Running a small business of any sort can be incredibly rewarding. There's a reason why small business owners are among the most satisfied workers in the country, after all. That doesn't mean this kind of work comes without challenges, however.
As an Amazon FBA (Fulfilment by Amazon) seller, you are responsible for understanding and paying various fees and taxes associated with your business.
While Amazon provides a convenient platform for selling your products, it’s important to familiarise yourself with the costs involved to ensure you’re making a profit. You'll also need to stay compliant with regulations to stay in business!
What do you need to know about the fees and taxes for an Amazon FBA seller? How can you ensure you're running your business as you should? Read on and we'll walk you through the basics.
If you're an Amazon seller, the first fees to be aware of are the fees associated with using Amazon’s FBA service.
FBA fees include storage fees, fulfilment fees, and optional fees. Storage fees are charged based on the amount of space your products take up in Amazon’s warehouses, and they vary based on the time of year and the size of your products.
Fulfillment fees are charged each time a product is shipped to a customer, and they vary based on the size and weight of the product. Optional fees include fees for multi-channel fulfilment, removal of inventory, and other services.
To ensure you’re optimising your FBA fees, it’s important to keep an eye on your inventory levels and adjust them as needed to avoid long-term storage fees. You can also use tools like Amazon’s FBA Revenue Calculator to estimate your potential profits and costs.
As an Amazon FBA seller, you are responsible for paying income taxes on your profits.
This means that you must report your earnings to the IRS and pay taxes on them each year. Specific tax laws and regulations vary based on your location, so it’s important to consult with a tax professional or use tax software to ensure you’re meeting your obligations.
Managing your income taxes is one of the most important things you can do as an online seller. Failure to pay these taxes, or pay them properly, could result in fines that could threaten the life of your business.
Some things to keep in mind include:
- You may need to collect and remit sales tax for orders shipped to customers in certain states.
- You can deduct business expenses from your taxable income, including expenses related to your FBA fees and other costs associated with your business.
- You may need to pay estimated taxes quarterly throughout the year, depending on your income level and other factors.
Customs Duties and Import Taxes
When selling products internationally as an Amazon FBA seller, you may encounter customs duties and import taxes. These fees are charged by the country where the products are being shipped.
They can add up quickly if you're not prepared.
Customs duties are taxes that the importing country charges on goods entering the country. The amount of duty charged is usually based on the value of the product, as well as the product category and country of origin.
The importing country's customs department will typically calculate the duty owed based on the information provided on the customs declaration form.
Import taxes are additional taxes charged on imported goods. Like customs duties, the amount of tax charged is usually based on the value of the product, as well as the product category and country of origin.
Import taxes are generally charged by the importing country's tax department. Depending on where you're getting products from, or sending products to, the amount you'll need to pay will vary.
It's important to do your research on import taxes ahead of time so you know what to expect.
Keep in Mind the Differences By Country
It's important to note that customs duties and import taxes can be complex and vary widely by country.
Some countries have free trade agreements with certain countries that lower or eliminate the duties and taxes charged on imports, while others have higher rates for certain products or categories.
Additionally, some countries may have restrictions on certain types of products or may require additional paperwork or inspections before allowing products to enter the country.
To ensure you're prepared for customs duties and import taxes, it's important to research the regulations and requirements for each country where you plan to sell your products.
You may also want to consider working with a customs broker or freight forwarder to help navigate the process and ensure compliance.
By taking the time to understand and plan for these fees, you can avoid unexpected costs and ensure a smoother international selling experience as an Amazon FBA seller.
What to Know as an Amazon FBA Seller
As an Amazon FBA seller, there are a variety of fees and taxes you should be aware of. Educating yourself is key to ensuring you’re running a profitable and compliant business.
Getting familiar with the above information can allow you to stay on top of your financial obligations and avoid unexpected costs. It’s always a good idea to consult a professional if you have questions or concerns about your specific situation.
Need more help handling accounting for your small business? Have more questions about these taxes and fees? Give us a call anytime for more assistance.