Author Topic: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?  (Read 23213 times)

Cwadda

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #150 on: January 29, 2018, 04:58:37 PM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #151 on: January 29, 2018, 05:09:37 PM »
While there are some serious downsides to selling on Amazon, there is also the fact that you can put a product in front of tens, if not hundreds of millions of customers. Granted, only a tiny portion of that will ever see whatever product youíre trying to sell but itís like being able to get your product on the shelf of every Walmart and Target x10.

About 50% of product purchasing searches now start on Amazon. Thatís massive. Amazon Prime members (who typically have above-average household incomes) shop on Amazon at least weekly on average with a substantial percentage shopping daily.

Iím in the process of creating a brand with a related website but I plan to sell through Amazon. The website will have information and referral links but the products will be sold through Amazon. It just doesnít make sense to try and create an online storefront where I have to pay to drive traffic to it when Amazon traffic is already made up of people looking to buy things. I can send a box of widgets to Amazon at ridiculously low rates and they handle all the pick, pack, and shipping. Just the few items I sell now itís a hassle to pack them up and drop them off at the post office. Not to mention anything other than a book or very small item just kills you on shipping. I sent a 30lb box into Amazon for $12 and a 15lb box for about $6. Looking at one item Iíve got thatís pretty heavy it would cost me about $12 to ship it via USPS. But, if I stick a bunch of them in a box and send it to Amazon my total shipping cost will be about $7 including inbound shipping to Amazon and then their fees for pick, pack, and shipping. Plus, my labor for packing up a single box of items is minutes compared to what could easily add up to a couple of hours if I was fulfilling a dozen orders one at a time. With my own online storefront I'd have many hours in getting it setup and maintained plus monthly costs for that shopping cart. Amazon's 15% is probably a lot less than it would cost me to try and setup my own store unless I were doing massive volume.
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CareCPA

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #152 on: January 29, 2018, 05:11:27 PM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

SC93

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #153 on: January 29, 2018, 09:53:42 PM »
I opened up a topic on another site and it was about Amazon. A very wealthy person that started on Amazon wrote about it. To make a very long post of what he said, short.... he called the Amazon of today a dirty whore's market. I wouldn't have thought of those words but I think it fits perfect.

He said exactly what I thought.... big money has come in and ruined it for the little guy, as always. He did say there is money to be made, just like I figured but it's just not what people think it is. Although they have spoiled it for most, I still think that if someone buys a boatload of something little... chap stick, lip gloss.... something like that and gets it for almost nothing and sells it for $2.99..... they could make a good profit over time. I'd do it but I don't want to have $50,000 tied up in chap stick for 3-5 years trying to make $200,000. :)

I guess I should have jumped on board years ago like I started to do.... but I didn't.... my loss.

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #154 on: January 30, 2018, 06:45:25 AM »
I opened up a topic on another site and it was about Amazon. A very wealthy person that started on Amazon wrote about it. To make a very long post of what he said, short.... he called the Amazon of today a dirty whore's market. I wouldn't have thought of those words but I think it fits perfect.

He said exactly what I thought.... big money has come in and ruined it for the little guy, as always. He did say there is money to be made, just like I figured but it's just not what people think it is. Although they have spoiled it for most, I still think that if someone buys a boatload of something little... chap stick, lip gloss.... something like that and gets it for almost nothing and sells it for $2.99..... they could make a good profit over time. I'd do it but I don't want to have $50,000 tied up in chap stick for 3-5 years trying to make $200,000. :)

I guess I should have jumped on board years ago like I started to do.... but I didn't.... my loss.

It would be pretty tough to make any money on a product selling for $2.99 even if you got it for practically free. The minimum cost for FBA fulfillment is a couple of dollars. Shipping it yourself might be cheaper but it probably still wouldn't be profitable which is why if you search for those little items they're generally sold as 5, 10, 20 packs so that it's not cost prohibitive on fees or shipping costs.

Just for kicks I found a single tube of chapstick selling on Amazon. At $3.99 with a COGS of $0.01 you would still lose money if you tried to sell it with Amazon FBA. Amazon does sell it themselves for $3.94 but only as an add-on item where they don't have to pay for shipping.
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SC93

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #155 on: January 30, 2018, 10:01:06 AM »
Now I don't know much about Amazon but I was talking to someone a month or 2 ago and that is why I used that example because she was saying she was doing what I was thinking.... did that confuse you? lol Anyway... she had bought something like that, I don't remember what it was, and is selling it for like $2.99, it might have been $3.99 but I'm thinking $2.99. She said she made a killing. She shipped it herself in a regular envelope for the cost of a stamp or 2. Dang, I'll try to remember who that was and talk to her again.

