Business
Founding a startup or starting an Amazon FBA business
Amazon FBA is a profitable and easy way to start your own business.
Although founding your own start-up via a Shopify or WooCommerce store is currently all the rage, it is not the only way to start a business. Amazon FBA is an often easier and cheaper option to start selling products to customers across the Eu and abroad.
To start an E-Commerce business, no matter if you are planning on using shop systems or Amazon, you need to prepare. Not only do you need to design your storefront, but you will also need to register your business in the first place and apply for certain numbers in order to trade and sell legally.
Fortunately, we have done the research and can lead you through the process, from having a name for your business idea to selling your first product. Let’s look at four steps you need to follow to start your own startup or start an Amazon FBA business.
How to start your business
How to start and register a new start-up or Amazon business depends on the country you want to register your business in. Regardless, you have to take care of at least two steps:
- Decide on a company type
- Register with the local commercial office
In most countries, you can choose between personal or one-man businesses, companies with limited liability, fully incorporated entrepreneur companies, and various intermediate forms. These business types are characterized by different financial requirements and liabilities.
Once you have decided on a business type, you have to go to your local commercial office and register your company. In many countries, you will need to specify your field of business when registering, which is why you should already have an idea about which Amazon categories are to be served.
How to get your business ready for taxes and customs
The registration with the commercial register is not all you need to do to pave the way for your start-up or Amazon business. Next, you need to:
- Open a business account
- Register for tax purposes and obtain a VAT ID
- Apply for an EORI number
In order to keep your personal finances and business finances separate, you should open a dedicated account with your bank once you found a start-up or Amazon business.
In some countries, a separate business account is even obligatory when you found companies of certain types. Furthermore, a separate account will ease your or your accountant’s workload when tax season rolls around.
You will find out if a business bank account is necessary once you register for VAT. As soon as you found a business and register at the commercial office, you will need to register for VAT with your local tax office.
Once the registration is completed, you will receive a VAT ID, which is necessary to legally trade and sell products.
Even though specific regulations differ from country to country, VAT registration is almost always mandatory all over the world when founding a business.
In some countries, exceptions exist, whereas registrations are only necessary once your revenue crosses a certain threshold.
Nevertheless, scaling your Amazon business or growing your start-up will be impossible without a tax and VAT ID, no matter where you are located.
Furthermore, selling on Amazon might require you to register for VAT number in a variety of countries like in Germany, Spain, Poland, etc. You need to apply for a VAT Identification Number in all countries in which your products are stored, as is the case if you are using Amazon Fulfilment Programs.
In Europe, FBA enables you to store in a variety of European countries to ensure fast delivery times to your customers. However, using FBA Programs also means that you need to register for VAT before you start selling immediately after founding your Amazon business.
The same applies if you found your own E-Commerce start-up and plan on using a Fulfilment provider that maintains foreign warehouses.
Even if you are not storing your products abroad, as soon as you are making more than 10,000€ turnover through transactions with foreign customers in Europe, you will need to register in each of the countries in which your customers are located.
As an alternative, you can start using the One-Stop-Shop (OSS), which enables you to declare all cross-border transactions in a single EU-wide OSS return instead of filing several local VAT returns upon registration.
No matter which option you choose, if you are planning to serve customers in foreign countries you should employ not only a regular accountant but also a specialized VAT service provider such as HelloTax.
They take care of all necessary registrations, from VAT to OSS, and file your foreign VAT returns for you as soon as you found your Amazon or start-up E-Commerce business.
In case you are importing or exporting products across EU borders or between non-EU countries, you will need to register for another number: the EORI number.
While each country like France, Spain or Germany issues its own EORI number, European ones are applicable EU-wide.
Therefore, only one number is necessary to import products into the European Union. Outside of the EU, you will need separate numbers to move products across borders.
How to sign-up for Amazon and fill your shop with products
Once all bureaucratic steps have been taken care of or while you wait for all necessary numbers to be issued, you can sign-up as an Amazon seller or build up your E-Commerce shop. You will need to:
- Sign up as an Amazon seller or buy a domain
- Search and procure products to sell
- Present your products and start selling
If you want to found an Amazon business you will need to sign-up via the Amazon website and present your business account number, contact information, payment details, and a shop name.
You will also need to decide if and which fulfillment program to use and where to store your products. If you are founding your own E-Commerce start-up, you will need to select a shop system or platform, such as WooCommerce or Spotify, sign-up via the website, present similar payment and contact information, and also buy a domain and design your shop.
You can also commission E-Fulfillment providers with the shipping of your products, although that is not necessary.
The next step is finding and procuring products to sell. Some E-Commerce entrepreneurs produce their own products, though nowadays most products sold on Amazon and in Shopify or WooCommerce shops are sourced from wholesalers and manufacturers.
These kinds of products can be found on B2B and dropshipping platforms such as Alibaba.
No matter where you will end up selling them, you will need to thoroughly research profitable products, calculate prices with import, storage, and fulfillment costs in mind, and obtain certain certifications for some products if you are selling in countries with strong safety and environmental regulations.
Lastly, you will need to think about marketing, create attractive listings on Amazon or on your own shop website, choose adequate packaging, and order and receive your products.
How to sell VAT compliant
Once you have successfully started your own start-up E-Commerce or Amazon business it’s time to make your first sale. However, for each sale, you have to charge VAT according to the product category and country of residence of your customers.
While this is easily done with Amazon, a scalable system with which VAT can be charged should be implemented in your shop system. The VAT then needs to be declared in one or more local regular VAT returns or OSS reports and subsequently paid to the authorities.
Compiling returns and submitting them in foreign languages can be a tedious task but don’t worry: VAT service providers like HelloTax can take over this task for you so you can continue to run and expand your business.
Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.
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