- eCommerce

Top 9 Things You Need to Do Before Selling on Amazon FBA 

Selling on Amazon can be very exciting. After all, more than half of all eCommerce transactions happen on Amazon! It’s a massive market. Amazon has really changed the face of retail and for Amazon Sellers, it’s become a legitimate way to earn anything from a side income to a multi-million dollar enterprise.

With any business, there are many steps you need to take to prepare, like registering your business name, opening a bank account, choosing a business entity and much more.  With a little planning, you can be on your way to selling on Amazon. Here are 9 things you need to do before you begin selling on Amazon FBA.

Pick a Business Entity

What type of business entity do you want to operate under? Before you get started you will need to decide what type of business entity you are. Sole Proprietor, Single Member LLC, S Corp? There are many others too. However, for most people just starting out, the easiest one to start with is “Sole Proprietor”. All you need is an EIN number or your Social Security Number. Keep in mind, this is just general advice. It’s always wise to speak with a local business Attorney for guidance.

Pick a Business Name

If you are going to be in business, you are going to need a name! Believe it or not, this is sometimes one of the hardest parts of starting a business. It does sound kind of funny, but there are so many businesses in existence, there is a good possibility your first choice of names is already taken!

The easiest thing to do is to use a DBA (doing business as). This is usually set up with your state or country clerk’s office. You will first be asked to do a search in their database to make sure someone is not already using that name. It’s also wise to do a trademark search to make sure no one has trademarked the name. You can get started doing that at the USPTO website.

Register for an EIN Number

Once you have a name, you will need to register for an EIN number. Also known as a Federal Identification Number. This is very easy to do. Just visit the IRS.gov website and follow the instructions. It sounds complicated but can be completed in just a few steps.

Register to Collect Sales Tax

Very important! It’s a major headache if you forget this step. You need to collect sales tax on all sales to customers in the state you live in. While you are registering your DBA with your county clerk’s office, visit your state’s department of revenue website and register to collect sales tax in your state. But be careful, it is NOT ok to collect sales tax until you have registered to collect it. You will at the very least have to tell Amazon that you will be collecting sales tax on all orders shipped from Amazon to customers in your state. When you set up your Amazon Seller Account, you will be asked to set up your tax collection preferences.

Open a bank account

Your business does not necessarily need an official name (although it’s a good idea) to open a business bank account. It can be just under your name, but again if you are serious about being in business you should select and register a business name. You will want to open a “business checking account”

Business Credit Card

While you are setting up your bank account, most banks will offer you a business credit card with at least an introductory line of credit. It’s a good idea to take the credit card. This can help with business cash flow and it starts to generate a credit history for your business. At the very least you will need a credit or debit card to pay for the Amazon fees and to open an Amazon Seller Account.

Business Model

If you have gotten to this stage you might already know what your business model is, but if not, you will need to decide what kind of seller you will be. Whitelabel, Reseller, Retail Arbitrage etc. If you are unsure, you can use tools like SupplySpy.com to help you find products to sell and further decide what the best set up is for your personal situation.

Check the product category

In your process of investigating the best business model for you, make sure to check with Amazon to see if the category you want to sell in, needs approval or not. For example, home and garden, anyone can sell in. But fresh groceries have a strict approval process. Check if the category you want to sell it is restricted. More information here

Register for an Amazon Seller Account

Once you have everything above, you will need to open an Amazon Seller account. You have two choices. Individual or Professional. An individual is $.99 per sale plus fees. Professional is $39.95 a month plus fees. For most sellers, it’s a better deal to just get the professional level. But you can decide for yourself.

 

As you can see, there are many important steps you need to take before opening an Amazon Seller Account. It’s best to take your time and get everything in order before you begin. Being prepared will make the whole process easier.  Good luck!


Author: Jon Carmen – Digital Media Consultant. 20 years of consulting and building companies in the digital economy. Digital Media, Adtech, Mobile, eCommerce.

Top 9 Things You Need to Do Before Selling on Amazon FBA

About eCommerce FAQs

Read All Posts By eCommerce FAQs

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.