Cwadda

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #156 on: January 31, 2018, 08:27:24 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.

L2

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #157 on: January 31, 2018, 08:55:17 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
You may not like it, but that interpretation is most definitely correct. Here is a notice I just received yesterday from a client. Also the IRS isn't involved at all. Each individual state is who will determine what they want done. I will add this client did have about 3.5m in Amazon sales (CA sales unknown at the moment), which I think might be more than most people here. But that might give you an idea of what revenue area the states might be beginning to target.
« Last Edit: January 31, 2018, 09:11:51 AM by L2 »

CareCPA

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #158 on: January 31, 2018, 10:38:31 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #159 on: January 31, 2018, 11:09:02 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.
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CareCPA

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #160 on: January 31, 2018, 12:25:25 PM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.
That's the solution that everyone except Amazon is hoping for - make Amazon collect and remit on the sellers' behalf. Especially since Amazon controls every part of the process.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

robartsd

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #161 on: January 31, 2018, 12:47:58 PM »
That's the solution that everyone except Amazon is hoping for - make Amazon collect and remit on the sellers' behalf. Especially since Amazon controls every part of the process.
It seems like it would be easy for Amazon to collect and remit sales tax for all FBA sales in states where there are FBA warehouses - they already must collect and remit sales tax in these locations for any items sold by Amazon.com. It would be harder, but not impossible for Amazon to track which FBA sellers have inventory in which states to track any sales tax nexus created for a seller by FBA so as to avoid collecting sales tax on behalf of FBA sellers where it is not required. The only sticky issue I see is if the FBA seller also sells across state lines through other channels and FBA inventory creates a sales tax nexus for the seller that must be accounted for in those other channels. Does Amazon already handle sales tax for FBA sellers who are in states with sales tax that Amazon itself does not have a sales tax nexus in?

Cwadda

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #162 on: February 02, 2018, 09:14:56 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.

No thanks. I'm not going to spend thousands of dollars on Taxjar on the notion of fear that the IRS will come and get me for not filing sales tax in 20 different states. It's just not worth it. I don't sell millions of dollars worth. I am a ham and egger.

I am not going to file for sales tax permits in 20 states, with fees $150/each. I'm not going to pay a service $500/month to do it for me.

I'm going to continue filing and remitting sales tax in my home state for every item sold, every month. No more, no less.
« Last Edit: February 02, 2018, 09:18:52 AM by Cwadda »

CareCPA

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #163 on: February 02, 2018, 09:52:55 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.

No thanks. I'm not going to spend thousands of dollars on Taxjar on the notion of fear that the IRS will come and get me for not filing sales tax in 20 different states. It's just not worth it. I don't sell millions of dollars worth. I am a ham and egger.

I am not going to file for sales tax permits in 20 states, with fees $150/each. I'm not going to pay a service $500/month to do it for me.

I'm going to continue filing and remitting sales tax in my home state for every item sold, every month. No more, no less.
That is a business decision you have made, which you are entitled to do.
It's the part where you take the decision you have made, and try to turn it into fact for everyone else, that I'm having a hard time with.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

L2

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #164 on: February 02, 2018, 10:46:25 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.


I'm going to continue filing and remitting sales tax in my home state for every item sold, every month. No more, no less.

Just as an FYI, if you are doing this, then you most likely have a refund opportunity. See, accountants do have value :)

 Also, to be the bearer of bad news again, look up South Dakota vs. Wayfair. The way in that the nexus laws are shaped is most likely going to change from having to file where you have a physical requirement to having to file in a state where you have X number of sales and/or X number of transactions.

L2

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #165 on: February 02, 2018, 10:47:10 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.


I'm going to continue filing and remitting sales tax in my home state for every item sold, every month. No more, no less.

Just as an FYI, if you are doing this, then you most likely have a refund opportunity. See, accountants do have value :)

 Also, to be the bearer of bad news again, look up South Dakota vs. Wayfair. The way in that the nexus laws are shaped is most likely going to change from having to file where you have a physical presence to having to file in states where you have X number of sales and/or X number of transactions.

