- As an Amazon Agency Partner, we’re always up to date with the latest Amazon rules. The INFORM ACT (June 27th, 2023) now requires re-verification for accounts with over $5K in sales or 200 transactions. If you don’t meet these requirements, your account could be flagged. Same goes for Amazon’s product liability insurance rule—sellers crossing $10K in monthly sales, especially with high-risk products, need U.S. insurance to stay compliant.
- If you’re stuck verifying your account or meeting these requirements, we can help. We recommend starting with a quick call with our team. As part of our e-commerce expansion packages, we review your business formation and Amazon documents to make sure everything is in line. In some cases, we can even directly introduce you to Amazon to streamline the process. The goal? To get your account fully verified without the hassle of extra utility bills or needing third-party specialists.
- Selling more than $10K a month? Amazon’s strict on requiring U.S. product liability insurance, especially for high-risk products. If you’re based outside the U.S., this can be tricky, but it’s part of our package. We’ll walk you through securing the right insurance and handling other key compliance steps to keep your business compliant and moving forward.
Before Establishing Your Seller Central Account:
Before jumping into creating your Amazon account, it’s crucial to consider how your entity type—whether it’s a foreign entity or a U.S. entity—will affect your registration process, tax interview, and any additional verification Amazon might require.
Entity Type Impacts Everything:
If you’re using a foreign entity, be prepared for extra steps in the tax interview and possible delays in verification. Amazon will likely require additional documents, like a utility bill or proof of the entity’s address, which can slow down your account approval.
Choosing a U.S. entity simplifies things in many cases, but it comes with its own set of tax responsibilities. A U.S. LLC, for example, can be taxed in different ways—disregarded entity, partnership, or corporation—each affecting how Amazon handles your tax interview and registration. And keep in mind, if your address doesn’t match or align with your entity, Amazon may ask for additional verification.
Amazon Tax Interview Points
- What is your tax classification? Are you operating through a foreign entity or a U.S. entity (and what type)?
- Are you a U.S. citizen, U.S. permanent resident (green card holder) or other U.S. resident alien?
- If you form a U.S. LLC, how should it be taxed?
- What is your mailing address in each situation?
- When is an extra level of verification required based upon your tax interview?
- Will you complete a W-8BEN, W-8BEN-E, or W-9?
- Why is your verification not approved and now you need to provide a utility bill?
Amazon Tax Interview Questions
Hassle-Free Amazon Account Activation
To avoid delays or account inactivation, make sure your business and bank account addresses are perfectly aligned. Amazon may randomly request extra verification, like a utility bill, which could cost more than your entire entity setup. Don’t let this slow you down!
Why choose NCP’s U.S. e-commerce expansion packages? We provide a complete Amazon setup guide to help you avoid these common pitfalls. Our experts ensure that your business is fully prepared—no guesswork, no headaches. Whether it’s verifying your address, aligning with U.S. business requirements, or staying ahead of compliance issues, we’ve got you covered.
Even in today’s digital world, key institutions like the IRS and banks still rely on physical mail. With NCP, you’ll never miss an important notice. We make sure you stay informed and compliant at all times.
Address Selection Importance
When setting up your Amazon Seller Central account, your business address is critical in the verification process and can directly impact how smoothly your account is approved. If discrepancies arise between your business address, official registered address, or mailing address, Amazon may request additional verification, such as a utility bill.
Additionally, the address you choose can affect your ability to open a U.S. bank account, so careful selection is vital.
NCP’s U.S. expansion packages help ensure that your business address meets Amazon’s stringent verification requirements and aligns with your banking needs so you can avoid potential delays.
Amazon Expansion Goals
Whether you’re U.S.-based or an international seller, stepping back and evaluating your U.S. expansion strategy is crucial. Are you aiming for acquisition, global brand development, or simply looking to boost profits? Your goals will shape the best path forward.
The key decision: Should you expand by selling through your foreign entity or set up a U.S. entity? Each option comes with its steps, costs, and compliance requirements. Navigating this process can be overwhelming, but that’s where we come in.
