Do You Need A Registered Business Name To Sell On Amazon
Concluding updated: 5 Jun 2021
Choosing to sell on Amazon is becoming increasingly popular for individuals, sole traders, and limited companies, providing enhanced exposure and access to millions of potential customers online.
Co-ordinate to Mintel, almost xc% of all Great britain shoppers employ Amazon, and effectually 70% make purchases on the site at least one time a month. Equally a result, Amazon is now the 5th largest retailer in the UK. Information technology's easy to meet why it's such an appealing selling platform for new and existing businesses of all sizes.
At Rapid Formations, we receive a lot of enquiries from people who are interested in setting up a express visitor for an Amazon business organization. The ii most common queries are:
- Is it ameliorate to sell on Amazon as a limited company or as a sole trader?
- Can I change my Amazon Seller account from sole trader to limited company?
To answer these questions and help you to make the correct decision, we will discuss the sole trader and limited company options available in the UK, every bit well as the process of setting up an Amazon Seller account. By the terminate of the blog, you should have a better understanding of this disruptive topic and be confident in your conclusion to sell on Amazon equally a limited company or sole trader.
Should I sell on Amazon as a sole trader or limited company?
Deciding whether to employ a sole trader or express visitor business construction depends on how much you're going to sell on Amazon. Choosing the wrong type of business structure could significantly impact your Income Revenue enhancement bill and National Insurance contributions (NIC), so it is not a decision that should exist taken without careful consideration.
Generally, if you're only probable to sell a small number of items each month, or you are planning to sell on Amazon on a coincidental ground, registering as a sole trader volition probably be best. In these situations, you're unlikely to gain whatsoever tax advantages past setting up a company. However, if you're intending to sell a lot of products on Amazon on a regular basis, it will exist more than tax-efficient to set up a limited company. You will besides benefit from limited liability.
Potential tax savings
Express companies pay 19% Corporation Tax on profits. Sole traders pay xx-45% Income Taxation on profits. Value Added Tax (VAT) may also be payable. However, the rules and requirements for VAT registration are the same for companies and sole traders, so this potential revenue enhancement liability will apply either fashion and should not influence your choice of business organisation structure.
Choosing to sell on Amazon as a limited company will enable you lot to minimise your personal revenue enhancement and NIC liabilities. This is considering you volition be able to pay yourself a combination of salary and dividend payments. By paying yourself less than the National Insurance threshold of £9,568/year (2021/22 tax year), y'all won't accept any National Insurance or Income Tax to pay.
Meanwhile, the first £two,000 of dividends will be tax free. Whatsoever dividend income above that amount volition exist subject area to Dividend Tax rates between seven.5% and 38.one%, which are far lower than Income Tax rates. Furthermore, neither you nor your company will take to pay NIC on dividend income.
Conversely, if you choose to sell on Amazon as a sole trader, all profits will be treated as personal income. This means that all of your profit will be subject to varying rates of Income Tax and NIC.
Equally a general rule of pollex, you will pay more than tax every bit a sole trader than a limited company when your annual income from all sources reaches around £thirty,000 per year. And if your income exceeds £l,000, you'll become a Higher-rate taxpayer, which ways you will pay twoscore% revenue enhancement on any personal income above that amount.
Limited liability
Aside from the tax-saving benefits, setting up a limited company volition also protect your personal finances. This is because limited companies are treated as singled-out legal entities (only similar people), so they are responsible for their own debts and liabilities.
If your business faces any legal issues or is unable to pay its bills, your personal finances and assets will be protected beyond what yous've already invested in the business organization.
If yous ready upward equally a sole trader, at that place will be no legal distinction between you lot and the business organisation. All business debts and liabilities will exist your debts and liabilities, so your personal finances and assets will be at run a risk if anything goes wrong.
Is it difficult and expensive to fix a company?
There are many misconceptions regarding setting upwards a limited visitor. People assume it is difficult, expensive, and requires a lot of piece of work. In reality, it's really quick and like shooting fish in a barrel to set a visitor, information technology can cost as little equally £12.99, the annual reporting requirements are pretty straightforward, and using an accountant to deal with your tax diplomacy will probably save y'all money.
You can annals a express visitor for your Amazon business online. It takes effectually five minutes to make full out the application form, and most companies are set up within iii to 6 working hours. When your company is registered, you will receive all of your incorporation documents and y'all can showtime trading immediately. You can and so set up your Amazon business on the very same twenty-four hour period.
The simplicity of company formation comes equally a surprise to many people. Information technology is no longer an sectional concern structure reserved just for affluent entrepreneurs and big businesses. Limited companies are suitable for all types of traders and all sizes of businesses, both new and established.
