If you are a UK-based Amazon FBA (Fulfillment by Amazon) seller in the US, you may want to consider setting up a UK-limited company to manage your Amazon sales. There are several advantages to doing this, including reduced UK tax liability and greater flexibility in how you manage your business.
As a general rule, residents of the UK are subject to UK tax on their worldwide income, including income from Amazon sales. If you are a UK resident and earn income from Amazon sales in the US as an individual, you will be required to pay UK tax on that income at the applicable rates. For example, if you earn income from Amazon sales, you will be subject to UK income tax on that income at the rates that apply to residents.
However, if you set up a UK-limited company to manage your Amazon sales, you may be able to reduce your UK tax liability. As a limited company, your Amazon sales income will be taxed at the corporate tax rate, which is currently 19%. This is lower than the income tax rates that apply to individuals. In addition, as a limited company, you may be able to claim certain tax deductions and reliefs that are not available to individuals, further reducing your tax liability.
Setting up a UK-limited company for your Amazon sales can also provide greater flexibility in how you manage your business. As a limited company, you can choose to distribute your profits to shareholders in the form of dividends, which are taxed at a lower rate than income. You can also choose to retain your
As a limited company, you have more flexibility in how you manage your business and distribute your profits. For example, as a limited company, you can choose to retain your profits within the company and reinvest them in the business, rather than distributing them to shareholders as dividends. This can be useful if you want to grow your business and need to retain capital for investment.
In addition, as a limited company, you can have multiple shareholders, which can be useful if you want to bring in investors or partners to help grow your business. As a limited company, you can issue shares to shareholders and allocate ownership and voting rights accordingly. This can provide a more formal and structured way of managing your business and working with others.
Furthermore, as a limited company, you have limited liability, which means that your personal assets are protected in the event of business failure. This is different from operating as an individual, where your personal assets are at risk if your business cannot pay its debts. As a limited company, your personal assets are generally not at risk, unless you have personally guaranteed the company’s debts.
In conclusion, setting up a UK limited company for your Amazon sales can provide several advantages, including reduced UK tax liability, greater flexibility in how you manage your business, and limited liability protection for your personal assets. It is advisable to seek professional advice from a qualified accountant or lawyer before setting up a limited company, to ensure that you comply with the applicable legal and regulatory requirements.
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