Are you contemplating starting a business online? We live in the digital age where many people spend time online. Setting up an online business is a good way to tap into this pool of potential customers. As it stands, over 2.14 billion people shop online, representing about 27.6% of the total population in the world. This statistic shows the growing adoption of online shopping by various people. Therefore, starting a business on a well-known platform is a wise and profitable investment decision. Amazon is such a platform. According to Forbes, 89% of people are more likely to purchase items from Amazon than other online shopping sites. In this post, we will focus on starting an Amazon business.

 

Starting an Amazon business

What makes Amazon great is that there are various ways of starting a business on the platform. On Amazon, there are many ways to succeed. However, they begin with choosing a business model and the products that you plan on selling. Regardless of your business model or your chosen type of product, setting up and running an Amazon Business remain the same. Below are the steps to set up and run an amazon business:

 

1. Choose a business model

There are many business models that you may use for your Amazon business. Settling on a business model plays a critical role in improving sales. Below are some models that you can use:

 

Private label: This refers to the process in which a retailer renames/rebrands a product that they have manufactured.

Wholesale: A retailer may buy goods at a discounted price or a low cost and then sell the individual units for profit in a retail market.

Dropshipping: This is a business model by which a seller transfers the customer orders directly to a supplier or a manufacturer instead of keeping their inventory.

Handmade: You can make your products like accessories, jewelry, home décor by hand and put them up for sale on the Amazon marketplace.

Retail and/or Online Arbitrage: Arbitrage refers to a method that retailers find a discount or low-cost goods on eCommerce sites and resell them on the internet.

 

2. Choose the fulfillment method

You can choose between;

Fulfillment by Amazon (FBA)

Amazon has among the most advanced networks for order fulfillment in the world. With FBA, you store products in an Amazon fulfillment center. Workers pick, package, ship, and offer customer service for your products.

Fulfillment by Merchant (FBM)

This refers to when retailers put their products on Amazon, but they handle the fulfillment of orders and customer service.

Each method has its advantages and disadvantages. Therefore, closely examine each before settling on either of them.

 

3. Settle on the products that you will sell

The next step is deciding which products you will be selling. You can sell fashion products, food products, handmade items, among many other categories. If you plan to sell handcrafted items, this process may be already sorted, although you still have ensured that there is a demand for the product on Amazon. Tools like Jungle Scout are essential for finding the highly demanded products.

 

4. Apply to become a seller

We will discuss the process of registration to become a seller in the next section.

 

5. Sourcing your products

Once your registration has been approved and verified, you can start sourcing for the product(s) that you will be selling. If you use a private label business model, you can find a manufacturer using the supplier database on Jungle Scout or Alibaba.

 

6. Creating your product listing

Finally, you can create your listing and use it as a basis for growing your Amazon sales.

 

 

Creating an account as a seller on Amazon

 

After figuring out the product(s) that you intend to sell on the platform, complete the process of registration as a seller. The process is as below:

 

1) Head to https://services.amazon.com

 

2) Next, scroll the page that is below the link showing how you can become a seller on amazon

You will see a link labeled “see pricing->”, click on it.

(With the “See pricing->” link, you can see the difference between professional and individual accounts. Thus, you can choose what registration to use”.)

 

3) Choose between professional or individual accounts

You have two options for seller plans on Amazon, Individual and professional plans.

Are you going to sell over 40 products per month? Then a professional plan is your best option. Whether you do not consider yourself a professional or sell as a hobby, the plan helps you save money. However, if you plan on selling less than 40 units a month, select an individual plan.

 

4) Key in your details and click “Create a new account”

After selecting a seller plan, a form will appear for you to enter your seller account’s credentials. Click “Next” when you are done.

You will see another screen requesting you to enter a Time Password (OTP) sent to your email by Amazon. It verifies your email. After entering the OTP, click on the “Create Your Amazon account” button.

 

5) Choose the location and type of your business.

Business Location

In which country is your business located? You must get this right because Amazon will verify it.

Business type

Amazon lets you choose from the following business types; Charity, Privately owned business, publicly owned business, state-owned business, or none (if you are an individual). You then have to enter all your three names. After this, click on the “Agree and continue” button.

 

6) Provide your personal information

After selecting the type of business, Amazon will ask for your details. To validate them, Amazon will ask you to give identification. It may be a driving license or a passport. For verification, they may ask you to provide your phone number.

 

7) Select your marketplace

After filling in the personal details, check the box below to select the marketplace(s). A marketplace, in this case, is the location of an Amazon store, amazon.co.uk, amazon.ca, amazon.in, among others. Click “next”.

