If You’re Currently A Sole Trader In Australia, How Easy Is It To Switch To A Company Later? (Your Questions Answered)

Most Amazon sellers start as sole traders, but there may come a time when things get more serious and you want to become a proprietary limited company.

I get asked this question often, and today, we’re going to talk about why you might want to form an Australian company and the things you’ll need to do!

Operating as a sole trader is the most common way to start your journey as an Amazon seller. It’s easy, requires minimal admin, and allows you to get your venture off the ground as quickly as possible.

But, as your business grows, you might wonder about the advantages of becoming a proprietary limited company (Pty Ltd).

Why become a Pty Ltd?

The biggest advantage of being a Pty Ltd is having limited liability. This means that your company will be a separate legal entity and therefore be liable for its own debts – protecting your home and other personal assets.

That’s not all. You might consider forming a Pty Ltd to improve tax efficiency, to strengthen your borrowing power, or to give your brand more credibility in the eyes of your customers and suppliers. 

It’s clear that there are some valuable advantages to switching – but, how easy is to go from being a sole trader to a fully-fledged Pty Ltd company?

What you’ll need to do to switch from a sole trader to Pty Ltd company

I’m assuming that you’re a sole trader selling on Amazon and you already have an ABN (Australian Business Number) and a business name. 

If you haven’t registered a name yet, head to ASIC (Australian Securities & Investments Commission) and check to see if your desired name is available. This is the only step to being a sole trader that should cost you any money – around $37 a year.

Now, let’s get started!

Firstly, you’ll need to get a new ABN as you’re going to be taxed differently. Then, take the business name that you acquired from ASIC over to your Pty Ltd company. 

Now, to avoid any hassle or disruption, I strongly advise you to tell Amazon what you’re doing. So, contact Amazon Seller Central and explain that you’re changing your company structure and you’re now the director. Tell them you’ll have a new business bank account where your money will need to be deposited and a new debit or credit card for your seller fees. End by asking them if they need to know anything else before you take any more steps. 

As it’ll be a separate legal entity, your new company will require its own bank account – you can no longer just use your own or upgrade it in any way (remember the part about protecting your assets?) With the new account comes a shiny new company debit or credit card which you’ll use for business transactions and your seller fees.

If you don’t ‘pre-warn’ them about changing your bank details, Amazon may think you’ve been hacked and shut your account down – so, don’t forget!

And, that’s pretty much it. There are only a few simple but very important steps to switching from a sole trader to a Pty Ltd, and then you begin a new, exciting chapter in your Amazon business.

Thanks for reading guys and gals!

Much love.

Stacey xx

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