Why Incorporate
Many Amazon sellers start as sole traders because it is simple and free to set up. But as your business grows, incorporating as a limited company offers advantages: limited liability (protecting your personal assets), tax efficiency at higher profits, professional credibility with suppliers, and easier access to business banking and credit. Most sellers consider incorporating once profits consistently exceed thirty to forty thousand pounds per year.
The Process
Register through Companies House online. Choose your company name, provide a registered office address, appoint at least one director (yourself), and submit the incorporation documents. The process takes 24 to 48 hours for standard registration and costs twelve pounds for online filing. You will receive a Certificate of Incorporation with your company number.
After Incorporation
Register for Corporation Tax with HMRC within three months of starting to trade. Set up a business bank account in the company name — most high street banks offer this, though online business banks often provide faster setup. Update your Amazon Seller Central account with your new company details. Register for VAT if your turnover exceeds or is expected to exceed the threshold.
Running Costs
A limited company has ongoing obligations: annual accounts filed with Companies House, a Corporation Tax return filed with HMRC, a Confirmation Statement filed annually, and proper bookkeeping throughout the year. Most sellers hire an accountant to handle these requirements, typically costing five hundred to two thousand pounds per year depending on complexity.
Sole Trader vs Ltd: The Decision
Stay as a sole trader if your profits are low and simplicity matters most. Incorporate when your profits are high enough that the tax savings exceed the additional costs of running a company. The crossover point depends on your personal circumstances — an accountant can calculate the exact savings based on your numbers.