 

8) Provide your billing information

This is a way for Amazon to verify your identity and ensure that your credit card information is valid. Amazon requests the credit card number, the name as it appears on the card, and the date of the credit card’s expiry. Click “next” at the bottom of the page when done.

 

9) Adding the Amazon store and the product information

After your credit card information is validated, Amazon will ask you several questions about the products you intend to sell and your amazon store. They include;

• What is the name of your Amazon store?
• Do you have UPC codes for your product(s)?
• Are you the manufacturer? Who is your product’s brand owner?
• Do you have registered trademarks for your products?

After answering these questions, click “next”.

 

10) Validation of the address

After completing the steps above, Amazon requests you to confirm the business address you had provided earlier (in the “personal information” screen).

If the displayed address is correct, click on the “confirm” button. A message appears showing that Amazon will send a postcard to that address. It also includes a verification code. When the postcard arrives, enter the code into the “enter the code” field. To finish the process of verification, click “next”. You are now in. All you have to do is log into https://sellercentral.amazon.com. To get started.

 

Conclusion

To ensure increased security, set up two-step verification on your Amazon account. However, note that there has been a change registration process for a seller on Amazon. It is primarily to help in verifying the seller’s details. To be prepared with the documents, read our article on “Amazon seller verification”.

 

 

GM Professional Accountants have offices Located in London, Birmingham and Essex.

 

 

 

 

 

 

 

 

Advantages and Disadvantages: Limited Company Vs. Sole trader

Functioning as a sole trader may be a great way to work for a small business. It is often very effective for many people running a small company. But they have another option to operate their business as a limited company.

However, operating as a limited company is not necessarily the perfect choice for most. This is because they will have to deal with several issues in the process. It can be pretty complex to start a new limited company. However, you will get rewarded with benefits like receiving a more professional appearance and a more favourable tax situation.

Find out more

Let us now learn about the advantages and disadvantages of setting up a limited company rather than a sole proprietorship. This will allow us to understand if we will benefit from opening a limited company and whether it is going to be a perfect choice.

Subscribe to our channel for the latest updates.

Subscribe Now

The Advantages

The decision can be beneficial to you for several reasons. A few significant positives of becoming a limited company are as follows:

Tax Efficiency

Getting additional tax benefits can be the first primary reason for becoming a limited company rather than a sole trader. You can generally take maximum tax-free income as a director of your limited company. As of 2022, you may claim an allowance of 12,570 as your salary and balance income in the form of dividends.

It benefits you a lot because you do not have to pay any national insurance contribution on dividends. Moreover, you will be paying only 19% of your company profits as corporation tax than 20%-45% as income tax if you operate as a sole trader.

Limited Liability

Choosing to become a limited company limits your liability. You will not be liable for the business as you will be as a sole trader. This means that all assets and finances are protected if the company incurs debts and goes bankrupt.

Separate Entity

Sole traders have total liability for their business actions and are responsible for entering into legal contracts. On the other hand, limited companies allow much greater flexibility to the management. They are also hugely beneficial because they are separate legal entities.

Professional Image

When you operate as a limited company, you get a more professional appearance. Even as a single individual, it appears more significant and more professional to others. Although it may seem a little less unimportant advantage, it can make a tremendous difference in how customers and other businesses perceive you. You may be considered for assignments that you may have not received as a sole proprietor.

The Disadvantages

A sole trader business has several inherent pros and cons. Similarly, besides the benefits mentioned above, a limited company also comes with a few significant disadvantages as follows:

Complex Setup

You undoubtedly get a wide range of benefits with becoming a limited company, however it is pretty complex to set it up. In contrast, it is relatively easy to set up a sole trader business by simply registering with HMRC. On the other hand, you will have to register as a limited company with companies house and pay fees. For the first-timers, it can be a daunting process.

Complicated Accounting

Unlike the Sole trader business, you will face a range of additional challenges to manage the accounts of a limited company. According to specialists of small businesses, limited companies may have to deal with tax planning, book-keeping, payroll, not to mention keeping company accounts up to date, managing business expenses, and addressing tax return issues. Moreover, if you fail to submit tax returns correctly, you may have to pay fines and face other punishments.

Ownership Issues

Sole traders make all of their decisions in isolation, and they have to justify their choices only to themselves. But it is not so simple for limited companies with multiple shareholders. Those shareholders will have a say in how the business will be run. You will have to appease all of them to run the business smoothly which complicates matters significantly.

Reduced Privacy

Limited companies have to register with Companies House, and they share information about company accounts, their shareholders, names and addresses of directors, etc. It means that such financial records and personal details are available to anyone who can access them.

Gm Professional accountants have office located in Canary wharf London, Birmingham, Wimbledon and Ilford Essex.