Dropshipping - how to start

Dropshipping - how to start

 

Question:
Hello!

For some time now I have been seriously considering the possibility of doing dropshipping. I plan to deliver products ordered by Aliexpress to end customers mainly in the United States, but I do not rule out the possibility of having customers from all over the world.

In this regard, I have many legal and accounting ambiguities:

1. In order to carry out this activity, do I need to register a company or can I do it as an individual?

2. If you need a company - what form is most appropriate - ET, Ltd., etc.?

3. Is it obligatory for the company to be registered for VAT from the very beginning for this activity?

Thanks in advance!

 

Answer:

Hello,

We answer your questions chronologically:

1. In order to carry out this activity, do I need to register a company or can I do it as an individual? - the short answer is NO. As an individual you can perform activities included in the so-called. "free profession", but trade cannot in essence be exercised as a free profession. The choices before you are two, ET or EOOD. There are options where in the current situation and already traded (example deliveries in OLX), without VAT registration, such income is entered in the personal tax return of the individual and the tax authorities have "closed their eyes", but this is not a practice and we are talking as an exception to the rule.

2. If you need a company, what form is most suitable - ET EOOD, etc.? - We strongly recommend Ltd. as a form of business. ET was a form that was widely used in the years of transition, mainly due to its easy establishment, but it binds the company to the individual. In a sense, if you have any obligations to suppliers or the state for the work of the sole proprietorship, then you are responsible with all your personal property for them, while with EOOD you are responsible up to the amount of assets and capital of the company. Regarding the tax burden, in practice it is the same, as in ET it is 15%, and in EOOD we have once 10% corporate tax (on profit) and then 5% tax on distributed dividend.

3. Is it obligatory for the company to be registered for VAT from the very beginning for this activity? - Provided that you will use a platform, you will actually receive services from a legal entity (company) from the European Union, for which you will receive the relevant invoice. You fall at least under the condition for mandatory registration under Art. 97 of the VAT Act, and this must happen before receiving the first invoice from the platform.

We hope we have been helpful to you.

Greetings!