Starting a Business on Amazon
Starting a Business on Amazon
Question:
Hello!
For some time now, I have been trying to start working with Amazon FBA, where goods are purchased from China online and arrive at an Amazon warehouse in the US, from where they are sold. I have a few questions related to the taxation of money. Do I need to register a company to apply for VAT or is it possible for an individual without a registered company to receive money from these sales?
What is the percentage of taxation of profits and what accounting activities should be conducted?
Thanks in advance!
Answer:
Hello,
You can carry out the activity you have indicated both as a company and as an individual. There are several differences in the two options, and we will try to describe the main ones.
From a tax point of view, things look like this:
- for an individual, you declare the amount of profit for the year (income minus expenses). It is important to know that only the value of the purchased goods and the amount of mandatory social security contributions are recognized as your expenses. Profit is taxed at 15% profit tax.
- for a company, you declare the amount of income and expenses related to your activity. If income is more than expenses, then you make a profit and this profit is taxed at 10% tax.
From an insurance point of view, things are as follows:
- for an individual, you owe insurance contributions on the amount of profit made. The amount on which insurance contributions are paid on an annual basis cannot be higher than 45,000.00 BGN and lower than 11,196.00 BGN
- for an EOOD, insurance contributions are again paid on the minimum insurance income for the year - 933.00 BGN on a monthly basis.
That is, purely from a tax and insurance point of view, you will have to assess and make some kind of plan regarding the expected income and expenses. Only in this way could you determine which form of activity is more economically profitable (i.e. you would pay less tax and social security contributions).
Apart from the differences from a tax and social security point of view, there are also several purely functional differences:
- the money you earn as an individual is actually your money and you can "spend" it whenever and for whatever you want. With an EOOD - the money the company earns remains with the company. If you, as the owner, want to have this money at your disposal - there are several options: to give yourself a salary, to give yourself a loan or after the financial year has ended and if the company has made a profit, to distribute the profit as a dividend (but you will have to pay an additional 5% dividend tax on this amount).
- working as an individual does not require registration. To work through a company, you must register one. First, a set of documents is prepared (constituent act, minutes of the constituent meeting, management agreement, several declarations and a sample signature). Some of the documents are notarized. Then you need to open a savings account in a bank of your choice, where you can deposit the initial capital. The minimum is 2.00 BGN. The deposit note for the deposited capital, together with the other prepared documents, is submitted to the Commercial Register, no later than 7 calendar days from the date of the founding act, and registration is carried out within 7 working days. The state fee is 110.00 BGN. The notary fee is 8.00 BGN, and the bank fee depends on the bank you choose, ranging from 30.00 - 250.00 BGN
Regarding VAT registration - whichever option you choose - registration is mandatory, since you will receive services from a company outside Bulgaria (Amazon).
We hope that we have been useful to you!
Greetings!