Cwadda

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #166 on: February 03, 2018, 10:33:34 AM »
How do you handle taxes for this? For anyone who has been doing this for more than a year, what does Amazon send you in terms of a 1099 or other tax documents? Do they report your revenue net of any fees or shipping that you purchased through them or just your gross sales (which would presumably include any shipping credits) leaving you to explain to the IRS that your COGS and expenses accounted for much of that.

I don't really want to go to the trouble of filing a Schedule C just to report that I lost $5 on about $600 in sales (probably more if I accounted for some mileage, to say nothing of my time). The extra $40-50 TurboTax would charge me is obviously not worth it since even if it was pure profit I'd barely pay that much in taxes.

So far 2018 is proving to be more profitable and I'm keeping better track of my income and expenses and I plan to get a business licenses and start quarterly filings with the state (and I suppose the federal government though I need to research the thresholds on that).


Edit: I just went looking to see when Amazon would send me any tax documents and it turns out their minimum threshold to send out at 1099-K is $20,000 in gross sales or 200 transactions. Since I didn't come close on either I don't think I need to worry about reporting any of this for tax purposes.

You only need to file sales tax for states in which you have a physical presence i.e. your residence. Amazon will remit these on your behalf if you have the settings configured properly (for Amazon to collect sales tax).
Technically, you need to remit sales tax for any state you have Nexus. For many states, just having your inventory in an Amazon warehouse in that state creates Nexus.

I respectfully disagree with your interpretation. With Amazon FBA, your inventory gets automatically distributed to fulfillment centers around the country. In most cases, you have no idea where it even goes. Does this mean you need to obtain a sales tax permit for every state and file/remit 50 times per month? If the IRS expects FBA sellers to actually do this, they have a major mess on their hands.

Respectfully disagreed.
As L2 noted, this is exactly what it means. You can pull an inventory report at any time to see what warehouses your inventory is in. State and Federal governments do not accept ignorance (especially willful ignorance) as an excuse for not following the rules.
Also, I don't believe Amazon has warehouses in all 50 states. 

Not to sound like a jerk here, but you can disagree all you want - it doesn't change the technical answer. You'll notice many FBA sellers wait to see if they receive a notice from the states for exactly this reason.

I think that most sellers will continue to fly under the radar of the states. I think there are 15-20 fulfillment centers in states with sales tax. So if you have inventory in any of those and then sell to someone in that state, even if it ships from another state, you're supposed to collect sales tax and remit it to the state.

Obviously this is a pretty complicated issue to handle on your own and there is at least one company, TaxJar that specializes in this (https://www.taxjar.com/guides/sales-tax-guide-for-amazon-fba/). Frankly though, unless you're selling tens of thousands of dollars a year (maybe hundreds of thousands of dollars a year) it probably doesn't make financial sense to be the one small seller that is trying to follow all the myriad sales tax rules.


I think the states are going to start going after Amazon directly soon rather than try to track down literally hundreds of thousands of individual small sellers to get a few bucks from each one. If you're doing a million plus in sales and not following the rules on sales tax then it's just a matter of time before someone comes after you. But in the long run, I think Amazon will be forced to handle this directly.

No thanks. I'm not going to spend thousands of dollars on Taxjar on the notion of fear that the IRS will come and get me for not filing sales tax in 20 different states. It's just not worth it. I don't sell millions of dollars worth. I am a ham and egger.

I am not going to file for sales tax permits in 20 states, with fees $150/each. I'm not going to pay a service $500/month to do it for me.

I'm going to continue filing and remitting sales tax in my home state for every item sold, every month. No more, no less.
That is a business decision you have made, which you are entitled to do.
It's the part where you take the decision you have made, and try to turn it into fact for everyone else, that I'm having a hard time with.

Nope, people need to consult a CPA like yourself or a lawyer for counsel. Not my place to make decisions for people and spread misinformation.

doompatrol

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #167 on: February 07, 2018, 09:35:02 AM »
Amazon FBA is a great option for people who are wanting to start with e-commerce. It has definitely gotten tougher lately as more people see the "gold rush" happening, but if you have some creativity and patience it can definitely pay off.

I think the main difference now is you have to do some sort of alteration/branding on a product to make it stand out. Before you could go to alibaba, find a product for cheap, and essentially flip it on Amazon, but that is no longer the case. Now it requires having your own design, putting branding, or finding a separate use for a product in a new niche.

