Getting Started On Amazon
Unfortunately, these admin-focused tasks are all a part of starting an online business.
Once you complete the basics, you can focus on running and growing your online store.
Now that you know a tax ID is necessary, you are one step closer to becoming a successful Amazon seller.
As a new seller, another area you might want to look into is barcodes. Ive put together this helpful guide on UPCs that you should have a read through.
There is also one piece of advice I give to new sellers never stop learning.
I highly recommend you check out the eBusiness Boss Private Label FBA Course to enhance your knowledge and hone your skills.
If you have any questions about the tax ID process, drop a comment below.
The Advantages Of An Llc For An Amazon Business
While youre not legally obligated to create an LLC, youll miss out on these benefits:
Boost Your Reputation;
Customers are more likely to buy from established companies with business names. One way of demonstrating youre serious about your business is to form an official business entity such as an LLC.;
Also, forming an LLC protects your business name. No two business entities can have the same name in the same state.;
Protects Your Personal Assets
This is the main reason to form an LLC. It gives you peace of mind about keeping your personal assets protected. After all, you dont want any unforeseen challenges in your Amazon business to take a toll on your personal finances.
Easy to Set Up and Manage
You can set up an LLC for your Amazon seller business in a couple of hours using an online business formation company. Its then overseen by your state government. Theres much less complexity and paperwork than a corporation.
Most small business owners like an Amazon seller choose to set up an LLC because theyre simple to manage and inexpensive. Youll pay a one-time filing fee . On average, an LLC fee costs $89.
Youll get the same advantages for larger corporations, but without any of the expensive rules, regulations, legal compliance, and paperwork needed with other types of business structures.
Manage Business Partners
Ill Wait Until Im Making $x A Month To Set This Up
It doesnt cost nearly as much as you think to set this up, so theres no need to wait until you hit some arbitrary revenue goal.
Everything you need to get going is included in the Entrepreneur package. So, your non-US corporation structure will pay for itself in the very first year if you make only $1,000 a month of net income from your Amazon FBA business.
Plus, getting this structure in place now gets you properly positioned for the pop. Youll have everything already set up when you really start selling.
It would be terrible to have a really good month and have to send a bunch of money to the IRS just because you didnt take a little time to get your legal structure together.
Finally, theres also a tax reason to set things up sooner rather than later. Contributing an on-going business to a non-US corporation can be a taxable event. So, its better to do that while things are slow and the business isnt worth much.
When Does An Amazon Fba Seller Need To Collect Sales Tax
For the purposes of sales tax, ecommerce sellers are treated just like all other online retailers.
As an FBA seller, you are required to collect sales tax in states where your selling meets two criteria:
- Sales tax nexus
- Product taxability
Understanding both will help you determine when and if you are required to collect taxes from your Amazon FBA customers.
File Your Federal And State Income Tax Returns
Next, you need to file your federal and state income tax returns. This part of the process is a bit easier because you will only need to file in the state where you do business.
The state where you do business is the state in which you registered your business entity or the state in which you reside if you are operating your business as a sole proprietorship. Like sales tax, state income tax is required in most states, though some states do not have this tax. The following states are the states with no income tax:
For your federal return, refer to the IRS.gov website for the proper forms and instructions needed to file income tax for your particular situation.
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Using A Wyoming Llc To Be An Amazon Associate
Amazon is the #1 internet retailer. Amazons success is in large part due to the fact that the site offers unmatched retailing opportunities to third-parties and individuals. Nearly anyone can sell products through Amazon, and anyone with a website or blog can be an Amazon affiliate, no matter where you live. This last part may come as a shock to anyone living in states where Amazon has banned affiliates. But its true, anyone can be an Amazon associate no matter where they live, if they use a Wyoming LLC.
Which Entity Should Amazon Sellers Incorporate As
As a disclaimer, we cannot provide you with legal advice. Every type of Amazon Seller’s situation is different and as such, it’s a good idea to consult with a legal professional to find out which entity is best for your circumstance.
That being said, we see many Amazon Sellers incorporate as a limited liability company . Forming an LLC allows you to receive the incorporation benefits listed above, along with the ability to choose your tax structure . An LLC also offers fewer ongoing maintenance requirements, such as not having to hold annual meetings or have a board of directors, than other legal formations. For FBA and FBM sellers that are largely solopreneurs, this entity might just be the perfect fit for their business.
