In the previous article we talked about things you need to consider when choosing a business structure when you are starting your business online. In this article we will talk about what you need to do if you decide to sell specifically through an online marketplace such as Amazon.
Create your Seller Account
You can sell through your customer account but it is wise to create a business account on amazon if your intention is to sell regularly. This is because if your business expands and you have to change your account to the business account because you will be liable to pay your taxes you will have to wait and the trading is suspended for days and this might affect your business.
Understand what audience you will target
When you are advertising your product online you have 2 types of audience: B2C customers and B2B customers.
B2C customers: When you are selling your product and services to the customers who are the end users.
B2B customers: This means that you are selling from your business to another business
You should understand that when you are selling on an online marketplace you will be selling to the customers inside and outside the EU. You will have to register for VAT and follow the local VAT rules in the area that you are selling.
VAT requirements and registration
Where, when and how you have to register for VAT depends on the following:
- The nature of your business
- Your annual sale
- Your fulfillment model
- The place where your business is established
If you are a UK seller selling goods in the UK as a business activity and your business VAT taxable turnover is more than £85 000 a year you have to register for VAT
You must also register for VAT in the UK if you are an overseas seller and the online marketplace provides you with the VAT details of the business customer
If you are an overseas seller with goods stored in the EU and your total sales to the customers in Northern Island are more than £70 000 a year
You can also register your business for VAT if you want to recover import VAT from the goods imported to the UK that will be located in the UK at the point of sale and sold through an online marketplace.
HMRC defines you as an overseas seller if you sell goods stored in the UK to the UK customers but your business is not registered in the UK and all the management decisions are made in the UK.
Understanding Fulfillment by Amazon
When you sign up to sell on amazon by making a seller account you will automatically be enrolled for FBA. Through FBA you just have to send your products to amazon fulfillment centers and they will handle the shipping, returns, customer service etc. you can track your inventory etc through your account.
In our next blog we will discuss how we do accounting when selling on amazon.
You can hire an accountant to help you simplify all the book keeping, accounts and taxation and help you concentrate on running your business. If you are thinking if you need an accountant or not read one of our blog here
If you are looking for an e-commerce accountant contact Taxaccolega, accountants in Croydon, accountants in London and our team of accountants will be happy to help you.
Source: https://www.gov.uk/guidance/vat-overseas-businesses-using-an-online-marketplace-to-sell-goods-in-the-uk#online-marketplaces