- Daily, international sellers are launching new Amazon.com Seller Central accounts, aiming to grow their U.S. market presence. If you're considering establishing a U.S. LLC to sell on Amazon, look no further. We are the only U.S. specialists offering a one-stop solution for U.S. LLC formation, taxation, and Amazon tax interviews and verification solutions.
- Amazon is enforcing the INFORM ACT that took effect on June 27th, 2023. Verification is required for accounts with sales of $5K or 200 in the last 12 continuous months or 24 months. The INFORM ACT requires re-verification of the seller's account details. If you have yet to be able to verify your account details, NCP has services to help.
- In September 2021, Amazon started enforcing its terms of service (TOS) regarding product liability insurance for sellers. Sellers will receive notifications once they cross $10K a month in sales, and if you are in a country with a high-risk product, obtaining U.S. insurance may be your only option for compliance. Our U.S. LLCs come with complete steps for U.S. insurance requirements and options.
Amazon Seller Central Account Requirements:
Let’s first look at what Amazon.com requires before you create your Amazon account, and then we can look at some of the strategic factors to consider when you start a U.S. company for selling on Amazon.
Go to https://sell.amazon.com/ to set up your account. Most sellers will become professional sellers. Professional sellers have a monthly fee of $39.99 per month. If you plan to sell more than 40 units a month, a professional plan makes sense since an individual account charges $0.99/per item fee for each unit that sells (this is not the case with the professional seller account).
To complete your Amazon seller registration, you'll need the following:
- Your legal business name, address, and contact information.
- An email address
- Already selling online and need to determine their past sales tax liabilities
- An internationally chargeable credit card with a valid billing address (type carefully and make sure your card is activated; because if the card is not valid, Amazon will cancel your registration.
- A U.S.-based phone number where you may be reached during the registration process. Skype is a great option.
- Complete the tax interview. This is where most mistakes occur. A U.S. taxpayer will complete the W-9 form, and a foreign taxpayer will complete either the W-8BEN (foreign individual) or W-8BEN-E for a foreign entity. Learn more here
- An EIN is NOT required for a non-resident seller unless it is a foreign entity. Depending upon your LLC ownership structure, you will complete the correct W-8 form. If the U.S. LLC is going to be the legal entity on your Amazon account instead of you as an individual, Amazon may take up to 60 days to eight weeks to verify your EIN and account.
Trouble-Free Amazon Account Activation
Ensure all your information aligns perfectly, especially your business and bank account addresses. Amazon randomly initiates extra verifications, requesting a utility bill to confirm your address (which may cost more than your entity formation). Don’t risk delays or inactivation!
Why choose NCP’s U.S. LLC packages? Our packages include the utility bill service fee, giving you one less thing to worry about and planning to establish a new U.S. LLC for your Amazon business. Please consult with our experts first. Learn more here.
Think three steps ahead to avoid potential pitfalls. Navigating business in a foreign land can be tricky. Our services help you foresee and sidestep future hurdles that might affect your Amazon account, with a focus on ensuring your address aligns with U.S. business requirements.
Old-school requirements in a digital world, despite the digital age, key institutions like the IRS, banks, and trademark offices still communicate through snail mail. With NVinc, you’re always in the loop, ensuring you never miss essential notices that can impact your business.
U.S. Virtual Address Service
Unleash the power of a U.S. virtual address service that will revolutionize your Amazon business. Our expert team is here to scan every important piece of mail that comes your way, so you never miss a beat. Say goodbye to the fear of missing Amazon address verification notices, trademark applications, or IRS notifications.
Our company is like no other; we understand Amazon’s different verification levels, from the 6-digit code verification to asking for a utility bill. When set up correctly, our virtual address service can accommodate a utility bill for the individual on the Amazon Seller Account or an entity.
The best part is that our team knows the exact steps to take with each notice, providing you with peace of mind that is priceless to your business.
With our virtual address service, you’ll never have to worry about that again. Whether you’re selling on Shopify or crossing economic nexus thresholds in multiple states, our service will provide you with a huge benefit.
This includes your Shopify sales tax registrations and much more important mail you can’t afford to miss.
Trust us to keep your business running smoothly and ahead of the game.