We still strongly encourage you to meet with a legal or financial professional before making your decision. You can use this time to ask additional questions, such as whether or not you will need to file for a DBA, the types of business licenses and permits you may require as an Amazon Seller, and how to handle sales tax hurdles.
Keep your business and self protected as an Amazon Seller! Our experts make it easy to file your documents so you can get back to doing what you do best. Read more about how to form an LLC or corporation.
Get More Information
Also Check: How To Run An Amazon Store
If You Decide To Open A Canadian Corporation For Your Amazon E
There is no difference from the tax standpoint. Both types of corporations are taxed exactly the same. The main difference between the two has to do with the name protection. With a federal corporation, your business name is protected across all provinces; with provincial it is only protected in the province of incorporation.
Who Can Form An Llc
Almost anyone in good legal standing who has the right to live and work in the U.S. is able to form an LLC.
But, not all businesses can operate as LLCs. For example, businesses dealing with banking or insurance are typically prevented from forming as an LLC. There are also restrictions from state to state, for example California prevents some types of professionals from starting LLCs.;
Fortunately, there are no rules preventing you from starting up an LLC if youre selling on Amazon.
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Where To Incorporate Your Amazon Fba Business To Reduce Taxes
Dateline: Kotor, Montenegro
Lots of entrepreneurs with fast-growing e-commerce businesses want to know Where do Amazon FBA sellers and Shopify store owners set up their corporation to do business?
Generally, this differs from person to person. For one thing, it depends on how much tax you want to pay; if the answer is I love paying taxes, then any old company in Australia or Canada or wherever else will probably do.
However, if youre trying to decide where to set up a company to reduce your taxes and liability, there are a few factors that you need to consider.
The first thing to think about is tax. What a lot of people dont realize is that you have the power to decide how you want to be taxed. More importantly, there are also things that you can do to help reduce, or even eliminate, the tax that you pay.
The next thing to think about is liability. As a business owner, one of your biggest priorities is to protect yourself from getting sued. Not only that, youll want to make sure that if it does happen, you dont lose absolutely everything that you own.
There are, of course, other things to consider. But, for the average person starting out, tax, and liability are the most common considerations. Im going to go over each of these points in a bit more detail.
First, lets talk about legal liability.
What Is An Llc
Most business owners have heard of the LLC as a type of business entity. The LLC structure has some similarities with corporations and sole proprietorships or partnerships but is different in some important ways. An LLC combines the most attractive features of sole proprietorships, partnerships, and corporations.
An LLC is a legal entity that you create by making an application through your state government using simple forms. In this way, forming an LLC is similar to applying for a charter for a new corporation through your states government. However, an LLC is more like a sole proprietorship or partnership in the way you are allowed to operate the business. Unlike a formal corporation, an LLC does not need a board of directors or officers and is able to transact business in the same way as a sole proprietorship or partnership in most ways.
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Reporting Collected Amazon Fba Sales Tax
The vast majority of states want to know not only how much sales tax youve collected in the state, but also how much you collected from buyers in each county, city and other special taxing district within the state.
You can find this information in two ways:
- Use sales tax automation: Use a sales tax automation solution to generate a report for you. A sales tax automation will connect with all of your shopping carts and marketplaces, not just Amazon to give you a comprehensive report of all the sales tax you collected from buyers within a state. It will also break down how much sales tax youve collected in each county, city and other taxing jurisdiction so you dont have to spend time with maps and tax tables.
Once youve reported how much sales tax you collected in a state, its time to file your sales tax returns and remit the sales tax you collected.
Do You Need A Business License To Sell On Amazon In Uk
No. What you need to get is an EORI number to send your products in the UK. EORI is your company or products unique identifying number.
If you dont have an EORI number, the UK customs will require you to get one before it leaves customs. You will get your EORI number by applying for VAT through the HM Revenue & Customs in the UK.
It is best to secure an EORI number first because the longer your product sits on HMRC, penalties will add up and you need to pay it before they free your product.
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But Isnt It Really Expensive To Form A Non
Yeah, it costs at least $10,000, but its totally worth it . . .
Just kidding! Thats how things used to be .
You can actually do it yourself without spending very much at all. Ill show you exactly how to do it.
If you can sign up for a PayPal account, you can form a non-US corporation structure. Thats really all it takes-you just have to click around a bit, type information into boxes, and send emails.
You can handle this!
Like this article?on the latest tax topics for global individuals who live or invest abroad.
