Sole Trader vs Limited Company: Which is best for Amazon Sellers?
If you’re selling on Amazon, whether that’s FBM (fulfilled by merchant) or FBA (fulfilled by Amazon), it’s best to decide whether to start as a sole trader or limited company before you register your seller account.
This is because you’ll need to indicate what type of seller you are when you open your Amazon seller account. What’s more it can be very difficult to change the type of account you hold later down the line.
Usually, sellers change from a sole trader to a limited company, which can result in a lengthy Seller Identity Verification – potentially leading to weeks of lost revenue whilst your account is reviewed by Amazon.
So, taking this into account, should Amazon sellers opt to start out as a sole trader or limited company?
What’s are the Differences Between a Sole Trader and a Limited Company?
In the UK, there are two main types of businesses: either a sole trader or limited company.
- As a sole trader, you run your own business as an individual and are self-employed.
- If setting up a limited company, the business is distinct from you and has its own legal entity.
Each of these has their own advantages & disadvantages, which you should consider before setting up as an Amazon seller:
The Advantages of Being a Sole Trader on Amazon
- It’s very easy to set up as a sole trader..
- It’s also highly private. Unlike a limited company, your personal details aren’t out in the public domain.
- Annuals accounts are submitted via self-assessment which is much more straightforward than company accounts, although it’s stell best to hire an accountant for this!
The Disadvantages of Being a Sole Trader on Amazon
- The sole trader is personally responsible for any debt incurred, including if you are sued for any reason. This personal liability can be stressful if things go wrong and it affects your personal finances or credit rating.
- Whilst easy to set up, most sole traders aspire to grow their business into a limited company. However, as mentioned above, changing from a sole trader to a limited company on Amazon leads to your seller account being suspended for a number of weeks before it can be changed over.
- As of August 2021, the rate of tax you pay as a sole trader – also known as personal income tax – is slightly higher than corporation tax, although you only start paying tax on earnings over £12,570 – the current tax-free threshold.
The Advantages of Setting up a Limited Company on Amazon
- A limited company has limited liability, which means your personal assets are not at risk should your business run into financial difficulties.
- You pay corporation tax – which is slightly lower than personal income tax -tax on your earnings, other than the salary that you take from the company. There are also more opportunities for tax-deductibles meaning you reduce the amount of corporation tax you pay.
- Unlike being a sole trader, your trading name cannot be duplicated once you’ve registered it at Companies House.
The Disadvantages of Setting up a Limited Company on Amazon
- Running a limited company is a lot more bureaucratic than being a sole trader, with annual company accounts, confirmation statements and requirements for data protection.
- Whilst easy to set up, most sole traders aspire to grow their business into a limited company. However, as mentioned above, changing from a sole trader to a limited company on Amazon leads to your seller account being suspended for a number of weeks before it can be changed over.
- Limited company accounts are much more complex and require specialist help – ideally from a specialist Amazon accountant.
Does a Sole Trader or Limited Company on Amazon Pay More Tax?
Tax is one of the biggest factors for Amazon sellers choosing whether to set up a sole trader or limited company.
Although limited companies may seem more complex, the tax implications are usually quite simple. As of August 2021, corporations pay 19% tax on profits, and your first £2,000 in dividends is tax-free. Any salary or dividends you pay yourself still require you to pay tax on though – you will need to submit a personal tax return alongside the corporation tax return.
For sole traders, the tax rate is slightly higher at 20%, although this is only paid on earnings above the personal allowance rate. The personal allowance rate in the UK is currently £12,500, so you pay nothing below this. If you earn between £12,500 to £50,000 you’ll pay the standard UK personal income tax rate of 20%.
If you earn above £50,000 you’ll be subject to the higher rate of tax at 40%, but only on the proportion of earnings above this. Even higher rates apply for earnings over £150,000.
It’s worth pointing out that many of these supposed tax benefits of running a limited company will be countered by higher administration and accountancy fees so they often balance out if your profits are below £50,000. If your profits are above this, you’re almost certainly going to see more tax advantages from setting up as a limited company.
I hope you found this article helpful. If you are experiencing issues with your Amazon Seller Account and your Seller Account already received a warning or is under a review, I can assist you and help you resolve the matter.
In order to receive a professional advice and get help with your Amazon issue, feel free to subscribe and reach out through my dedicated assistance help page at www.onlyfans.com/kikaangelic, where I provide help with Amazon related matters in exchange for a small $24.99 fee.
If you have an Amazon-related issue, feel free to join and post into my large Amazon Seller Performance – Friendly Advice – Worldwide Facebook group, where you will be very welcome.
Many Amazon sellers recently started trading stocks and crypto currencies, hoping to diversify their income, which is a very good idea with all the uncertainty which comes with the platform. For this reason, we launched a new Facebook group, Crypto Arbitrage Income (Bitcoin, Crypto, Altcoins, Blockchain, Trading) – feel free to join us and forget about the troubles of selling on Amazon for a moment!