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #168 on: February 08, 2018, 10:34:39 AM »
Well I found some Yankee Candles at Walmart that were only $1.70 as they were from last season (normally $20+). Looks like they still sell a few everyday even during the rest of the year. I was only able to find a couple in-stock after checking a few stores but my net margin should be about $11 on each, depending on shipping costs (edit: shipping turned out to be about $13 thus reducing actual profit to about $6). Another Walmart 50 miles away supposedly has 39 in stock but I'm not sure I want to risk driving all the way there only to find out they have none. www.brickseek.com is a neat resource for checking inventory at Walmart (and a few other stores) but so far it's been pretty hit or miss on accuracy. It's pretty nice seeing an item that's still marked $15.87 ring up as just $1.70. I'd never know that it was marked down so much without that resource.

Also picked up some 8-packs of Gillette Razors for $5.00 that are normally $25-30 but I'll have to sell those on eBay or maybe just use them myself. Too many counterfeits for Amazon to even allow you to request approval to list them.

Finally, purchased some bags that cost $85 but are selling for $150 on Amazon. I couldn't determine the exact sales rank because it was only showing the rank within a subcategory but they're also selling on eBay for about the same so I don't think I'm in any danger of having to sell at a loss. Judging by the number of reviews they must be selling a decent amount and Amazon isn't one of the sellers. The online retailer had 31 in stock but I decided 7 was enough. $2,635 is a bit more than I'm willing to tie up in inventory on a single item I'm not too familiar with. With shipping and fees I figure I should make about $30-35 on each one.

I've since bought about 10 of those candles at various Walmart's though I haven't made the hour-trip to try and buy another 30+ that are in-stock at another one. So far I've sold 6 of them for about $25 each including four to one buyer. That was really nice as it cost $12 to ship one but only $20 to ship four. I guess someone really liked that particular candle and wanted to stock up since it's seasonal and now out of stock. I could increase my profit margin by sending it in to FBA but I would need to buy some cardboard boxes to fit them, plus labels and get everything packed up nice and neat so Amazon doesn't break them. Buying the boxes would only be cost effective if I went to that other store and they actually had 30+ in stock. A 50-pack of boxes that would fit them would work out to about $0.80 each with shipping (plus I'd need a lot more bubble wrap). I know that based on the last few years history from CamelCamelCamel that sales drop off to just a few per month around April/May and there's already several FBA sellers that have a total of 10-15 in stock. The might decided to drop the price from $25 to $15-20 to get rid of their inventory and I'd be stuck with some storage costs waiting for them to sell. Still, if I have any reason to head up that way soon I'll definitely buy whatever's left. At $2 each when they sell for $25+ new it's hard not to make money.

Those razors sure sold nice and quick on eBay and shipping is a lot easier, just pop it in envelop with a bit of bubble wrap for good measure. I'd forgot that Paypal takes about a 5% cut in addition to the eBay fee. Still, works out to a bit less than Amazon.

Sent 4 bags into FBA and already have two pending sales. They're all still in reserved status as I sent all of them to a warehouse in TX and now they're being redistributed around the country. I just sent the other 3 in this morning. It was pretty nice that they came in the original boxes straight from the manufacturer so I didn't have to do any prep at all, they even had barcode stickers on the outside of the boxes. I wish I had known they shipped four to a box I would have just order 8 instead of 7. I can tell the online seller I purchased them from simply opened the box, took out one of the boxes inside and resealed it. Shipping an 18lbs box vs a 14lbs one to Amazon would have been basically the same cost and I calculate I'll make about $42 on each one after all fees.
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anonymouscow

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #169 on: February 13, 2018, 07:56:49 PM »
I am trying Amazon FBA, not going so great. Mostly I am buying things on clearance at Walmart. It seems that by the time my items ship to Amazon the price has dropped by 1/3. I am thinking maybe the same items are being clearanced at multiple stores and it drives the price down. Any idea if I should leave the price higher in hopes that it will rise in the future?

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #170 on: February 13, 2018, 08:34:33 PM »
I think that ship has sailed.....

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #171 on: February 13, 2018, 09:31:54 PM »
I am trying Amazon FBA, not going so great. Mostly I am buying things on clearance at Walmart. It seems that by the time my items ship to Amazon the price has dropped by 1/3. I am thinking maybe the same items are being clearanced at multiple stores and it drives the price down. Any idea if I should leave the price higher in hopes that it will rise in the future?

So far the only things I've had success with have been very deep discounts.

