Getting started with selling on Amazon can be a daunting task. For instance, many potential sellers often ask - what do I need to signup for an Amazon account. Amazon requires the following information to get started:

• Your business name, address, and contact information
• An internationally-chargeable credit card with a valid billing address
• A phone number where you can be reached during this registration process
• Your tax identity information

There are two types of business licenses that you should consider when starting to sell on Amazon - Legal Entity Registration and Sales Tax Licenses.

1. Registering as a Legal Entity

Most Amazon sellers start out as sole as sole proprietors. Once their business starts taking off most sellers will incorporate their businesses in states that are affordable to incorporate (e.g., Delaware). Filing as a corporation or Limited Liability Corporation can offer liability and tax advantages, so we recommend speaking with a tax and legal professional if you are interested.

In addition to considering registration as an LLC or corporation, you are required to pay sales taxes in states where you have a nexus.

2. Sales Tax Licenses

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Individuals who routinely make retail sales through online marketplaces or auctions are legally considered as businesspeople and are obliged to register with their respective Department of Revenue and collect retail sales tax on sales to their customers.

You are required to register for sales tax licenses on all the states that you’ve got nexus in. Go to the Department of Revenue of each state to obtain the resale licenses you need.

There are a number of states that will only give out sales tax licenses to entities, and not individuals. As such, you would be required to register as a corporation or equivalent. To do this, you need to have your DBA name and select your business structure. Sole proprietor business structure is the usual model selected since it’s the least expensive and the simplest among all. Eventually,

Amazon, like eBay, doesn’t really ask all of its users to present a business license. It’s usually the state that regulates the matter. And when the law calls for it, Amazon can just be the one to collect the sales tax for you if you set it that way. However, even if you don’t sell routinely but reach a couple of thousand dollars in a total sale, regulatory entities might interfere. For example, if you reach around 3000$-5000$ in total sales, the need for PayPal Business Verification might pop up.

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So . . .

At the end of the day, things can be slightly or majorly different from place to place. Th scope and requirements could depend on where you are located, where your customers live, and what the laws in those places are. The best step is to check with your chamber of commerce or local government to know the requirements for the type of sales that you want to proceed with. The basic flow is just to register on FBA, then work on your home state or visit your chamber of commerce, and then work on the rest of the states as you complete the initial steps. The process might sound daunting, but once you complete this phase and persistently kick off your online trade, you’ll surely enjoy the full reap.