The internet has opened many doors for merchants, big and small. With the advent of online marketplaces like Amazon, Etsy, Shopify, WalMart and Ebay, sellers can more easily get their merchandise into the hands of sellers across the world. But what happens when you spend time building up an account with positive product and merchant reviews and then you decide you’d like to sell your business?
You check your online seller agreement with Amazon only to discover that your seller account, with all of its reviews, is not generally transferable. Amazon’s official advice is that, “If the ownership of a business changes for any reason, the new owner needs to establish a new seller account.” What? Well, this doesn’t mean that you can’t sell your online business and its assets. But most online marketplaces have good reasons for making sure that you transfer your assets related to their online storefronts the right way.
- Avoiding Fraud
There would an inherent risk to both the online marketplace and its sellers if accounts aren’t transferred appropriately. There is a risk of fraud if someone appropriates your account and changes the bank account or other information like the Employment Identification Number. The online marketplace could be on the hook for money stolen from your business.
- Ensuring State Sales Tax Is Paid
After the Supreme Court ruling in the South Dakota v. Wayfair case, online sellers may be required to collect sales tax for individual states where the consumer resides. For an online marketplace, this makes ensuring that every seller’s tax information is up to date imperative. Thirty-one states currently have tax laws taxing internet sales.
Of course you can sell your business, but Amazon’s sellers agreement makes it clear that preparing to sell, getting your accounting in order and getting professional advice, can be absolutely essential. When you’re preparing to sell your business, a professional broker or attorney can help you navigate the right way to transfer your assets.
Transferring an online business is unique, and it is important to have legal and accounting advisors who have experience in mergers and acquisitions of eCommerce businesses. Our team has worked on hundreds of eCommerce transactions including many Amazon.com transactions.
If you need strategic advice or contractual and transactional assistance for your business, we can help you develop thoughtful solutions. Send us a message or call us at (314) 454-9100 to schedule a consultation.