Check camelcamelcamel.com to see the price history. If you buy something for $10 and it normally sells for $25-30 you're probably ok. If it fluctuates from $15-30 then you may end up selling it at a loss or minimal profit or holding it for a few months.

The only stuff I've bought at Walmart that's been profitable was some candles that were still labeled as being $15 but rang up as $2 or less. Same with some razor blades that were at a very deep discount of $5 vs. a normal price of $20+.

Monthly storage fees and eventually long-term storage fees might eat up any potential profits from keeping the price high. Also it ties up your cash if you've got inventory sitting there for months hoping to get full price rather than discounting it to sell quickly and buy new inventory. Once again, camelcamelcamel can help you determine if there are recent or seasonal trends in pricing and sales.
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L2

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #172 on: February 14, 2018, 08:06:38 AM »
I'm sure most of you received the email mentioned here. Protip: Do not listen to Funky Monkey. RI isn't inquiring for no reason.
https://sellercentral.amazon.com/forums/t/sales-tax-rhode-island/359506

Hopefully you all are under a lot of these thresholds being set by states. RI is 5k and CA is 10k FYI. The client whose notice from CA I shared on here a few weeks ago might end up having to go out of business because he can't afford to pay the tax he owes. There is no statute of limitations for failure to file. Charging and remitting sales tax in some of your higher-risk states (if your accountant deems you have any) isn't really an additional cost to you. It might result in a little bit lower sales, but the cost is being passed on to the customer. Monthly sales tax returns in a few states really isn't really some big burden. It can be done in a half hour. If you get caught, you can't go back and charge it to the customer retroactively, its gotta come out of your own pocket.

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #173 on: February 18, 2018, 11:08:29 PM »
Hello all!

I just want to say thank you for the wealth of information that I have found in this forum, but thank you also for this specific topic. Recently (about 3 weeks) I started looking into FBA and noticed that most people in FB groups all they talk about is PL. For me I believe plunging 3-4K into a product that already sells by different brands is not feasable, all your doing is adding your logo. I think that if you were to have something unique, then yes, but because of this I think that wholesale is a great option to start.

My question is, is it still worth it in 2018 to start with FBA? I've read tons of people around the web where they are leaving the platform, saying is saturated etc etc.. Also I've noticed that some other programs have come to light to offer something thaat IL offers, such as fetcher (same people from JS) and I was looking to see if some of you can do an updated post with the software that you guys use.

@RFord617  Can you tell us what software/tools are you using to make it efficient?

@hodedofome  PriceMaster is very close to where I live, so I could probably save the shipping part. Can you tell me if its still worth purchasing from them? Can they provide you with a spreadsheet with the UPC?? Would their invoice still ungate me to some of the sections if I am starting? Is it possible to make between 20-30% ROI? I will be doing this with a LLC and resale certificates.

Thank you.
« Last Edit: February 18, 2018, 11:10:44 PM by nyorker »

Michael in ABQ

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #174 on: February 19, 2018, 09:33:15 AM »
Year to date my sales have been about $1,100 with most of that through Amazon but maybe 10-15% through eBay when something was a good deal but restricted on Amazon. My initial cost of goods sold (COGS) was a bit of $400 but once I add in selling fees and shipping my total COGS was about $750. So my gross profit has been $350 for an average gross margin of about 32%. If I look at my return on investment for just the purchase price, not including the fees and shipping which are almost entirely incurred when something sells, it's 84%.

I've got three higher-priced items that are just about to come in stock through FBA and I have the buy box already. The first four sold in less than a week and though there's no sales ranking, I'd estimate monthly sales at about 10-15 based on what I've seen the other few sellers doing plus myself. So, likely I'll sell through those by the end of the month which will bump up my gross profit to $470 while lowering my profit margin slightly to about 30%.

Out of that $470 though I've probably spent another $30-40 in shipping supplies and if I were tracking my mileage I'd probably have some additional expenses there (not much though as I can mail things by just going slightly out of my way to work, same with most sourcing trips). Not to mention quite a few hours here and there either looking through stores or online and then the time spent actually packaging and shipping things either individually or to FBA.


