You may be wondering how much money you will need to get started. In my opinion, that is totally dependent on how quickly you want to grow. I started my business with $3,000 total. In addition to buying products, you will need money to register your business, buy supplies, buy software, and other administrative expenses. This business is a numbers game; the more quickly you can buy products and resell them, the faster your business will grow.
Here is an overview of everything you need to get started.
Register Your LLC – Cost Varies By State
I need to preface this by saying that I am not a lawyer and cannot give legal advice, just my opinion. There are many business entities to choose from. The most common are sole proprietorship, limited liability company (LLC), partnership, corporation and S corporation. There are many differences regarding rules and taxes for these different entities.
I started my business as a sole proprietor and had to form an LLC as the business grew, which was a pain. My advice would be to form an LLC right away, so you don’t have to worry about it later. This can easily be done by consulting with a local accountant, using LegalZoom or even filing it yourself.
Once you have formed your LLC, it is a good idea to apply for an EIN. Most wholesale companies ask for your EIN on their applications and you will be forced to use your social security number if you do not have one. It also makes you look more professional.
Obtain Your Resale Certificate – Cost Varies By State
The resale certificate should be obtained from your home state and allows you to collect sales tax to be remitted back on a monthly, quarterly or yearly basis (filing basis is set by the state and depends on your sales volume). Most wholesale companies require a resale certificate, so this is very important.
Amazon Professional Selling Account – $39.99/month
There are two options when it comes to Amazon selling accounts: Professional and Individual. The Professional plan costs $39.99/month and the Individual plan is free. There is an additional $0.99 per item selling fee on the Individual selling plan, so if you sell more than 40 items per month the Professional plan pays for itself. The Professional plan also allows you to sell in another 10 categories on Amazon. I highly recommend starting out with the professional plan right away.
Pro tip: If you sign up for a Professional plan and don’t have any sales or inventory at Amazon’s warehouses for a few months, you can usually open a case and request a reimbursement for the monthly subscription charge.
GoDaddy Bookkeeping – $9.99/month
There are many options when it comes to bookkeeping, but I believe GoDaddy Bookkeeping is the best solution for Amazon sellers. It uses the cash method of accounting, which is much easier to maintain than the accrual method. The best part about GoDaddy Bookkeeping is that it syncs with your Amazon account through their API! This means that all of your income and expenses from Amazon will automatically appear in your bookkeeping software, which makes keeping track of everything much easier. All you need to worry about recording is COGS (Cost of Goods Sold), office supplies, office expenses, mileage and other expenses that may be applicable to your business.
GoDaddy Bookkeeping will also show you an estimate of how much taxes you owe (based on your income), which makes remitting your quarterly payments to the IRS very easy. You can also record these payments to the IRS and sales tax payments to the states you collect in. Please note that you need to be on the Amazon Professional Selling Plan to obtain an API Key.
TaxJar – $19/month
TaxJar helps you automate your sales tax calculations, reporting and filings. When you are collecting sales tax in states where you have nexus, you need to report and remit that money back to the states. TaxJar makes this easier by providing instructions and reports for filing. You can also enroll in their AutoFile program ($25 per filing) to have them do all the work for you! I highly recommend AutoFile as it has personally saved me a lot of time.
Jungle Scout Pro Chrome Extension – $197 one-time payment
Jungle Scout Pro is a Google Chrome extension that allows you to see product data at a glance. Once the extension is installed, you just go to any Amazon page with products and click the ‘JS’ button to instantly see sales data. This is helpful for both wholesale and private label to see estimated quantities sold, estimated sales per month, etc. There are other companies that offer similar extensions, but I believe Jungle Scout is worth the investment. Based on my experience, they seem to be most accurate. It’s also nice that the extension is a one-time fee.
Keepa Chrome Extension – Free
Keepa is a free Google Chrome extension that allows you to see price and sales rank history for any product. This is extremely helpful to see how consistent prices are and how often an item sells. You will need both Keepa and Jungle Scout because they serve different purposes. Keepa allows you to see price and sales rank history for a product, while Jungle Scout gives estimated quantities sold and much more information.
Helium 10 – $97/month (only required for the private label business model)
If you are going into private label, Helium 10 will make your life so much easier. This awesome software can do everything: product research, keyword research, reverse ASIN searches, listing optimizer, index checker, keyword tracker, hijacker alert, inventory protector, refund genie (pays for itself if you sell enough), misspellings checker and track profits.
Printer with Scanner – $184.99
You will need a nice printer with a scanner for easy expensing of receipts. I keep paper copies of all receipts and also upload them to GoDaddy Bookkeeping for better organization. The automatic document feeder on this printer makes expensing receipts so much faster!
The rest of the items are only required if you are preparing your own shipments for Amazon FBA. If you are using a prep center, these are not required.
FBA Labels – $14.50
These are the labels you will use to print your Amazon barcodes for your products.
Box Shipping Labels – $10.99
These are the labels you will use for the outside of your boxes when sending to Amazon FBA. The left side will be a shipping label (e.g. UPS) and the right side will be for Amazon to scan when receiving your products.
Pro tip: If you plan on using UPS for shipping, you can get these labels for free by creating an account here. Once your account is created and you are logged in, go to ‘Shipping’ –> ‘Order Supplies’ –> ‘Labels and Stickers’ –> ‘UPS WorldShip Peel-and-Stick Labels – (2 per Sheet)’. You will only be able to order 50 sheets at a time. Check the box that says ‘Update Supplies Order’ and click the ‘Add Selected to Your Order’ button at the bottom of the page. Then scroll to the top of the page, click ‘View Your Supplies Order’, confirm your shipping information and click ‘Submit Order’.
Bubble Wrap – $16.88
I always line the bottom of my boxes with one layer of bubble wrap to protect the products during shipping. You may also need air pillows to fill any empty spaces at the top of the boxes (so your products aren’t flying around in the box during transit).
Poly Bags – $23.99
Amazon requires that each unit must be contained within a single, secure package. If you are shipping any loose items or sets, they must be in poly bags. You can read more about this requirement here.
Suffocation Labels – $8.99
This is a Set Labels – $6.99
If you are shipping sets (multiple products that are sold as an individual unit), your poly bags must have a ‘This is a Set’ label. This lets the Amazon warehouse know not to separate the products.
Box Cutter – $13.99
It’s always nice to have a box cutter for opening boxes that you receive from suppliers.
Tape Gun – $13.79
You’ll need a tape gun to seal your boxes and send to Amazon FBA.
Boxes – $1.36/box
I have found that Home Depot has the highest quality boxes. I think it’s a bit cheaper to pick them up in the store, but you can also order online. It is also possible to reuse the boxes you receive from suppliers if they aren’t too damaged.
Inventory – Up to You
I would recommend having at least $1,000 to spend on inventory, but this number is totally up to you. It will be cheaper to start out with wholesale instead of private label.
Total Required = $659.45
I hope this gave you a good estimate of the total required to start an Amazon FBA business. Please remember that these are estimates and your actual total will vary depending on business model (wholesale or private label), software used, whether or not you are using a prep center, etc.