We understand the full picture and will guide you through every decision to ensure your smooth and successful expansion.
Which Entity is Best & Why
The e-commerce world is evolving fast, and staying ahead means more than just forming an LLC and getting an EIN. It’s about choosing the right structure to optimize your U.S. e-commerce business and minimize surprises, including sales tax obligations.
Selling on platforms like Amazon, Walmart, and Shopify is complex, each with its own rules. Sometimes, a foreign entity works well, but in other cases, a U.S. entity may be necessary—especially if you need U.S. liability insurance or want to use services like Shopify Payments.
Key Considerations for Non-Residents:
There’s confusion around whether a single-member LLC disregarded for tax purposes can be Amazon’s legal entity. Some suggest manipulating the Amazon tax interview, but we don’t recommend that. The structure of your LLC can affect everything, from your tax obligations to Amazon’s verification requirements.
If your LLC is taxed as a C-corporation, you’ll face a flat 21% tax rate, but depending on your business goals, this may not be your best option. Understanding whether your entity creates effectively connected income with the U.S. is critical.
Beware of online “banks” that require you to declare yourself a “U.S. taxpayer.” This complicates things if you’re using a disregarded entity for tax purposes.
U.S. Residents and LLC Taxation:
U.S. residents may choose to form a single-member LLC disregarded and later file form 2553 to elect to be taxed as an S-corporation once profits reach a certain level. This will trigger adjustments to your Amazon tax interview and save you on self-employment taxes.
Dropshipping & Alternative Banking Options:
Dropshippers often prefer to use their personal names on Amazon accounts while using an SM LLC for supplier purchases. We can guide you through alternative banking options tailored to this structure.
Why Us? Speed, Efficiency, and Expertise
Our U.S. E-Commerce Expansion Packages cover everything from entity formation to Amazon account verification, ensuring your business is set up correctly and efficiently from day one. We handle the details so you can focus on growing your business without worrying about compliance or delays.
Choose our support to avoid common pitfalls and start selling with confidence. Don’t leave your U.S. expansion to chance—make informed decisions that set you up for long-term success.
Start Right, Start with NCP!
Clarify These Two Key Aspects for Your U.S. Expansion
1. Your end goal
Are you looking to grow your Amazon brand for a potential acquisition or long-term success? Now is the time to strategically position your business to maximize its value over the next few years. Expanding into the U.S. can help boost your brand’s growth and increase its appeal for acquisition.
Potential buyers will evaluate your business for profitability, scalability, and how well it’s positioned for future growth. Ensuring your business structure and compliance are aligned from the start is key to achieving that big exit or long-term growth.
We’re here to help you navigate this journey. Our expert team will guide you through every step of your U.S. expansion, ensuring your brand is ready for the next phase—whether that’s being acquired or scaling to new heights. With our support, you can focus on growing your brand and achieving your financial goals without unnecessary hurdles.
2. U.S. Tax Strategy
- Did you create a U.S. taxpayer?
- Did your foreign company 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 when you combine non-marketplace sales?
- If you have already been selling in the U.S., what is the start date on your SS4 application with the IRS?
- What is the taxation of dividends in your country?
- Do you need an EIN for the ownership entity?
- Will Form 8832 also need to be filed?
- The level of U.S. address service required.
- U.S. residents, is an LLC taxed as an S corporation the best option?
Our team collaborates with experienced CPAs and tax attorneys to ensure you’re fully compliant as you expand into the U.S. When establishing a U.S. LLC as part of our expansion packages, it’s essential that your accountant in your home country is on the same page regarding the flow of profits and tax responsibilities.
For U.S. residents, operating as a sole proprietorship can negatively impact your personal credit and brand reputation—it’s not the best option, even if you’re not yet profitable.
Entity Options
The limited liability company (LLC) structure was introduced in Wyoming in 1977, offering flexibility and protection for business owners. In 1997, the IRS set default tax rules for LLCs:
Multi-member LLCs are automatically taxed as partnerships.