I'd definitely like to move into wholesale but I've been trying to bootstrap with about $500 to start so I'm sticking with retail and online arbitrage for the time being to build up a bit more capital and experience before trying to start setting up manufacturer or wholesale sourcing relationships. I think there's still plenty of opportunity. Keep in mind that Amazon sales totaled almost $200 billion last year and roughly half of that was from third-party sellers. So yes, there's still plenty of room in a market with close to $100 billion in sales, even with millions of sellers operating. The sooner you get started the sooner you can start building up experience and are more likely to get access to restricted brands and categories. I've been approved for a few random brands just by requesting it without needing an invoice or letter from the manufacturer. The bottom line is that Amazon wants customers to have a good experience. If you do a good job they will let you sell more things. They don't want to let everyone start selling everything right away because there's too much risk of fraud and counterfeiting.
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Cwadda

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #175 on: February 19, 2018, 12:06:56 PM »
I'm sure most of you received the email mentioned here. Protip: Do not listen to Funky Monkey. RI isn't inquiring for no reason.
https://sellercentral.amazon.com/forums/t/sales-tax-rhode-island/359506

Hopefully you all are under a lot of these thresholds being set by states. RI is 5k and CA is 10k FYI. The client whose notice from CA I shared on here a few weeks ago might end up having to go out of business because he can't afford to pay the tax he owes. There is no statute of limitations for failure to file. Charging and remitting sales tax in some of your higher-risk states (if your accountant deems you have any) isn't really an additional cost to you. It might result in a little bit lower sales, but the cost is being passed on to the customer. Monthly sales tax returns in a few states really isn't really some big burden. It can be done in a half hour. If you get caught, you can't go back and charge it to the customer retroactively, its gotta come out of your own pocket.

I asked my accountant, btw.  His response:

Quote
My understanding about the "sales tax" issue - you only have to collect and remit sales taxes to the State of CT for State of CT residents.

Please note - The Supreme Court is relooking into this issue and they may decide that all sales regardless what state they are from sales taxes will have to be collected.

My guess is that if the SC decides that Amazon sellers need to file and remit in all states, I see Amazon collecting and remitting on behalf of 3rd party. Amazon already does this for itself, and certainly has the resources to easily do it for others. Too many resellers would leave the platform, and with 3rd parties making up half of all Amazon revenue, it'd be quite a bit to lose.

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #176 on: February 19, 2018, 06:01:04 PM »
I'm sure most of you received the email mentioned here. Protip: Do not listen to Funky Monkey. RI isn't inquiring for no reason.
https://sellercentral.amazon.com/forums/t/sales-tax-rhode-island/359506

Hopefully you all are under a lot of these thresholds being set by states. RI is 5k and CA is 10k FYI. The client whose notice from CA I shared on here a few weeks ago might end up having to go out of business because he can't afford to pay the tax he owes. There is no statute of limitations for failure to file. Charging and remitting sales tax in some of your higher-risk states (if your accountant deems you have any) isn't really an additional cost to you. It might result in a little bit lower sales, but the cost is being passed on to the customer. Monthly sales tax returns in a few states really isn't really some big burden. It can be done in a half hour. If you get caught, you can't go back and charge it to the customer retroactively, its gotta come out of your own pocket.

I asked my accountant, btw.  His response:

Quote
My understanding about the "sales tax" issue - you only have to collect and remit sales taxes to the State of CT for State of CT residents.

Please note - The Supreme Court is relooking into this issue and they may decide that all sales regardless what state they are from sales taxes will have to be collected.

That's correct and maybe something I should have clarified. *IF* you have nexus in a state, you should be collecting and remitting sales tax to the state that the customer resides in. Thats why I said you probably have a refund opportunity if you are paying sales tax to Ohio for all of your sales.

hodedofome

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Re: Selling on Amazon Prime via fulfillment (Amazon FBA) - Anyone try this?
« Reply #177 on: February 22, 2018, 12:51:08 PM »
Hello all!

I just want to say thank you for the wealth of information that I have found in this forum, but thank you also for this specific topic. Recently (about 3 weeks) I started looking into FBA and noticed that most people in FB groups all they talk about is PL. For me I believe plunging 3-4K into a product that already sells by different brands is not feasable, all your doing is adding your logo. I think that if you were to have something unique, then yes, but because of this I think that wholesale is a great option to start.

My question is, is it still worth it in 2018 to start with FBA? I've read tons of people around the web where they are leaving the platform, saying is saturated etc etc.. Also I've noticed that some other programs have come to light to offer something thaat IL offers, such as fetcher (same people from JS) and I was looking to see if some of you can do an updated post with the software that you guys use.

@RFord617  Can you tell us what software/tools are you using to make it efficient?