You will have a few additional filing obligations and may have to spend a little more money on an accountant (which is optional, not required), but you will have the opportunity to retain more of your Amazon profits. Your accountant can advise on the best ways to minimise your tax bill and operate your business in the nigh tax-efficient manner, and so yous will probably save more money than you lot spend on any such additional services.
Irresolute Amazon Account from sole trader to limited company
If you are already fix as an Amazon Seller, changing from a sole trader to a limited company can exist tricky. Information technology actually shouldn't be, but the process of moving an Amazon Seller Account to a new entity requires re-verification, which seems to event in significant delays.
In many cases, sole traders who request to transfer an existing seller account to a new limited company are unable to sell through Amazon for several weeks or months whilst their accounts are waiting to exist reverified. During that fourth dimension, seller accounts are often suspended, resulting in lost income.
Given the apparent difficulty that well-nigh people confront when attempting this process, nosotros would suggest setting up a limited company before creating an Amazon Seller Account – particularly if you know or think that you will want to trade equally a express company at some point in the future.
Setting up an Amazon business concern
There are two ways you lot can sell on Amazon – past registering as a vendor on Amazon Vendor Key, or by registering as a seller on Amazon Seller Fundamental. Equally an individual or a startup or pocket-sized business organization, yous will merely exist able to create an account on Amazon Seller Central, but it's worth agreement the difference between the two types of accounts.
Amazon Vendor Central Account
A pop selection for established manufacturers and distributors, Amazon vendors act as suppliers, selling their inventory (i.e. products) straight to Amazon at wholesale rates. Amazon then resells the products to customers nether its ain brand name, taking care of everything from pricing and shipping to client service and returns.
It is not possible to apply to be an Amazon Vendor – registration is by invitation simply, reserved for top sellers and well-known brands. Products being sold through Vendor Primal volition normally feature the phrase "ships from and sold past Amazon.com." Only yous never know, one solar day you may receive an invitation!
Amazon Seller Central Account
Amazon Seller Fundamental is suitable for individuals and any size of business. It is designed as an online marketplace for brands and merchants to sell products under their ain name direct to Amazon customers. To sell on Amazon, you volition demand to choose a selling plan and fix an account on Seller Central.
Amazon Selling Plans
Amazon Seller Central offers 2 selling plans – a Basic Selling Program (to sell a fiddling) and a Professional Selling Plan (to sell a lot). Y'all must choose the most suitable plan before creating an account.
Bones Selling Plan | Professional Selling Program |
| Ideal for individuals, coincidental or seasonal sellers, and very pocket-size businesses | Platonic for businesses with high-volume sales and/or those selling restricted products |
| Sell upward to 35 items per calendar month | Unlimited selling |
| 'Pay as you go' pricing – £0.75 (+VAT) fee per item sold | No per-particular fee |
| Additional referral fee percentage calculated on the full sales toll | Referral fee percent calculated on the total sales toll |
| No monthly subscription fee | Subscription fee of £25 (+VAT) per month |
| Sell products in sure categories only | Sell in all categories |
| Add items to Amazon Market place 1 at a time | Add large batches of products using bulk tools |
| Amazon-set up commitment rates for all products | Seller-fix delivery rates for non-BMVD products (Books, Music, Video, and DVD) |
Which selling plan is right for y'all?
Your choice of selling program volition depend on ii things: the products that yous're selling, and the number of items that you program to sell each month.
If you're selling products in a category requiring approval and/or yous're planning to sell more 35 items per month, yous volition demand to cull the Professional Selling Programme.
Here is a unproblematic cost-benefit analysis to help you lot decide which selling programme in best:
- The Basic Selling programme offers a pay-equally-yous-go rate of £0.75 (+VAT) per social club
- Yous would need a minimum of 34 sales/month to showtime the £25.00 (+VAT) subscription fee for the Professional Selling Plan (34 ten £0.75 = £25.50)
- If you accept fewer than 34 sales per calendar month, the Basic Selling Plan will likely be the all-time option for you.
Yous tin easily switch between Amazon's Basic and Professional selling plans at whatsoever time, downgrading if yous're non selling enough each month or determine to take a break, and upgrading if you need access to additional features or information technology becomes toll-effective to use the Professional Selling Plan at any point.
Please annotation: Amazon sometimes refers to the Basic Selling Programme as the 'Individual' selling plan, so don't be thrown if you come up across this term when you lot're creating an business relationship or reading articles on Amazon or other websites.