Additionally, here you can watch my YouTube video, where I am presenting you several secret tips about appealing Amazon Seller Account suspensions (don’t be confused by the opening of the video, where I am enjoying a vacation – it’s a part of the story):
As third party sellers gear up for the approaching holiday season, Amazon has recently announced a crucial update that warrants the attention of all sellers utilizing its fulfillment centers. This announcement concerns the management of aging inventory and aims to optimize space within the centers to accommodate the surge in demand during the holiday period. In this article I will be addressing this change and explaining how it impacts your business.
Commencing September 15, 2023, Amazon is implementing a new policy pertaining to aging inventory. The core aspect of this policy involves the potential removal of aging inventory from Amazon’s fulfillment centers, unless sellers choose to opt out of this process.
In this context, aging inventory refers to units that have been stored within an Amazon fulfillment center for a duration exceeding 365 days. To mitigate the accumulation of aging stock and to make room for new incoming products, Amazon has decided to introduce an automated process for the removal of such inventory.
While the notion of automated inventory removal might raise questions, it’s imperative to acknowledge the potential advantages this policy could bring to your business:
- Aged Inventory Surcharge Reduction: Sellers are subject to charges for housing aging inventory for prolonged periods. Allowing for automated removal could potentially save sellers from incurring these surcharges, thereby leading to cost efficiency.
- Enhanced Inventory Performance Index (IPI) Score: By actively participating in the automated removal process for aging inventory, sellers have the opportunity to enhance their IPI score. This metric reflects the efficiency of your inventory management and can influence factors such as search result placement and overall visibility.
Under the new policy, you will have the following choices:
- Returning Aging Inventory: Should you wish to retain your aging inventory, the process entails providing a valid return address through the Automated Fulfillable Inventory settings. This way, Amazon will return your aging units to you, preventing their removal from the fulfillment centers.
- Recycling, Donation, or Removal: Failing to provide a valid return address prompts Amazon to take further steps, which might involve recycling, donating, or outright removal of the aging inventory to optimize storage space.
- Opting Out of Automated Removal: If you prefer to maintain full control over your inventory and prevent automated removal, the “Disabled” option within the settings allows you to opt out of this process.
It’s paramount to note that once automated removals are initiated, they cannot be reversed. This underscores the significance of making a well-informed decision in accordance with your business strategy.
For sellers currently possessing aging inventory and yet to modify their removal settings, Amazon will notify you through email and Seller Central regarding impending automatic removals. Staying vigilant and proactive will be key during this transitional period.
For adjusting your settings and making informed decisions, navigate to “Automated Fulfillable Inventory settings.” To monitor aging inventory status and overall health, access “Manage Inventory Health.”
I hope you found this article helpful. If you are experiencing issues with your Amazon Seller Account and your Seller Account already received a warning or is under a review, I can help you resolve the matter.
If you would like to hire me to privately assist you, feel free to subscribe and reach out through my dedicated assistance page at www.onlyfans.com/kikaangelic, where I provide support with Amazon related matters in exchange for a small $24.99 fee. Alternatively, you can post into my free public discussion forum for Amazon Sellers, where I will answer your question.
To stay in touch, feel free to join and post into my large Amazon Seller Performance – Friendly Advice – Worldwide Facebook group, where you will be very welcome.
Many Amazon sellers recently started trading stocks and crypto currencies, hoping to diversify their income, which is a very good idea with all the uncertainty which comes with the platform. For this reason, we launched a new Facebook group, Crypto Arbitrage Income (Bitcoin, Crypto, Altcoins, Blockchain, Trading) – feel free to join us and forget about the troubles of selling on Amazon for a moment!
Additionally, here you can watch my YouTube video, where I am addressing everything you need to know about Seller Identity Verification and how to pass it:
Starting from August 23, 2023, Amazon is making a change that’s going to merge the Responsible Person dashboard with the Manage Your Compliance dashboard. I’m here to break it down and explain what this means for third party sellers.
During migration, your list of ASINs from the Responsible Person dashboard will be automatically added to the Manage Your Compliance dashboard, along with their compliance status: Completed, No longer requested, or Not submitted.
The Responsible Person dashboard will then be closed down, and any new Responsible Person submissions must be made on the Manage Your Compliance dashboard.
It is recommend that for all your ASINs that appear as “past due” on the Responsible Person dashboard, you add your Responsible Person information as soon as possible prior to the migration on 23. August.
Doing so will help to ensure the information is validated before the transition and automatically transferred to the Manage Your Compliance dashboard. You can also choose to do this for ASINs that appear with a due date of September 30, 2024, to ensure that you are compliant in advance.
As part of the migration, the Amazon Responsible Person service has been paused for new subscribers.