Want To Learn More About Wholesale Sourcing
For the longest time I wanted to add wholesale to my Amazon business. I have actually gone through 3 different wholesale courses to teach me how to do it. Each time I went through a new wholesale course I would try what was taught, but I kept coming up empty. It was extremely frustrating then I scheduled a phone call with Dan Meadors from The Wholesale Formula. That conversation opened up my eyes to things about wholesale I never thought about before . I took his advice and began to find multiple wholesale accounts.
Would you have wanted to listen in on that conversation? Unfortunately, we didnt record the call, but Dan and his team have created something even better: a free video series focused on successfully adding wholesale to your Amazon FBA business. The content in this free video series is the same content that I heard in my phone call with Dan and more!
Unfortunately, this free video series is currently closed, but if you want me to tell you when the doors are open to the free wholesale workshop again, then where Ill email you the moment the free wholesale workshop videos are available again. This free video series that will open your eyes to what is possible with selling wholesale items on Amazon, so take a moment, and .
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Create An Amazon Seller Account
In order to sell, we need an Amazon Seller account . On occasion it can take a while to get approved, therefore I suggest getting on and creating your account as soon as possible.
There are two types, Basic and Professional.
People ask me which one to choose I would suggest starting with a Basic account as there is no monthly fee, you only pay 75p per item when sold. At the point you are selling over 35 items a month simply switch to the Pro and pay monthly its the most cost-effective way.
Note that you will use a website called Amazon;Seller Central to manage all your selling .
Sign up here
S Of Launching Your Product
So now we have found a good deal, an appropriate shipping option and pulled the trigger on the order its a good time to create your Amazon listing.
Using Seller Central add a new product making sure to select Create New Listing.
I wont go in to mega detail here but do ensure your pictures are absolutely stunning, and that you use all 9 images available.
These are what really sell the product if you arent the most gifted with a camera and Photoshop, consider finding a professional to take care of this for you.
Money spent here will no doubt be the difference between a successful product and a failed product!
Regarding launching technique, I consider 4 avenues:
- List without doing anything .
- Use PPC very aggressively in the first few weeks to build up sales velocity.
- Set a low price to again build initial sales velocity, once your product ranks on the 1st or 2nd page you can adjust it appropriately.
- Give-aways by using a service or just to people you know, again to build that spike in sales.
All methods serve the purpose of increasing sales to the point that you start to show up on page 1 or 2 of the Amazon search results at this point you should start to see steady and continual sales without the need for the above. A combination of the above techniques usually works best for me.
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What Are My Income Tax Obligations In The Us As A Canadian Amazon Seller
Now that we discussed three general scenarios of how foreign businesses are taxed in the U.S., we can discuss the filing requirements for your Amazon e-commerce business.
Level 1 scenario: In case if you dont have any Effectively Connected Income in the U.S., you are not obligated to file any income tax returns with the Internal Revenue Services . Your net income from worldwide sources will be fully taxed in Canada.
Level 2 scenario: In case if you have Effectively Connected Income , but no Permanent Establishment , your business needs to file:
- For individuals/sole proprietorships/partnerships: file Form 1040NR U.S. Non-resident Alien Income Tax Return and Form 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701 to claim tax relief under the U.S.-Canada Tax Treaty.
- For corporations: file Form 1120-F U.S. Income Tax Return of a Foreign Corporation together with Form 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701 to claim relief under the treaty.
These are informational forms, your business will not be liable for income taxes in the U.S. However, the IRS will want to know about your business activity in the U.S. as a foreign corporation.
Level 3 scenario: If you have Effectively Connected Income AND a Permanent Establishment in the U.S., then you need to file the 1040NR / 1120-F . Form 8833 is not necessary;since your income will no longer be protected by the U.S.-Canada Tax Treaty.
How To Collect Sales Tax On Amazon
Important to note: Amazon now collects sales tax on sellers behalf in most states with an Amazon fulfillment center. The below information applies to .
Now that you are registered to collect, your next step is to ensure you are collecting sales tax from your Amazon FBA customers.
Fortunately, Amazon has a very robust sales tax collection engine.
Once you tell it what you want to collect, it will collect the right rate, even keeping up with complicated concepts like whether a state is origin-based or destination-based, or if a sales tax rate has changed.
It will also allow you to add product tax codes so you charge the right amount of sales tax on items like groceries and clothing, and allow you to choose whether or not you charge sale tax on shipping and gift wrapping.
Keep in mind that Amazon charges 2.9% of each transaction in order to collect sales tax.
The alternative, however, is not to collect sales tax from your Amazon customers and to instead pay out of your profits.
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