Create an Amazon Seller Account
Once you lot go to grips with the terminology, requirements, and restrictions, creating an Amazon Seller Account is (ordinarily) quite straightforward. Substantially, there are three main steps:
1. Decide what you lot desire to sell on Amazon
You will first need to choose the appropriate Amazon production category under which to list your products. More than 20 'open categories' are available to both Basic and Professional sellers. Additional 'categories requiring approval' are available simply to sellers with the Professional person Selling Plan. We hash out this in more than detail below.
2. Cull a selling programme
Basic Selling Plan or Professional Selling Plan?
3. Register and commencement listing
Once you've chosen your production category and selling plan, you are ready to create your Amazon Seller Account. You volition need to provide the following data (where applicable):
- Location of business concern (or your country of residence if yous don't accept a business)
- Type of business
- Sole proprietor (sole trader)
- Privately owned business (limited company or partnership)
- Publicly-listed business concern (PLC)
- Land-owned business
- Charity
- Individual (a person, rather than a business)
- Legal business organization name
- Your full name
- Registered business address
- Business phone number
- Company registration number
- Unique Taxpayer Reference (UTR) number
- Full name of the principal contact for the seller business relationship
- Personal data for the master contact person
- State of citizenship
- State of birth
- Date of birth
- ID (passport, U.k. driving licence, or National ID)
- Residential address
- Telephone number
- Verify your phone number by entering a one-time pin that is provided to y'all past text bulletin or vocalization call
- Land whether main contact is a beneficial possessor of the business organisation or a legal representative of the business organization
- Payment method (to pay your seller fees and to receive proceeds from sales)
- Store name for listing your products on Amazon Market
Side by side, yous will be asked to enable 2-step verification to protect your account. Use your phone number to receive a 'One Fourth dimension Countersign' by text bulletin or phone phone call and enter it when prompted.
When y'all have successfully completed the verification, you lot volition be taken to your Seller Central dashboard where you tin manage your business relationship details and provide whatsoever required documentation, such every bit proof of ID, business documents, and VAT details. Once Amazon has received and validated your data, you can start listing your products.
Categories and products requiring approval on Amazon
To comply with all applicable laws and ensure that customers tin store with conviction, approval is required to sell certain products on Amazon. Given that Amazon sells a vast range of products, the list is extensive. Here is a brief overview of the types of listings that may need approval:
- Alcohol
- Adult-oriented products
- Wearable (e.1000. branded items)
- Drugs and dietary supplements
- Electronics
- Food & beverage items
- Jewellery
- 'Made in Italy' products
- Music and DVDs
- Items in the Toys and Games category from November to the cease of January
- Streaming Media Players
- Items in Amazon Handmade
Agreeing to Amazon's Acceptable Usage Policy (AUP)
You lot are required to notify Amazon at the time of like-minded to the Acceptable Usage Policy (AUP) if you are planning to sell items in one of the following categories:
- Alcohol
- Developed-oriented, erotic, and sexual health products
- Dietary supplements and nutritional products
- Knives
- Non-prescription drugs
- Prescription and not-prescription eyewear
Amazon Payments Europe will have to perform additional checks to verify this data, which may delay the process. To select the relevant AUP category, you must:
- Click the 'Settings' tab on the top right of your Seller Central account, then click 'Business relationship Info'.
- Click on 'View or Edit' next to the option 'Amazon Payments Europe Acceptable Use Policy'. Y'all volition find this tab in the starting time grey box that appears at the top of the folio.
- Select the relevant category or categories. If you don't want to sell in whatever of these specific AUP categories, no further action is required. Otherwise, follow the next pace.
- If you desire to sell goods in one of the specific AUP categories, you need to inform Amazon by selecting the relevant category in Seller Cardinal.
What business documentation do I demand to provide to Amazon?
If you're creating an Amazon Seller Central account as a business (rather than as a individual individual), you lot volition be asked to provide certain documentation to verify your identity and the beingness of your business (if applicable).
