Are you considering selling on the USA Amazon store? Do not make a costly mistake by ignoring important tax considerations.
We are here to help you learn the top tax implications you need to know about expanding in the US. Do not miss out, and keep reading!
USA Amazon Store Tax Facts – UK Sellers Should Consider
As a UK citizen considering business expansion by selling on the USA Amazon store, one of the most important things you need to learn is the tax implication that comes with it.
The USA has its own tax laws and regulations that UK sellers must comply with to avoid penalties and fines. You may need clarification since USA and UK have entirely different tax systems, but we will help you understand what you should know.
This blog post will discuss the most significant tax considerations for UK citizens selling on Amazon. By understanding and addressing these, UK sellers can successfully navigate the tax landscape and grow their business in the USA market.
Registering with the IRS and Obtaining a TIN
You must register with the IRS and obtain a TIN (Taxpayer Identification Number) to sell on Amazon. This is your first step and one of the most essential USA Amazon store tax facts you should consider as a non-US seller.
This process can be tedious, but it is a necessary step to ensure that you follow US tax laws. To obtain a TIN, complete Form SS-4 and submit it to the IRS. You can do this online or by mail, but processing times vary.
You may also need to submit additional documents as IRS requires.
Next is to provide your TIN to Amazon once you have it. This is a requirement to receive payments for your sales. Ensure you provide up-to-date TIN information and accurately report your income to the IRS.
Sales Tax Consideration
Another USA Amazon store tax fact you need to know is having sales tax due to the US government. There is no federal sales tax in the US, but each state has its own sales tax regulations that must be followed.
If you sell on Amazon’s FBA (Fulfillment by Amazon) program, you may be responsible for collecting and remitting sales tax in the states where your inventory is stored.
In addition, Amazon offers a service called the Marketplace Tax Collection (MTC) program, which automatically calculates and collects sales tax on your behalf for orders shipped to certain states.
However, the MTC program only covers some states, and there may be additional sales tax obligations that you will need to handle yourself.
And to make matters more complex, sales tax rates can vary by state, county, and even city, so you need to maintain complete and accurate records of your business transactions.
To ensure you comply with all sales tax regulations, consult a tax professional like Sterlinx Global.
They can help simplify the process and ensure you collect and remit the correct sales tax amount for each transaction.
Income Tax Considerations
As a non-US resident, you will generally be subject to US income tax on your net income from your US sales.
However, the exact income tax rates and requirements will depend on your specific situation, including your income and any claimable deductions to which you are entitled.
Another thing you need to consider regarding your income tax is the US-UK tax treaty, which provides specific benefits to UK residents doing business in the US.
An essential tip for you in complying with IRS income tax regulations is to keep detailed and accurate records of your income and expenses related to your US sales and any taxes historically paid to the IRS.
Frequently Asked Questions
What happens if I don’t collect and remit sales tax for a US state where I have sales?
Failure to collect and remit the sales tax may subject you to penalties and interest charges, which rates can differ by state, but they can be significant and quickly add up.
In some cases, the penalties can even exceed the amount of tax that was not collected and remitted.
Additionally, if you intentionally ignore your sales tax obligations, you could face legal action by the state, which could result in fines, legal fees, and even criminal charges.
What documents must I provide when registering with the IRS and obtaining a TIN?
In verifying your identity and your business, these documents may be required by IRS to be submitted:
1. Personal identification – For IRS to verify your identity, you must provide them with a copy of your passport or another government-issued ID, such as a driver’s license.
2. Documents regarding your business formation – In addition to your identification, you should submit documents showing how your business is organised, such as articles of incorporation, partnership agreements, or a business license.
3. Proof of foreign status – As a non-US citizen, IRS needs to prove your foreign status. To do so, they may require you to submit a copy of your passport or a document showing you are a non-US resident.
4. Business address – You will also need to provide a physical address for your business, even if it is a home-based business or you are a registered sole proprietor only.
Do I need to register for a VAT number in the UK if I am selling on the USA Amazon store?
If you are solely selling on the USA Amazon store and not making any sales within the UK, you may not need to register for a VAT number. However, you must review the UK VAT regulations to comply with the law.
In capturing the US market as a non-US seller, you need to ensure that your selling experience is profitable and compliant with the relevant tax laws and regulations. Knowing these USA Amazon store tax facts is essential to understand how to do so.
You can always seek tax advice for your Amazon store at Sterlinx Global.