Amazon Expansion Goals
Whether you are based in the U.S. or outside the U.S., it is important to take a step back and evaluate your U.S. expansion strategy with your business and brand. Your goal may be to expand your brand for acquisition, global brand development, or increase your overall profits.
Your strategy will impact whether you expand to the U.S. by selling through your foreign entity or forming a U.S. entity. There are many steps, components, and, of course, expansion costs involved. Most don’t understand the full picture, but we do.
Which Entity is Best & Why NCP
Maximize Your U.S. E-Commerce Business and Minimize Surprises with the Right Structure
The world of e-commerce is rapidly evolving, and it’s crucial to stay ahead of the game. Your goal should not be simply forming an LLC and obtaining an EIN. It’s about finding the proper structure to maximize your U.S. e-commerce business and minimize potential tax surprises, including sales tax (when required).
Selling on Amazon, Walmart, Shopify, or any other platform is a complex process, and each platform has unique rules and regulations. It’s important to understand your options before making any decisions.
You may sell on Amazon through a foreign entity, but remember, it’s the preferred option sometimes. In some cases, forming a U.S. entity is necessary, such as obtaining U.S. liability insurance or using Shopify payments. However, in most cases, a U.S. entity is not required.
Note: Can a single-member LLC disregarded for U.S. tax purposes be the legal entity on Amazon? There is a lot of confusion around this subject, and even tax pros suggest “tricking” the Amazon tax interview, which we do not recommend you do. There are several moving parts that you should evaluate. The challenge for non-residents is the consultation to determine if your LLC or beneficial owner is engaged in a U.S. trade or business and has effectively connected income. An LLC taxed as a corporation removes this conversation but also guarantees 21% U.S. taxes, which may or may not be your best approach. Your LLC business address verification is critical for Amazon.
Update: Online “banks,” in their terms and conditions, will want the signer to acknowledge that the account holder is a “U.S. taxpayer”. That is NOT a single-member LLC disregarded, so that complicates your U.S. expansion.
If you encounter any account issues, extra verification will trigger a utility bill with the same entity name and address to verify your account. U.S. residents can form an LLC taxed as an S corporation when profits are high enough, triggering a change in your tax interview.
Suppose you’re a dropshipper desiring a personal name on your Seller Central account and using the SM LLC DE for supplier purchases. In that case, we’re here to help you with alternative banking options only available when NCP forms your LLC. As a non-resident operating an Amazon account, you’ll complete a W-8BEN form.
Clarify These Two Key Aspects for Your U.S. Expansion
Ready to cash in on your Amazon brand’s success? It’s time to join the trend and expand your brand to reach its maximum value in just 2-4 years. With the help of specialized aggregators, you can sell your Amazon brand for the big payday you’ve been working towards.
Large firms in the acquisition space are eager to evaluate your business and profits, determining the best multiple for a successful sale. But be warned, due diligence is crucial when selling your e-commerce brand, and one key area that will be scrutinized is your sales tax compliance.
Don’t let sales tax compliance hold you back from realizing the full potential of your e-commerce brand. While Amazon handles sales tax for you, selling through your website or Shopify store adds an extra layer of complexity with the ever-changing economic nexus thresholds. Navigating the nuances of how some states combine marketplace and non-marketplace sales to determine these thresholds can be a daunting task.
That’s where we come in. We’re here to help you navigate the complex world of sales tax compliance and registrations. Don’t let the confusion and stress of this critical aspect hold you back from maximizing the value of your brand. With our expert support, you can rest assured that your business will be fully compliant, freeing you up to focus on what really matters – growing your brand and securing your financial future.
- Did you create a U.S. taxpayer?
- Did you create a permanent establishment?
- Is there a U.S. tax treaty with your home country?
- Do you want to retain profits in the U.S.?
- Which U.S. tax returns are required on the ownership of your U.S. entity?
- What state tax requirements will come into play?
- Which states require sales tax compliance even with marketplace nexus?
- What is the start date on your SS4 application with the IRS if you have already been selling in the U.S.?
- What are the taxation of dividends in your country?
- Do you need an EIN for the ownership entity?
- Will form 8832 also need to be filed?
- Will you violate tranfer-pricing rules?
- U.S. residents is an LLC taxed as an S corporation the best option?