@hodedofome  PriceMaster is very close to where I live, so I could probably save the shipping part. Can you tell me if its still worth purchasing from them? Can they provide you with a spreadsheet with the UPC?? Would their invoice still ungate me to some of the sections if I am starting? Is it possible to make between 20-30% ROI? I will be doing this with a LLC and resale certificates.

Thank you.

I started in March of 2017 with $300 in mostly bad clearance items. A few worked out, a few I still have in my garage waiting to be sold on eBay lol. I didn't know anything about restrictions so I bought Lego, Little Tykes, etc.

I read everything I could, got involved with some facebook groups, scanned like crazy, signed up for Tactical Arbitrage, paid $2k for The Wholesale Formula class which I haven't used yet, worked as much as I could with 3 little kids and a full time job. I eventually invested $12k from my savings and I believe my total profit for 2017 is around $25k. Peak sales I've done for a 30 day period is $28k in the 4th quarter of 2017. Right now my sales are around $12-15k per month, with profit being around $3-5k per month. My sales didn't really ramp up until mid summer/early fall of 2017. Getting ungated in as many categories and brands as possible is essential.

I'd say my sales are about 50% coming from OA. I haven't really used Tactical Arbitrage lately, but I need to get back into it. I found an online brand that had some decent selling already going on at Amazon, but the few sellers who sold the product didn't keep it in stock. They'd buy 3 at a time and sell out quick. I could tell this from the Keepa graphs. So I started with 3, then bought 5, then bought 10, then 25, and finally settled on 50-75 per month from 1 item. This item largely has no competition. Had they just ordered enough to test the market, they would have found it was far deeper than they ever imagined. I buy it for $15, sell it for $35, make $9 on each item for a 60% ROI. It sells 50-75 per month so I'm making about $500 a month just from 1 item. All of the ranks for each variation are over 100k in home & kitchen, and some are over 1 million in rank. You can't always trust the rank, and if you're the only seller it can still be worth it.

Since the fall I decided to list all the different variations of this item, as well as similar items from the same website. So I'm moving away from just selling items that are already listed, to creating my own listings for items that haven't been sold before. Although the other variations don't sell as well, when you combine the other colors and sizes I figure I'm making about $1,500 in profit each month. So I setup the inventory alerts in seller central, and when I get to a 2 week supply I place an order for more. It comes to my house, I prep it and send it off. Replens are awesome. As time allows I'm ordering test buys for other products from this website, and creating new listings.

I found another product, in the beauty category, selling brand new on the shelf at a grocery store for $10. It sells (well) on Amazon for $30-45, depending on the competition. ROI can be anywhere from 70-170%. Rank is 25-40k in beauty. This product is apparently difficult to find these days, but it still sold in some stores and more can be ordered. At first I was clearing the shelf, but then eventually spoke to the manager about buying in bulk. She can order as much as I want. One of the orders accidentally included the invoice from the distributor in the box. I was super excited and called the distributor about opening up an account. They said they weren't interested. I don't know why people don't like taking other people's money sometimes. In any case, even paying retail price this one product is responsible for 20% of my sales and at least 25% of my profits.

So 1 RA replen and 1 OA replen website are bringing in $8k in sales and $2-3k in profit per month. Any clearance items I find are gravy after that. I've got basically a 'floor' of replens I can count on to make at least $2k per month. At this point I'm listing new products from that website, and slowly working on opening up wholesale accounts. Wholesale is going slower than I'd like, but I'm not giving up. There's a guy locally who knew my dad and got me to sell his bbq spices on Amazon. They are starting out slow but I'm running ads on them and trying to get reviews.

From the start I imagined me learning the business doing RA and OA, using the profits from that to get into wholesale, and finally using the profits from wholesale to get into private label. Once you know how to get a product ranked high on Amazon, PL offers the best profit opportunities IMO. Even if there's already competition, if you can figure out the listing, advertising and brand awareness/brand building part, you can get stuff to sell.

I do RA shopping during lunch during the week, prep 2 evenings per week and on Saturday. All in all probably putting in 10-20 hours per week.

In answer to your question, Pricemaster and EE Distribution is still good for getting ungated in grocery and toys. They don't provide an excel spreadsheet. Don't expect to make any money, just hope you can break-even. Consider it an investment so you can make more money from being ungated. Even if you're starting out, if you have a legit invoice and the business info of your seller account matches the business info on the invoice, the invoice will be accepted.
« Last Edit: February 22, 2018, 01:03:52 PM by hodedofome »