Selling on Amazon - Things I should know if

I am selling as a sole trader or a limited company

The way you run your business online depends on how big the business is. If you are not trading on a regular basis then it might be just convenient and tax efficient to register yourself as a sole trader to run your online business.

However, if your business is widespread or it's just a start but you expect your business to expand then working as a limited company right from the start might be a good option.

Every individual situation is different, every person starting a new business has different circumstances and therefore not one business structure would suit all even if you are running the same size of business.

Let's look at the following points which you should know once you have decided to start your business online.

Costs of Registering the business:

If you chose to work as a sole trader you just have to register for a self assessment tax return if you are earning more than £1000 per year. You do not pay anything for registering. You just pay your taxes by 31 Jan of the following year, you will have to fill in your tax return and HMRC will calculate the taxes for you.

Whereas, if you want to incorporate your business you have to choose a name and register your business with the Company's house. The registration fee is around £12 and the process is not that complicated. You can even hire an accountant to do this for you.

Registering for taxes:

You will have to pay taxes when your business is making profits but you have to register yourself to let HMRC know that you are doing a business and you have to submit your returns (incase you are a sole trader) or annual accounts (if you are a registered business) even if you are making a loss.

You will have to register for self-employment by 5th October in your business's second tax year. You can be fined if you don't do it on time.

If you are an incorporated business, you can register for corporation tax at the same time as when you register the business with the company's house. Otherwise you can do it at any time within 3 months of starting your business.

Registering for VAT

You will have to register for VAT as soon as you meet the registration requirements for VAT. It won't matter if you are running the business as a sole trader or as a limited company .

Taxes

If you are starting to sell online as a side business while you are already employed in a company you should note that you might be using all your personal allowance so any profits that you will make from your online business you will have to pay personal taxes on it.

If you are not employed anywhere then you can earn upto £12, 570 tax free if you are a sole trader.

If you run a company you will be paying tax on all your profits but the rate you pay is less than the personal tax.

An accountant can help you with the evaluation of your situation and conclude what business structure will work for you. Please contact Taxaccolega, e-commerce accountants in Croydon and we will be happy to help you.

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From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House.

Companies House will issue a personal code to PSCs.
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2.2 You accept full responsibility for any false, misleading, or incomplete information supplied, and acknowledge that this may lead to penalties or rejection of your verification by Companies House.
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Selling on Amazon - Things I should know if I am selling as a sole trader or a limited company