Private limited company
- Current appointments report / Company Report dated within the last 90 twenty-four hours
- Utility bill, banking concern statement, or credit card argument in the name of the business, dated within the past ninety days
- Articles of Association
- Memorandum of association or statement of capital
Partnership
- HMRC correspondence that contains the partnership's UTR number, name, and business accost, and one of the following:
- Notice to complete a tax return
- Letter confirming the partnership'south registration with HMRC
- Most recent tax return of the partnership, which must include the UTR number and the name and business address of the partnership
- Utility neb or banking concern statement in the name of the business organisation, dated within the past 90 days
- Partnership understanding
Sole trader
- Self Assessment welcome letter
- Course 2 National Insurance Contributions bill
- Certificate of registration for Value Added Tax (VAT)
- Correspondence from HMRC acknowledging UTR number
- Notice to complete Self Assessment Tax Return
- Utility bill, banking company statement, or credit card argument in the name of the sole trader or trading proper noun of the sole trader, dated inside the past xc days
Registered charity
- Governing document
- Electric current appointments study
- Clemency Committee written report
- Confirmed list of all trustees – must display full name and date of nascency of each trustee
- Utility neb or banking company statement in the proper name of the charity and including the registered accost, dated inside the past ninety days
Individual (private) sellers and primary contacts
- Full valid passport
- National Identity Card
- UK driver's licence
- Utility pecker, bank statement, or credit card statement addressed to the individual and dated within the by 90 days
You lot volition provide the required information and/or documentation in your Amazon Seller Central account. Become to 'Settings' then 'Account Info' and select the sections that are highlighted in cerise to see what you need to provide.
Information technology normally takes Amazon betwixt 5–ten working days to verify information, simply it can take longer. You may be able to sell on Amazon whilst your information is existence verified, but this is field of study to certain criteria. In some cases, you may have to look until your information is verified before you lot are permitted to sell on Amazon.
Where can I get a copy of my 'business registration extract'?
A business registration extract is an official document that confirms the registered details of a business. The document that yous volition need to provide for this purpose depends on your business structure.
If you lot decide to sell on Amazon as a UK-registered limited company or LLP, yous tin provide a Company Study. To obtain this certificate, follow these simple steps:
- Sign into your Companies House account at https://account.companieshouse.gov.britain/signin
- Enter your company proper name or company registration number in the search box
- Select the 'View all' tab
- Select 'View company information snapshot' at the bottom of the page
- Your company report volition download to your computer device
If yous decide to sell on Amazon as a sole trader or partnership, your UTR number may suffice as a business registration extract, but you might have to provide evidence by uploading a re-create of a letter of the alphabet from HMRC that contains your UTR.
Uploading more than one document at a fourth dimension
There is a limit to the number of documents that y'all can upload and submit for review. If you need to provide several documents, you may have to merge them into one document. You can practise this by scanning each document, merging the scanned images into a Microsoft Discussion certificate, and creating a PDF.
Providing VAT details to Amazon
As per the laws governing Eu member states, Amazon charges VAT on all orders delivered to customers within these European union countries. Whether registered as a sole trader or a express company, your Amazon business may be subject to VAT registration in i or more countries.
If your Amazon business is set up in the UK, yous will need to register for VAT in the UK if:
- You lot store inventory in the UK, and
- You sell these goods to Britain-based consumers, and
- Your almanac sales exceed the United kingdom of great britain and northern ireland VAT threshold of £85,000
- If you sell goods to customers in other EU countries, you might also take to register for VAT separately in those EU countries
If your Amazon business is set upwards in a different EU country, you will need to annals for VAT in the UK if:
- Y'all store your inventory in the UK, or
- You sell to non-business consumers based in the UK, and
- Your almanac sales exceed the UK altitude selling VAT threshold of £70,000
If your Amazon business is set up exterior the Eu, you volition need to annals for VAT in the Great britain if:
- Items that you shop in the UK are sold to EU customers
- If you sell to consumers in other EU countries, you might also have to register for VAT separately in those EU countries
You can add your VAT registration number(s) and upload your VAT certificate(southward) for your Amazon business once you lot have created your seller account. We would strongly recommend using an auditor if you need to register your sole trader or limited visitor Amazon concern for VAT considering it is an incredibly complex issue.
Getting paid for your Amazon sales
When consumers buy goods from your Amazon business, they pay via Amazon Pay rather than straight to you. Amazon deducts the applicative fees based on your selling programme and then transfers the remaining proceeds to the business bank account linked to your seller account.
To go paid for your Amazon sales using Amazon Pay, y'all must:
- Prepare up your banking concern account in Amazon Seller Fundamental
- Ensure that y'all have a valid bank business relationship or credit bill of fare number every bit your charge method in Seller Central
- Sell your goods using Amazon Pay buttons
- Dispatch your sold goods only to the addresses specified by the buyer and communicated by Amazon Pay
- Capture payments for your orders to collect payments from your buyers
Amazon Pay will transfer sales proceeds to your nominated bank account 14 days afterward the first business solar day (i.due east. Monday-Friday) on which the respective purchases were made. If you fix (or change) your bank account at any time, your payments will be suspended for three days as a security measure.
Source: https://www.rapidformations.co.uk/blog/how-to-sell-on-amazon-as-a-sole-trader-or-limited-company/
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