory in QuickBooks. It’s a good reality check before deciding if upgrading to QuickBooks Online (or pairing it with Craftybase) makes sense for your setup.

What’s missing in QuickBooks Self-Employed

Here’s the short version: QBSE tracks indirect expenses and income, but that’s only part of what handmade sellers need.

If you create products, the IRS expects you to:

• Track inventory and raw material usage
• Calculate COGS correctly
• File taxes using inventory-based accounting (Schedule C)

QuickBooks Self-Employed doesn’t support any of that. It has no inventory tracking, no raw material tracking, and no proper COGS calculation.

That means you’ll have to manage your materials and manufacturing outside of QuickBooks — usually in a spreadsheet — and be careful not to double-count expenses.

If that sounds familiar, you’re not alone. Many makers start with QuickBooks Self-Employed because of the Etsy partnership — but soon realize it’s missing the tools they actually need.

Why COGS matters (and how QuickBooks SE gets it wrong)

Let’s say you buy $5,000 worth of materials in January and record it as “supplies.”

At tax time, that full $5,000 gets deducted — great!
But what about next year, when half those materials are still sitting on your shelf?

You’ve already claimed the deduction, so you can’t claim it again. Now your COGS are off, your income is inflated, and your taxes don’t reflect reality.

Without proper COGS tracking, you can:

• Overstate expenses in one year and understate them the next
• Lose visibility into what your products really cost to make
• Risk red flags or audits from inconsistent filings

If you’re not quite sure how COGS should actually work for your handmade business — don’t worry, most sellers aren’t when they start out. This step-by-step COGS guide for handmade makers walks through how to calculate it the right way (and why QuickBooks Self-Employed can’t handle it automatically).

So what should Etsy sellers use instead?

If you’re just starting out, QuickBooks Self-Employed might seem “good enough.” But once you grow beyond hobby level — with real inventory, supplies, and production costs — you’ll need something more powerful.

Here are your two best options:

Option 1: Pair Craftybase with QuickBooks Online

This combo gives you the best of both worlds. Let QuickBooks Online handle your bookkeeping and bank feeds, while Craftybase manages everything manufacturing-related:

• Real-time inventory tracking for raw materials and finished goods
• Rolling COGS calculations (updated automatically)
• Pricing guidance and margin tracking
• IRS-compliant end-of-year reports

Want to see exactly how the connection works? Our QuickBooks integration page shows how Craftybase syncs your orders, materials, and purchase data automatically — so you can stop juggling spreadsheets for good.

Option 2: Use Craftybase as your all-in-one solution

If you don’t want to juggle two tools, Craftybase can also replace QuickBooks entirely for smaller or growing sellers.

You’ll get:

• Schedule C and COGS reporting
• Direct and indirect expense tracking
• Inventory valuation and pricing tools
• Etsy integration with automatic order and fee import

And if you’re curious about what else Craftybase can handle beyond QuickBooks integration — from raw materials to product costing — explore our full inventory management features here. It’s everything handmade sellers need in one place.

Final thoughts: Is QuickBooks for Etsy worth it?

Not on its own.

QuickBooks Self-Employed can handle simple income and expense tracking, but it doesn’t help you understand your actual product costs — and that’s the foundation of a real handmade business.

If you’re serious about growing, you’ll want more than bookkeeping. You’ll want clarity.

That’s where pairing QuickBooks Online + Craftybase comes in — or just using Craftybase on its own.

Because your handmade business deserves better than “bare minimum.”