For most ecommerce brands, ad spend is the biggest expense after inventory, and unlike inventory it is deductible right away. Advertising is a textbook ordinary and necessary business expense under IRC Section 162: 100% deductible, no percentage haircut, no special limitation. If the money was spent to acquire customers for the store, it comes off the top of your profit.
Meta, Google, and TikTok ads on Schedule C line 8
Sole proprietors and single-member LLCs report advertising on Schedule C line 8. Everything the ad platforms bill you belongs there: Meta and Instagram campaigns, Google Shopping and Performance Max, TikTok ads, Amazon PPC if you sell there, Pinterest, sponsored placements, and retargeting. So do the costs around the ads: landing page tools, email and SMS marketing platforms, photo and video production for creatives, and free products plus shipping for giveaways run as promotions.
The paper trail is easy to build and easy to neglect. Ad platforms let you download monthly invoices; pull them, because your credit card statement alone shows totals without campaign detail. If an ad account is paid from a personal card, the spend is still deductible, but move it to a business card going forward so your books and your bank feed agree.
Influencer payments, UGC, and the 1099-NEC you might owe
Payments to people are deductible too, with one extra duty. If you pay a US-based influencer, UGC creator, or freelance media buyer $600 or more during the year by cash, check, ACH, or wire, you generally must issue them a Form 1099-NEC by January 31. Payments made by credit card or through platforms that settle by card are reported by the processor on 1099-K instead, so you do not double-report those. Product seeded to creators is deductible as promotion at your cost, not at retail price, and if a contract requires deliverables in exchange for product, document the fair value.
Agency retainers, whitelisting fees, and affiliate commissions all follow the same Section 162 logic: ordinary for an ecommerce business, necessary to generate sales, deductible in full.
When prepaid ad credits count
Timing follows your accounting method. Cash-method sellers deduct ad spend when paid, which for auto-billing platforms is effectively as it accrues. If you prepay, buying ad credits in December for campaigns that run early next year, the 12-month rule generally lets a cash-method business deduct a prepayment whose benefit does not stretch beyond 12 months. That makes a December top-up a legitimate year-end lever for a profitable store. Accrual-method sellers deduct advertising in the period the ads actually run, regardless of when the platform charged the card.
One boundary: spending aimed at acquiring a business asset rather than customers, like costs of buying another brand, is not advertising. But the everyday work of paying platforms to put products in front of buyers is exactly what the deduction is for. Track it cleanly and take all of it.