How to Handle Taxation and Invoicing for a New Amazon Store?

Before becoming an Amazon seller, you need to decide and register a suitable business entity type. The most common business entity types include sole proprietorship, limited liability company (LLC), and corporation (Corp), among others. Each entity type has different tax obligations and favorable policies, so choosing the right business entity type is crucial for managing tax affairs. You can consult with an accountant or tax advisor to make a wise choice based on your specific situation.

After completing the registration of your business entity, you need to proceed with the corresponding tax registration procedures according to the regulations of the local tax department. Typically, you need to obtain a tax registration certificate and submit relevant tax declaration forms to the tax authorities. At the same time, you also need to understand and comply with local sales tax regulations to ensure timely and accurate payment of sales tax to the tax department. As Amazon is a global e-commerce platform, you may need to deal with tax requirements from different countries and regions. Therefore, understanding the tax policies of each country/region is also crucial.

How to Invoice?

When selling products on the Amazon platform, there are situations where you may need to provide invoices to buyers. Below, I will introduce several common invoicing methods.

▪️Firstly, if you are a sole proprietor or a small-scale taxpayer, you can use regular invoices to issue invoices. Regular invoices refer to invoices issued in accordance with the format prescribed by the national tax department, which can be used for transactions between taxpayers. Before issuing regular invoices, you need to apply for invoicing qualifications from the local tax department and manage and file invoices according to relevant regulations.

▪️Secondly, if you are an LLC or a Corp, you can consider using value-added tax (VAT) invoices. VAT invoices are invoices issued by the tax authorities in accordance with the format prescribed by the VAT laws, mainly used for transactions between taxpayers and tax authorities. On the Amazon platform, if you choose to use VAT invoices, you need to apply for invoicing qualifications from the tax department and manage and report invoices according to national tax policies.

Amazon provides sales data and transaction records, but you need to organize and submit tax forms yourself. Generally, you need to calculate the sales amount for each month or quarter and calculate the tax payable based on the local tax rate. Additionally, you also need to pay attention to tax issues related to specific product categories, such as VAT and import taxes for cross-border sales.