I hope you found this article helpful. If you are experiencing issues with your Amazon Seller Account and your Seller Account already received a warning or is under a review, I can help you resolve the matter.
If you would like to hire me to privately assist you, feel free to subscribe and reach out through my dedicated assistance page at www.onlyfans.com/kikaangelic, where I provide support with Amazon related matters in exchange for a small $24.99 fee. Alternatively, you can post into my free public discussion forum for Amazon Sellers, where I will answer your question.
To stay in touch, feel free to join and post into my large Amazon Seller Performance – Friendly Advice – Worldwide Facebook group, where you will be very welcome.
Many Amazon sellers recently started trading stocks and crypto currencies, hoping to diversify their income, which is a very good idea with all the uncertainty which comes with the platform. For this reason, we launched a new Facebook group, Crypto Arbitrage Income (Bitcoin, Crypto, Altcoins, Blockchain, Trading) – feel free to join us and forget about the troubles of selling on Amazon for a moment!
Additionally, here you can watch my YouTube video, where I am addressing everything you need to know about Seller Identity Verification and how to pass it:
If you’re an Amazon seller on Amazon.de, you might have recently come across an important announcement that could impact your listings. As of 1 July 2023, Amazon.de has deactivated all listings that are non-compliant with Extended Producer Responsibility (EPR) requirements for waste from electrical and electronic equipment (WEEE). But don’t worry – we’re here to provide you with all the information you need to navigate these changes and reinstate your listings.
Extended Producer Responsibility (EPR) is a crucial aspect of waste management, designed to shift the responsibility of managing waste from electrical and electronic equipment back to the producers. If you’re a producer selling on Amazon.de, there are specific steps you need to take to ensure compliance:
- Registration and Collection System: If you’re a producer with a branch in Germany, you must register with stiftung ear for each brand and type of equipment combination you’re selling. Additionally, setting up a collection system for your WEEE is mandatory.
- Authorized Representative: For producers without a branch in Germany, appointing an authorized representative from stiftung ear’s list of admitted representatives is necessary.
- Compliance Solutions: Amazon offers solutions for producers to achieve compliance. You can choose from EPR Services on Amazon or the EPR Service provider network.
- Supplier Information: If you’re not a producer, you need to request WEEE-Reg.-Nrs. (WEEE registration numbers) from your upstream supplier for each brand and type of equipment combination you’re selling.
To reactivate your listings and prove your compliance with EPR requirements, follow these steps:
- Register Brands and WEEE-Reg.-Nrs.: Register your brands and submit your WEEE-Reg.-Nrs. for each brand and equipment combination on the Seller Central Compliance Portal. Ensure you do this only after the registration numbers are visible on the Stiftung ear portal.
- Non-Producer Declaration: If you’re not a producer, indicate this by checking the appropriate box when submitting the relevant WEEE-Reg.-Nrs. on the Compliance Portal.
Once you’ve completed the necessary compliance steps, you should be able to reactivate your electrical and electronic equipment (EEE) listings on Amazon.de. It’s important to make sure all your brand and type of equipment combinations are covered and registered.
If proving compliance poses challenges for your products, leading to listing deactivation, follow these steps:
- Contact Support: If you believe your products are exempt from these regulations, get in touch with Selling Partner Support.
- Further Information: For comprehensive information, refer to the EPR requirements: WEEE in Germany help page, the guide and video provided by Amazon, and Stiftung ear’s informative videos available in both German and English.
As an Amazon seller on Amazon.de, understanding and adhering to EPR requirements for waste from electrical and electronic equipment is paramount. Compliance not only ensures your listings remain active but also contributes to responsible waste management. By following the outlined steps and utilizing the provided resources, you’ll be well-equipped to navigate these changes and continue your successful journey as an Amazon seller.
I hope you found this article helpful. If you are experiencing issues with your Amazon Seller Account and your Seller Account already received a warning or is under a review, I can help you resolve the matter.
If you would like to hire me to privately assist you, feel free to subscribe and reach out through my dedicated assistance page at www.onlyfans.com/kikaangelic, where I provide support with Amazon related matters in exchange for a small $24.99 fee. Alternatively, you can post into my free public discussion forum for Amazon Sellers, where I will answer your question.
To stay in touch, feel free to join and post into my large Amazon Seller Performance – Friendly Advice – Worldwide Facebook group, where you will be very welcome.
Many Amazon sellers recently started trading stocks and crypto currencies, hoping to diversify their income, which is a very good idea with all the uncertainty which comes with the platform. For this reason, we launched a new Facebook group, Crypto Arbitrage Income (Bitcoin, Crypto, Altcoins, Blockchain, Trading) – feel free to join us and forget about the troubles of selling on Amazon for a moment!
Additionally, here you can watch my YouTube video, where I am addressing everything you need to know about Seller Identity Verification and how to pass it:
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