How to Start an Amazon Business in Canada

What Products Can You Sell on Amazon?

The great thing about starting a business on Amazon is there’s no shortage of things you can sell, and Amazon outlines all the product categories and the conditions under which you can sell. 

You can sell personal computers, including desktops, laptops, drives and storage that are new, refurbished, or used. You can also sell automotive items, including tires, which must be new, used, or collectible but not refurbished. Likewise, any clothing sold must be new, while any sports collectibles must be “like new.” You can even sell digital products such as ebooks.

How to List Your Products on Amazon

Amazon makes it easy to list products, but you’ll need a product identifier, such as GTIN, UPC, ISBN, or EAN, to specify the exact item you’re selling when you create your product listing. You’ll also need a stock-keeping unit (SKU), a product ID you create to track your inventory. 

You’ll want to be as detailed as possible – a seller is more likely to quickly add your product to a cart if they don’t have any lingering questions. Basic details include price, product condition, available quantity, shipping options, and the name, brand, category, description, and images. 

If you want to be easily found, you’ll want to add keywords and search terms. If you’re the first to sell a product on Amazon, you’ll have to create a listing from scratch. If the same product is already available from another seller, you’ll match an existing listing, which is a little quicker.

Fulfillment by Amazon or Fulfillment by Merchant?

A crucial aspect of selling on Amazon in Canada is getting the item to your customer, whether they’re in this country or elsewhere – that includes packaging, shipping, tracking and even returns.

Amazon allows you to take advantage of its more than 175 fulfillment centres worldwide – you store your stuff on their shelves, and Amazon takes care of packaging, labelling, and shipping, as well as customer service and returns. Fulfillment by Amazon (FBA) makes sense if you’re looking to scale up your business quickly as a professional seller.

Alternatively, you can store and ship products directly to customers and pay Amazon a shipping rate based on the product category and shipping service selected by the customer (it passes the amount on to you in the form of a shipping credit). 

You can also take advantage of Amazon’s Buy Shipping tool to work with its trusted network of shipping partners, ship and confirm your orders, and track your shipments. Taking the Fulfillment by Merchant (FBM) approach means you must price your products profitably.

What Taxes Do Amazon Sellers in Canada Have to Pay?

Starting an Amazon business in Canada has tax implications. How much tax you pay depends on how much you sell. 

If you reach $30,000 of sales in Canada during 12 months, you must open a sales tax account with the Canada Revenue Agency (CRA), collect sales taxes from customers (which is done by Amazon), file sales tax reports, and remit the taxes to the CRA. Registering before you hit the threshold allows you to claim back the sales tax paid on expenses, including the 5% charged when the products are imported to Canada. (It’s your responsibility as the seller, even when done through a third party, to pay this tax.) If you have total annual sales of up to $1.5 million, you must file an annual GST/HST with the CRA.

You must also report your income and pay taxes on it. As a resident of Canada selling on Amazon, you are considered a small business and need to submit Form T2125 with your tax return. 

You must report all earnings, including money you earned from American buyers – all transactions should be converted into Canadian dollars. In addition, if you go the professional seller route or process more than 50 transactions per year, you must submit Form W-8BEN to Amazon so that it may pass the information to the Internal Revenue Service in the United States.

What Are the Benefits of Selling on Amazon?

There are a lot of benefits to starting an Amazon business compared to selling online through other platforms and channels. For one thing, you’re limited to selling in Canada – Amazon makes it easy to sell worldwide. You’re already guaranteed a lot of traffic by having a presence on the online retailing giant with a vast user base compared to setting up your site and having to promote it. Because you have less marketing and promotion to do, you save money.

It’s also a very efficient way to sell online – the clear procedures and rules Amazon has in place ensure you have a process to promote, sell, and fulfill orders in a manner that delivers an optimum customer experience. Ultimately, it’s easy to enter the e-commerce world, and you can still complement your Amazon business by selling through other channels.

What Insurance Do Amazon Sellers in Canada Need?

If you’re selling anything online, you need e-commerce insurance, which provides financial protection against the risks you are exposed to as an online business owner. 

An e-commerce insurance policy typically includes cyber liability and product liability insurance. Moreover, it’s worthwhile to consider upping your protection by including commercial property insurance to protect your place of business, its contents, and inventory, and commercial general liability insurance to safeguard your finances from the risk of third-party bodily injury and property damage claims.

Also, keep in mind as of September 1, 2021, Amazon requires all sellers to carry liability insurance who earn more than $10,000 in monthly sales, whether you use FBA or FBM to deliver your products to customers. 

– Reviewed by Matt Jardine, Team Lead, Property & Hospitality, Zensurance.

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