Individual to Business - What NOT To Do?
Hi guys,
I’ve seen far too many incidents of people rushing the individual to FBA process and coming across problems.
With all you guys’ experience, what are the step by step actions to take/things to prepare in order to make the process as smooth as possible?
Some context and questions:
- I am currently under an individual account
- I want to do Amazon FBA Wholesaling
- I am new to it - just spent months researching this world but no first hand experience
- I am neither a registered Sole Trader nor Company
- I have heard registering as a sole trader is less hassle but registering as a company can find you better wholesaler relationships - should I register as an LLC or Sole Trader and why?
- Generally, whats the most sensible way of going forward to learn and grow and be somewhat profitable?
Thanks guys,
Stallion March
40 replies
Seller_7VbclcPFFRTnc
Individual to FBA is a bit of a misconception
To buy and sell goods on amazon for a profit by fba or fbm, you need to be registered as a business seller
The HMRC website has some great info on sole traders vs Ltd companies (LLC is american and presumably recommended by you tube gurus ?!)
Selling on Amazon is no different to starting any other business.
You need some capital (that amount can vary) , a business plan and ideally a chat with an accountant about your own personal circumstances to decide if a ST or Ltd company is the best route for you - both have pros and cons
Seller_esvgLzKXw2YAl
This really is a misnomer. There is literally no reason why you would get a better wholesaler relationship, by being a ltd company.
I think the only time that this “might” apply, would be when dealing with extremely large manufacturers.
As a general rule of thumb, a sole trader is the way to go.
It is cheaper, far more straightforward and unless you are earning over about 50k per year (not turnover, profit), then it is generally not worth it.
A ltd company, gives limited liability, but most of the time, this really doesn’t matter. Especially when it comes to taking a loan out.
It is more expensive with accountancy fees etc and there are more legalities involved with it.
Speak to an accountant before you do anything else. Decide on how you want to setup your business first. Then you will need to register with Amazon as the business entity you decide on. It can take days to months to get through this process. Taking longer as a ltd company.
You do not need a lot of capital to start out. You just need to research properly what you are buying and reinvest the profits. Ensure that you calculate fees etc properly.
Understand the T&C’s for Amazon.
And avoid retail arbitrage when starting out.
Seller_8V8RSCu29UeAD
I also have 1 more question if that’s ok:
“Your account information is under validation and your have limited access to Amazon selling services”
Do you wait till this is cleared then begin the process of becoming a business account as a sole trader and go through the process anyway? Is it wiser to just wait to prevent further problems?
thanks
Seller_r1BWHFE9Q49m3
Welcome!
Assuming you’re based in the UK then I think many/most council areas have free resources and educational courses for setting up your own business. So doing an online search that sort of thing in your area might be a great place to start, especially if you’re still choosing between sole trader or Ltd.
HMRC website is surprisingly helpful, too. Here is their page on setting up a business: https://www.gov.uk/browse/business/setting-up
…and they’ve literally got a step-by-step guide to setting up as a sole trader here: https://www.gov.uk/set-up-self-employed
When you do get started, I would suggest not putting all of your eggs in one basket - i.e. use Amazon as just one sales outlet, rather than relying on it for most/all of your income.
For me (sole trader, in the Amazon Handmade marketplace) it’s definitely been worth building up a seller account with Amazon, even though about twice a year I hit a stupid/annoying/frustrating/scary obstacle that Amazon’s environment throws in my way. So from those experiences, in answer to your question about what NOT to do when signing up as a business, I can say:
If you choose to join as a sole trader, it looks like you should put your own name in the “Legal Business Name” box, rather than your business name! Also, make sure that the name in that box exactly matches whatever details HMRC send to you when you register your business with them (i.e. if your name is John Charles Smith but HMRC’s letter is addressed to “John C. Smith”, then it seems like you are better off entering “John C. Smith” in that box). Definitely double-check with others about that though - I’ve only been doing this for about 3 years so there are other sellers faaaaaar more experienced than me who can give you better advice. However, so far you are doing a great job by looking before you leap, and asking great questions. Once you get started with actually filling in the forms on the system, keep using this forum to ask any more questions if you get stuck 
Good luck!
Seller_DJwE1RXTpAHPh
have you ever sold anything for profit online?
Seller_L2WLWf8N814M4
Hello @Stallion_March,
Welcome to sell on Amazon!
I suggest also to have a look on Seller University where you can find useful information, and if you have any other questions, you can search also on the Forum topics.
I want to thank all the sellers for they contribution.
@NEil great milestone, 8 years!
Regards.
Nickolas