Single-member LLCs are considered disregarded entities, meaning profits or losses flow directly to the owner for tax purposes.
However, with a single-member LLC, Amazon won’t allow you to change the legal entity linked to your seller account easily. To fully comply, you’ll need to establish a U.S. taxpayer entity.
When forming your LLC, your operating agreement must align with both the number of members and the selected tax structure. For example, an LLC taxed as a C corporation operates under different rules than one taxed as a partnership. It’s essential to ensure your operating agreement matches the chosen tax setup to avoid compliance issues.
U.S. Banking
Expanding into the U.S. requires navigating Amazon’s payment options, but it doesn’t have to be costly. For non-resident sellers, setting up a Payoneer or Wise account offers a simple way to transfer your earnings back to your home country efficiently and at lower fees. This helps you keep more of your profits without the hassle of traditional banking.
If you’re also selling on platforms like Shopify or your own website, you’ll likely need a fully functioning U.S. bank account with ACH capabilities. This setup is important for seamless integration with payment gateways and sales tax software.
But what if you’re a non-resident company without a U.S. presence? No problem. We work with trusted providers that offer wire transfer options, so you can handle these payments without needing a U.S. company or a traditional U.S. bank account.
Amazon FBA: Creating Physical Nexus and U.S.-Sourced Income
Using Amazon FBA to fulfill your orders can significantly streamline your operations, but it also has important tax implications. You may create physical nexus in multiple locations by storing inventory in Amazon’s fulfillment centers across various states. This means your business now has a physical presence in the U.S., which can generate U.S.-sourced income.
This is a major step toward evaluating whether your business could be considered to have a U.S. Trade or Business (USTOB) and Effectively Connected Income (ECI). If your activities meet these criteria, you may be subject to U.S. federal and state taxes on your earnings.
For non-resident sellers, this is a critical factor to understand before expanding into the U.S. Our team can help assess your situation, ensuring that you remain compliant with U.S. tax laws and avoid unexpected liabilities down the road. If U.S. taxes are owed, we’ll guide you through the necessary steps to address your tax obligations properly.
Amazon Brand Registry
When you set up your Amazon account, you’ll need a brand name and a sold-by name. While the seller name can be easily changed, your brand name is linked to your brand store page and must be registered and trademarked. Remember that your brand name doesn’t have to match your entity name. In many cases, filing a DBA (Doing Business As) with your registered brand name is smart.
Trademark registration goes beyond simply filing with the U.S. Patent and Trademark Office (USPTO). Many services only check the federal trademark database, which covers just a fraction of what’s out there. Most don’t include searches of state trademarks or common law marks, which could pose legal risks if someone else has prior rights.
Once your brand name is trademarked, you can use your pending mark to secure Amazon Brand Registry within about seven business days. This unlocks powerful tools that protect your brand and enhance customer experience by allowing immediate updates to your listings.
While our U.S. e-commerce expansion packages don’t include full trademark support, we recommend the best trademark service providers who can handle comprehensive searches and registrations. This ensures that your brand is legally protected at the federal level and across states and common law jurisdictions. Conducting a true IP search to avoid costly mistakes and protect your brand’s future growth on Amazon is crucial.
Exemption Certificates
If you’re a dropshipper, having an exemption certificate (or resale certificate) is crucial when working with U.S. suppliers. This certificate allows you to purchase products without paying sales tax, as long as the items are for resale. Without a resale certificate, suppliers will charge you sales tax, which can quickly add up and eat into your margins.
Each state has its own rules regarding exemption certificates, and some states won’t accept out-of-state certificates. This means you need to understand the specific requirements in every state where your suppliers are located, especially if you’re sourcing from multiple states.
Our U.S. e-commerce expansion packages include support in obtaining the necessary exemption certificates, helping you stay compliant with U.S. tax laws while minimizing costs. With the right certificate in place, you can present it to your U.S. suppliers and avoid paying unnecessary sales tax on your inventory purchases.
