My stock is all going to arrive in the next few weeks. (Big cheer!) In the meantime, I’m getting myself organised while I have some ‘downtime’. I’m doing all kind of things to A, plan for my product launches (future blog post) and B, get my admin in order.
This post is all about the things you need to think about, and do, when you’re just starting out as an Amazon FBA seller (or any new business, in fact) to save time and hassle later on.
So, let’s think about…
Name and domain
If you just want to sell products on Amazon (or eBay), you don’t necessarily need to give this much thought. If however, you want to build a brand, you need to decide on your name (and logo and all the other elements that go along with that). You can see a (fairly old) post about this here.
If you want to build a brand, then you’ll need to have a website, which means buying a domain and hosting. This article explains this in more detail. Bear in mind that if you are an Amazon seller, and you want to apply for Brand Registry, you will need a website to qualify.
I got both my domain and hosting from GoDaddy (I’m not an affiliate, and this is a regular link). There are, of course, others out there.
Bear in mind that this may end up impacting on your chosen name, if the domain isn’t available, or is super expensive. If you have your heart set on a brand name, you should check you can have the domain for it before doing anything else.
Building your website
If you need a website, as well as the domain, and somewhere to host it, you will also need to build it. You might decide to go down the route of hiring a developer, but there are also a few options for doing it yourself.
I’ve used Shopify, and find it pretty intuitive, but I can’t vouch for the rest. These are just to give you some initial options to look at.
Are you a sole trader or a company?
This can be a tricky one and there are a few things to consider.
Trading as a Company
If you want to trade as a company, firstly you need to register at Companies House. There are plenty of businesses out there who can help you do this – but it’s actually really simple to do yourself. You can follow this link, it costs £12 (payable by card or Paypal) and you can even register for your Corporation Tax while you’re at it. It should take you 20 minutes or less.
Corporation Tax is something your company will need to pay, at a rate of 19%. When you register, you provide the date from which your company will start trading. HMRC will then give you the dates for your first accounting period. At the end of this time, you (or your accountant would probably be best) will need to file your company tax return. You then have another 12 months before your taxes are due to be paid.
You will also need to complete a self assessment tax return every tax year. (See below.)
Trading as a Sole Trader
As a sole trader, you don’t need to pay Corporation Tax – but you do need to register and send a self-assessment tax return and pay the tax on your taxable income. (Apologies for saying tax so much in one sentence!) The finances are a bit simpler, but you do need to record your incomings and outgoings and keep hold of all invoices, receipts, etc. It is definitely feasible to do this yourself. Your tax year runs from 6 April and you have to complete your self assessment by 31 January of the following year.
Which is best?
That’s down to you to decide. The main difference is that if you set up a company you become a Director and that offers you some protection should anyone take legal action against you – as the action will be against your company, rather than you. It protects your home and other assets, as it is a separate entity to yourself. As a sole trader, you are your business. So if it fails, or you owe a lot of money – it’s YOU who owes the money and that could put your home, etc, at risk.
It’s a lot to think about. Of course, you can always start out as a sole trader and then decide to register as a company further down the line. This is what I did, as I wanted to give it a while to see if things worked out.
This decision impacts on a few more things…
If you want to sell on Amazon…
You need to let them know what your legal entity is. (Whether you are a sole trader or private company.) Whichever you choose, you need to be able to provide Amazon with the documents to support this, so you either need to register your company or register for self assessment before you sign up with Amazon.
Banking
Whether you’re a company or sole trader, also impacts on your banking. As a sole trader, it’s fine to use your own bank account (although you can set up a separate account if you wish). If you’re a business, you need a business account.
You can use a site such as MoneySuperMarket.com to compare the best current deals. Most will offer low (or no) monthly fees and some might have other features such as an overdraft, or the ability to bank via an app.
Keeping track of your finances
You do need to manage your finances – whether you hire an accountant, go it alone, or do a combination of the two.
I managed my own finances when I was a sole trader, including submitting my Self Assessment. Now that Tiny Chipmunk is a registered company, I use an online accounting solution and intend to use an accountant to file my company tax return at the end of my first trading year.
A few of the most popular online/cloud-based systems are:
Again, these are all just suggestions that you can look into yourself and see which might be right for you.
Finally..
Insurance
However you’re set up, I strongly recommend taking out insurance. Policies aren’t as expensive as you’d think
I only found two providers that offered protection that seemed suitable for an online retail business:
Both cover you for public liability and product liability. This basically means you’re covered for third-party damage and injury caused by you or your business and damage to people and property caused by the products you sell, and that you’re liable for.
Both also offered the option of adding additional insurance for your stock and employer’s liability (if you have any staff). Amazon do state that they will reimburse you for missing or damaged stock. I can’t find a link to a page that isn’t inside the password-protected areas of Seller Central, but here’s the page:
So there you have it. What do you think, have I missed out anything crucial?
P.S. There are plenty of links in this post – but none are affiliate links.