Businesses around the world have been using Fulfillment By Amazon for years and buying products through their website.
That is until Amazon introduced Marketplace, where customers can outsource a certain task or process to another company. With this service, they get paid by sellers that borrow their services to make more sales. The other advantage of being a seller is you don’t have to worry about the fulfillment of your own products at all!
This article will go over how you can start your own business as a seller on Amazon’s marketplace so it doesn’t seem so hard remaining successful with this company has many benefits as well as drawbacks.
Firstly, you will need to register your company on Amazon.com as a marketplace seller. You can do this by going into the fulfillment services option under “seller central” and clicking on marketplace seller fulfillment by amazon (MFFA).
Once you’ve found this link, choose to get started and then sign up for their free account. You will then be required to fill out some details such as your company name, contact information, tax information, estimated yearly sales volume and if you have any employees or not.
Next up is choosing what type of business entity you are filing for once Amazon has confirmed your information is correct. There are four different types of business entities for you to choose from:
Single owner LLC: The advantage to this is that when one person owns your company, there is no need to file a name change. You can just make the change from business name to LLC on your state’s government website and keep using the same address.
If however you want multiple owners, it may be best for you to use a C-Corp because they have taxation advantages over an individual owner (see below).
As for filing the paperwork for this type of entity, I would recommend doing this with a lawyer who does not work with Amazon as it can end up costing a lot of money.
If you have employees, you will then have to fill out an additional form called a “W-9” which can be found on Amazon’s website.
C-Corp: If you are looking to accept investments or grants at a future point, this is the choice for you. Otherwise, I wouldn’t recommend it because of all the extra paperwork required and the taxation advantages don’t make up for it.
If you’re interested in this type of entity then I would suggest hiring a lawyer specializing in this type of work as it can turn out to be very complicated and expensive if you try to do this alone.
S-Corp: This is the choice for most people as it allows for unlimited shareholders and you can do a lot of business with this type of entity. You can even rely on the services of your own lawyer if you choose to leave Amazon to make more investments or grants.
With this kind of entity, the main disadvantage is that there are a lot of paperwork requirements. You will have to fill out a form called “c corp papers”, which is included in your annual filing cost (around $100). However, you can hire your own lawyer to handle all these extra things and it’s recommended that you do so.
If you have an investor and intend to make additional investments or grants at a later date, this can be much cheaper to do once you’ve been in business for some time as your lawyer will know the requirements in your area.
The annual cost for a C-Corp is around $300, which comes with two benefits:
The ability to accept investments and grants from investors at any point after your start-up period. The ability to make all kinds of investments and grants without having to pay income tax on them if the company goes public or gets acquired. Many people use this type of entity for these purposes.