Table of Contents
1. Introduction
2. Selling on Amazon as a Canadian
– Choosing between Amazon US and Amazon Canada
– Storing inventory and shipping requirements
3. Selecting a Selling Plan
– Individual account vs. Professional account
– Cost considerations and benefits
4. Business Structure: Sole Proprietorship vs. Corporation
– Setting up a corporation or LLC
– Pros and cons of each option
5. Bank Accounts for Amazon Sellers
– Using a Canadian bank account
– Opening a US-based bank account
6. Requirements to Sell on Amazon
– Chargeable credit card, bank account, and ID
– Tax information and verification process
7. Income Tax and Sales Tax
– Paying income taxes to the CRA
– Understanding sales tax in Canada and the US
8. Sales Tax Nexus in the US
– Physical Nexus vs. Economic Nexus
– Obtaining a sales tax permit and collecting taxes
9. Conclusion and Next Steps
– Further resources and recommended courses
**Selling on Amazon as a Canadian**
Are you a Canadian looking to sell your products on Amazon? In this article, we will guide you through the process of selling on Amazon as a Canadian seller. We’ll cover important topics such as choosing between Amazon US and Amazon Canada, storing inventory, selecting a selling plan, business structure considerations, bank accounts, requirements, income tax, sales tax, and more. By the end of this article, you’ll have a clear understanding of how to navigate the Amazon marketplace and start your successful selling journey.
**1. Introduction**
Selling on Amazon has become a lucrative opportunity for many entrepreneurs, and as a Canadian, you have the advantage of being able to sell on all Amazon marketplaces worldwide. However, it’s essential to understand the nuances and considerations specific to Canadian sellers. In this article, we’ll provide you with valuable insights and tips to help you make informed decisions and maximize your success on Amazon.
**2. Selling on Amazon as a Canadian**
**Choosing between Amazon US and Amazon Canada**
When deciding where to sell your products, you’ll likely consider Amazon US and Amazon Canada. While both marketplaces have their merits, we highly recommend starting with Amazon US. The US marketplace has a significantly larger population, offering greater sales potential. However, keep in mind that increased sales also mean increased competition. As a smart Amazon seller, you can begin selling on Amazon US and expand to other marketplaces, such as Canada or Europe, once your business becomes profitable.
**Storing Inventory and Shipping Requirements**
A common misconception among new sellers is that they can store inventory in Canadian fulfillment centers and sell in the US or Mexico. However, this is not the case. If you want to sell in the US, you must ship your inventory to US fulfillment centers. Similarly, if you want to sell in Canada, you need to ship your inventory to Canadian fulfillment centers. Understanding these shipping requirements is crucial for efficient inventory management and order fulfillment.
**3. Selecting a Selling Plan**
**Individual Account vs. Professional Account**
Amazon offers two selling plans: the individual account and the professional account. If you anticipate selling fewer than 40 units per month, the individual account is suitable for you. It costs $1 per item, along with additional fees. However, if you’re serious about your Amazon FBA business and expect to sell more than 40 units per month, we recommend the professional account. It costs $40 per month in the US, but here’s a hack for Canadian sellers: you can sign up for the professional plan through Amazon Canada, saving you 25 Canadian dollars every month.
**4. Business Structure: Sole Proprietorship vs. Corporation**
**Setting up a Corporation or LLC**
As a Canadian seller, you might wonder if you need to set up a corporation or LLC to sell on Amazon US. The answer is no, it’s not a requirement. While there are benefits to setting up a corporation or LLC, such as limited liability and potential tax advantages, it’s unnecessary for most beginners. Setting up and maintaining a corporation can be costly, involving accounting, bookkeeping, and tax obligations. You can start selling as a sole proprietor using your SIN number and incorporate your business later if it proves profitable.
**5. Bank Accounts for Amazon Sellers**
**Using a Canadian Bank Account**
As a beginner, you can enter your Canadian bank account information to receive payments from Amazon. However, keep in mind that Amazon converts the US dollar payments to Canadian dollars before depositing them into your account. Some sellers mistakenly believe that opening a US dollar account with their Canadian bank will result in receiving payments in US dollars. However, Amazon considers the location of your bank, not the account currency. If you want to receive payments in US dollars, consider opening a US-based bank account with a Canadian bank located in the US, such as Harris or RBC Giorgio.
**6. Requirements to Sell on Amazon**
To sell on Amazon, you’ll need a few essential requirements. These include a chargeable credit card, a bank account for sales deposits, a government-issued ID, your SIN number or tax information, an email address, and a phone number for verification purposes. Amazon’s verification process ensures the security and legitimacy of sellers on their platform.
**7. Income Tax and Sales Tax**
As a Canadian seller, you’ll pay income taxes to the CRA (Canada Revenue Agency) rather than the IRS (Internal Revenue Service). Amazon automatically asks you to sign a form, such as the W8 Ben or W8 Ben E, to inform the IRS that you are a non-US resident and will pay taxes only to the CRA. This simplifies the tax process, ensuring you pay income taxes in your own country.
Sales tax can be a complex topic, but for most beginners, it’s not a significant concern. In Canada, you’ll need to register for the GST/HST once your total sales surpass