(For those who want to get an answer to a question, but are not ready to dive deep into the topic)
No, you don’t formally need a company. Amazon allows you to register a seller as an “individual”. However, we strongly advise against doing business this way. By making things easier for yourself now, you risk negative consequences in the future: from problems with verification to higher taxes.
Below, we will take a closer look at what difficulties you may face when starting on Amazon without assistance and why registering a company is still the right decision.
You can’t refuse to register
(Who can be lied to)
The first thing that every entrepreneur does when entering Amazon is to register an account through Seller Central. This is a specialised account website through which you can track sales, manage balances, change prices, and actually conduct business.
At first glance, registration does not take much time. Everything is intuitive and simple, just like on any other website. But this is only the initial stage of collecting information that will be thoroughly checked later.
List of data and documents required to register a seller on Amazon
- email address (or Amazon customer account);
- telephone number;
- a bank card number that allows international transactions;
- proof of identity;
- tax information.
In addition, Amazon may ask for the most unexpected data: for example, paid electricity and water bills. Or bank statements for the current period.
It is important to understand that the platform has rather strict requirements for all documents and files:
- screenshots are not allowed, only photos taken on a mobile phone or high quality scans;
- raster image formats are not allowed (only standard formats: jpeg, jpg, etc.). No archives (especially .rar) or presentations (.pptx);
- file size should be less than 10 MB;
- no special characters or Cyrillic fonts in the titles.
And these are just the most obvious nuances that every second aspiring entrepreneur on Amazon stumbles over.
Important! The platform does not accept documents in Ukrainian, so you should have them translated and notarised beforehand.
And now, when the documents are accepted for review, the most difficult part begins, according to many, waiting for verification. Without this stage, you cannot start trading or even listing.
Verification can take 1.5-2 months. And even with this duration, it is not 100% win-win.
There are a lot of problems with registration and verification. People complain about unclear reasons for refusals, wasted time, and most importantly, that they cannot launch their business.
But isn’t it harder to register a company than an individual?
No, it is not. In fact, it will take no more time than registering an ordinary seller. At most, they will require additional documents confirming the legitimacy of doing business.
That’s if we’re talking about registering on Amazon. You can learn more about registering a company and the list of documents in this article.
Why is registering a company still the right decision?
Easy verification. Amazon encourages entrepreneurs registered as companies and gives them more credibility (but this is not public information). At the same time, individuals are subjected to a thorough and meticulous check.
A private entrepreneur may be repeatedly asked for a utility bill (proof of residence). Companies, on the other hand, are hardly bothered by such issues.
Reducing the tax burden. Most often, individuals are taxed on their income, while companies pay a percentage of their profits. This is extremely important as trade turnover increases.
In addition, an individual will have to pay VAT at the rate of the country of residence, which is on average 20% in the CIS countries.
Reduced additional costs. With a corporate account, you can benefit significantly by not having to pay the exchange rate difference twice, as is the case with Payoneer.
It will be much easier for you to conduct international financial transactions when paying your suppliers. You will not have to constantly involve intermediaries in such transactions.
Moreover, you can even save money on advertising services, as companies do not pay Google tax.
It is quite difficult to deal with all tax, legal, and business issues on your own. Therefore, we advise you not to waste your time and possibly money, but to get a free consultation right away.