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Amazon FBA

Know your legal obligations while selling over third party plate-form (e.g. Amazon, Wayfair)

The United States taxation system can be difficult to understand, especially for foreign nationals doing business in USA. A foreign national may be subject to one of two drastically different systems of taxation by the United States depending on whether he/she is classified as a resident or a non-resident alien of the United States. The determination of residency status is critical.Normally foreigner are considered as non-resident due to physical non presence in USA but that doesn’t exempt them from complying with local tax laws

How do you know you are liable for US tax laws: 

In general, to determine how your U.S. earned income should be taxed, you will need to determine your company’s involvement in the U.S. by checking if any of the followings apply to you:-

Level 1. Your company does have any connections to any of the U.S. suppliers/vendors, Customers or having any offices and any employees on the U.S. soil.

Level 2. Your company is using U.S. suppliers and logistics (i.e., Fulfilled by Amazon or other 3rd Party Logistics) to produce revenue, but does not have employees, office or warehouses in the U.S. In that case, your company is deemed to be “engaged in a trade or business in the United States (ETBUS)” and have generated “Effectively Connected Income (ECI)”.

Level 3. Your company has an office or employees in the U.S. (i.e., fixed place of business). You regularly conduct business with U.S. companies. You have continuous projects (over 12 months) or you provide services for 183 days or more in the U.S. In those cases, you will be deemed to have an Effectively Connected Income (ECI) and a Permanent Establishment (PE) in the U.S.

What constitutes an Effectively Connected Income (ECI) for Canadian Amazon Sellers?

In order to have ECI in the U.S., you need to have business activity in USA. Examples of that activity include:

• Using 3rd Party Logistics (3PL) like Amazon FBA, Wayfair
• Use of U.S. facilities (warehouses, storage, display)
• Passing the title of imported goods in the U.S. (if you are importing from another country)
• Using dependent agents (like employees or salespersons) to conduct business in the U.S.
• Having a US-based bank account. 

Legal Obligation and Requirements for a seller selling product over Amazon/Wayfair or similar service provider:

Non-resident aliens are normally taxed only on income derived from US sources. US-source income that is considered “effectively connected” with a US trade or business. If you are one of those matches with any of the above classification for business doing in USA, you are liable for the followings as per Federal and State Income Tax Laws-

• Register your business in USA
• Apply for EIN/Federal Tax ID number for the business
• Register your business for sales/use taxes in particular state/s
• File your Sales and Income Tax Returns to IRS and particular state/s periodically 

Consequences for the non-compliance: 

• Penalties and Interest on taxes due shall be imposed and keep building up over the period and that could lead to file for bankruptcy in USA
• Any such non-compliance could lead to freezing business and/or bank accounts for the businesses till all dues are paid
• In case of intentional non-compliances or omission assuming other factors involved personal liability could come on person-in-charge of the company (e.g. foreign national)
• Practically such business and beneficiary/person-in-charge could fall in so call, black or observation list maintain and followed by Treasury department and FBI
• Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined up to $100,000 ($500,000 in the case of a corporation), or imprisoned up to 5 years, or both, together with the costs of prosecution
• In addition any such handling of the government notices and cases would incur lots of fees charge by the Accountant and Lawyers.

Ever wondered why some organizations are moving up the success ladder faster; getting better assignments, interesting projects and reaching out to more and more prospects. It may not be because they are technically superior or have an organized team or are more skilled but may be because they operate with a different mindset.

What might be making them effective is the way they present their work and organization making a clear connection with the customers, basically thinking about the bigger picture by taking a look on all aspects of the working of the organization. But these changes do not come from the organizations perspective as no matter how insightful the team or leaders be, they would look from the inside out and not outside in as a business consultant would.

What is the role of a business consultant?

Consultants are basically advisors. They understand your business and help you solve problems from a different perspective as they survey the entire field and uncover solutions that you never thought were possible.Business consultants adopt a totally different mindset as they focus on how to solve the problem instead of simply completing the task at hand.

Here are five specialties that a business consultant can help your organization with.

1. Perspective

Most often businesses fall into a routine bringing in same results. A new insight without any baggage could be a chance for your organization to grow at a better speed and that change is usually brought in by consultants as they invest themselves in diagnosing and finding creative solutions from a different perspective.

2. Optimization

Sometimes there are skill gaps or overlaps or communication gaps that can result in reduced productivity among the team. Business consultants evaluate and again put solutions forward that save resources and increases harmony and productivity. It could also be by automating processes to optimize the working of the organization.

3. Facilitating Teams

Skills are important for great work, but so are personalities and sometimes personality differences can cause more harm to an organization than developed skills. Consultants work through any such underlying issue to develop a cohesive environment and also make recommendations for missing or overlapping skills for the team to function well.

4. Crisis Management

Declining sales, employee turnover, restructuring…there are many factors that could cause a crisis situation within the organization throwing the company into a downward mode. Business consultants help by assessing situations and planning for them before the actual crisis begins or turn around the situation as soon as possible.

5. New Opportunities

Businesses looking for growth have immense options but sometimes they need a business consultant to sort and pick the most suited growth opportunity for them. Most of the times companies have a fair idea of what they are looking for but might lack in direction or resources or processes and here the right consultant can identify the need and come out with the perfect solution helping your company grab new and better opportunities.

Whether it is looking through a new perspective, fix a broken team, improve productivity, automate processes for optimization, find out-of-the-box solutions, deliver grave news to employees, fix a crisis, identify the need of business or create a new venture, we at Overseas Corporate Professional can assist you to take your business to newer heights.

We have been serving in this industry for close to two decades now and if your business needs guidance whether for the domestic or international market, we are just a shout away. You can rely on us for all your business needs.