Our team works with several CPAs and tax attorneys to help ensure you comply as you expand to the U.S. If you decide to create a U.S. taxpayer, we recommend that your accountant from your country is on the same page with the flow of profits and taxation responsibilities. U.S. residents will find that operating as a sole proprietorship will impact your personal credit and brand and is not the best way to operate, even if you are not profitable your first year.
LLC formation. In Wyoming, a limited liability company became available in the U.S. in 1977. In 1997, the IRS established default rules for taxing LLCs. Two members would be, by default, taxed as a partnership. By default, a single-member is disregarded, and the profits or losses will flow to the owners, but Amazon won’t allow you to change the legal entity with this entity. It would be best if you created a U.S. taxpayer.
The operating agreement must match the LLC members and taxation type when you form an LLC. For example, if you have an LLC taxed as a C corporation, an LLC taxed as a partnership is disregarded; those are two separate operating agreements.
Expanding to the U.S. has always been challenging with Amazon’s flexible payment options. But why settle for high fees when you can keep more profits? We recommend setting up a Payoneer or Wise account to transfer your earnings from Amazon to your home country effortlessly. You’ll save big on Amazon’s fees.
But wait, there’s more. If you’re selling on your website or Shopify in addition to Amazon, sales tax compliance becomes a crucial factor to consider. A fully functioning U.S. bank account with ACH capabilities is recommended for seamless integration with sales tax software companies. But what if you’re a non-resident company without a U.S. presence? No problem. We work with a trusted provider that offers wire transfer options for sales tax compliance without requiring a U.S. company.
Importing Goods to an Amazon Fulfillment Center
Many Amazon sellers manufacture their goods abroad. China is the most popular. Once your products are manufactured, and everything is approved for shipping, you will want to work with an experienced freight forwarder and customs broker to get your products to the U.S. and cleared through U.S. Customs, then arrange transport to an Amazon fulfillment center.
Amazon Brand Registry
When you set up your Amazon account, you will have your brand name and sold-by name. Your seller name is easy to change on your Amazon account. The brand name leads to the brand store page and is linked to registered and trademarked brands. The brand name does not match your entity name. We would recommend that you file a DBA with your registered brand name. You will want to go through a comprehensive trademark registration process. Most trademark services only check the federal trademark database but do not conduct a nationwide search.
After your brand name is trademarked, you can use your pending mark to get a full brand registry in about seven business days. Amazon brand register unlocks tools designed to help you build and protect your brand, creating a better customer experience. Any listing that includes your company’s brand can get immediate updates for your team.
Many trademark services will only check to see if your name is available by checking your name at the USPTO. Here is the challenge with that process.
The USPTO examining attorneys ONLY search their database of Federal trademarks. That’s about 2 million marks. That is just 12% of reality, which MAY affect legal use. They do NOT research State trademarks (1 million marks) or common law marks (13 million) with 1st use rights under common law. Additionally, the USPTO rejects 39% of all filings because of other mistakes, not just the likelihood of confusion refusals.
So, yes, the USPTO searches, but only some of the research is needed to determine if your given name, slogan, or logo is, in fact, legally exact. This is why the USPTO publishes marks for the opposition and why they allow people/companies a chance to cancel a mark up to 6 years later.
This is why they recommend a true I.P. comprehensive search BEFORE filing, before use anywhere – because others MAY have prior rights in SOUND, APPEARANCE, or MEANING. In the end, there is more to a trademark registration than only filing with the USPTO; similarly, there is more to filing an LLC than filing the articles with the secretary of state.
Most drop shippers need a resale certificate to present to their U.S. suppliers. Such a certificate is also called a seller’s permit and allows you to buy products without paying any taxes.
Sometimes, the supplier will request an exemption certificate from the seller. Typically, this is when the supplier has a nexus in your customer’s state.
In most states, you can use your certificate to make tax-free purchases for further reselling, while you have a valid certificate from any state.
But you won’t be able to use an out-of-state resale certificate in California, Florida, Alabama, Illinois, Maryland, Hawaii, Louisiana, Massachusetts, and Washington (including Washington D.C.).
NCP’s U.S. LLC packages include an exemption or resale certificate. Are you ready to launch your complete U.S. LLC? Please feel free to book a call with our team at this link.