How to Start an Amazon FBA Business in Canada
Everything you need to start an Amazon FBA business in Canada: incorporation, Amazon Seller account setup, product sourcing, FBA enrolment, HST registration, importing inventory, bookkeeping, tax obligations and scaling. Written by a licensed CPA who works with Amazon sellers every day.
The Complete CPA Guide to Starting an Amazon FBA Business in Canada
We work with Canadian Amazon FBA sellers at every stage: first-time sellers launching their first product, established sellers scaling to $500,000+ in revenue and multi-channel operators expanding from Amazon to Shopify and wholesale. The most common mistake we see is launching without the right business structure, HST registration, import process and bookkeeping system in place. Fixing these after the fact costs 3 to 5 times more than doing it correctly from day one.
This guide covers every step in the correct order. Follow it and your Amazon FBA business will be set up properly from a legal, tax and financial perspective. For our full Amazon seller accounting services, visit our Amazon FBA and Shopify sellers page.
Amazon FBA Startup Costs in Canada
| Item | Cost | Notes |
|---|---|---|
| Federal incorporation | $273 | Includes Corporations Canada filing fee. We handle the full incorporation. Provincial registration additional if needed. |
| Ontario corporation registration | $335 to $360 | Required if incorporating provincially. Federal incorporation + Ontario extra-provincial registration is the most common path. |
| Amazon Professional Seller account | $29.99 CAD/month | Required for FBA. Individual accounts cannot use FBA. Professional account unlocks advertising, promotions and bulk listing tools. |
| Initial inventory (first order) | $2,000 to $15,000 | Depends on product, quantity and sourcing method. Private label from China: $3,000 to $10,000 for first MOQ. Wholesale from Canadian distributor: $2,000 to $5,000. |
| Product photography | $150 to $500 | Amazon requires white-background main image. Professional photography with lifestyle images recommended. 7 to 9 images per listing. |
| UPC/EAN barcodes | $30 to $250 | GS1 Canada membership required for legitimate barcodes. Single GTIN: $30. Pack of 10: $250. Required for Amazon product listing. |
| Shipping to Amazon FBA warehouse | $500 to $3,000 | From supplier to FBA. Sea freight from China: $2,000 to $5,000 per container. Courier from Canadian distributor: $200 to $800. Included in landed cost. |
| Amazon PPC advertising (first 3 months) | $500 to $3,000 | Sponsored Products campaigns required for launch visibility. Budget depends on category competitiveness. Typical starting budget: $20 to $50/day. |
| Bookkeeping (monthly) | From $150/month | Settlement reconciliation, FBA fee tracking, inventory valuation, HST filing, monthly financials. T2 filed FREE. Amazon Seller Services → |
| HST registration | $0 | Free to register. Voluntary registration recommended at launch to claim ITCs on startup inventory, equipment and advertising. |
Realistic First-Year Budget: A Canadian Amazon FBA business launching a single private label product typically needs $5,000 to $20,000 in total startup capital. This covers incorporation ($273 to $360), first inventory order ($3,000 to $10,000), shipping ($500 to $3,000), product photography ($150 to $500), barcodes ($30 to $250), Amazon PPC ($1,500 to $9,000/year) and bookkeeping ($1,800/year). The most common mistake is underfunding the PPC budget. New listings need advertising to generate initial sales velocity and reviews.
10 Steps to Start Your Amazon FBA Business in Canada
Choose Your Business Structure
You have three options: sole proprietorship, partnership or incorporation. For Amazon FBA, we recommend incorporation from day one for three reasons: the Small Business Deduction reduces the corporate tax rate to 12.2% on the first $500,000 of active business income (vs. up to 53.53% personal tax in Ontario), the corporation provides liability protection (your personal assets are separate from the business) and the corporation allows you to claim business expenses, manage salary/dividend payments and build retained earnings for reinvestment.
| Structure | Tax Rate on First $100,000 Profit | Liability Protection | Recommended For |
|---|---|---|---|
| Sole Proprietorship | Up to 43.41% (Ontario, marginal) | None. Personal assets at risk. | Testing a product idea with under $5,000 investment. Plan to incorporate once profitable. |
| Corporation (CCPC) | 12.2% (combined federal + Ontario SBD rate) | Full. Personal assets separate. | Every Amazon FBA seller planning to do this seriously. Incorporate before your first inventory order. |
| Partnership | Split income between partners (personal rates apply) | Depends on structure (general vs. limited). | Two or more partners launching together. Consider incorporating the partnership. |
Incorporate Before Your First Inventory Purchase: If you buy $8,000 in inventory as a sole proprietor and incorporate later, you cannot transfer that inventory to the corporation without tax consequences (section 85 rollover required). Incorporating first means all purchases, expenses and revenue flow through the corporation from day one. The cost of a section 85 rollover after the fact is $1,500 to $2,500. The cost of incorporating first is $273 to $360.
Incorporate Your Business
We recommend federal incorporation through Corporations Canada for Amazon sellers because it allows you to operate in every province and on Amazon.com (US marketplace) without provincial restrictions. The process takes 1 to 3 business days.
| What You Need | Details |
|---|---|
| Corporation name or numbered company | Numbered company (e.g. 12345678 Canada Inc.) is fastest. Named company requires a NUANS name search ($13.80) to confirm the name is available. |
| Registered office address | Your home address or a virtual office. This is a legal filing address, not a storefront. |
| Director(s) | At least one director who is a Canadian resident. You can be the sole director. |
| Share structure | Common shares to the founder. We recommend multiple share classes from day one (common, preferred, non-voting) for future tax planning flexibility (LCGE, family income splitting). |
| Corporate minute book | Legal record of the corporation: articles, bylaws, director resolutions, share certificates. We prepare the complete minute book at incorporation. |
Get Your Business Number, HST and Payroll Accounts
After incorporation, register with CRA for a Business Number (BN), a GST/HST account and (if you plan to hire employees) a payroll account. The BN is required to open a business bank account, register for HST and set up your Amazon Seller account.
| Registration | Required? | Why |
|---|---|---|
| Business Number (BN) | Yes | Required for all CRA filings. Issued automatically with federal incorporation or registered separately online. |
| GST/HST account | Mandatory over $30,000 revenue. Voluntary registration recommended at launch. | Voluntary registration allows you to claim ITCs on startup inventory, equipment, advertising and other pre-revenue expenses. Without registration, you pay HST on expenses but cannot recover it. On $10,000 in startup costs, the HST is $1,300 you cannot claim back without registration. |
| Payroll account (RP) | Only if you hire employees | Required to remit CPP, EI and income tax deductions. Not needed if you pay yourself through salary/dividends only (no other employees). |
| Import/export account (RM) | Yes, if importing product from outside Canada | Required to clear customs. Assigned automatically when you register for a BN. Needed for importing from China, US or any other country. |
Open a Business Bank Account
Open a dedicated business bank account in the corporation's name. Never mix personal and business transactions. You will need: the articles of incorporation, the corporate minute book (or a letter from your CPA confirming the corporation's details), the Business Number and personal ID for the director. We recommend a bank that supports USD sub-accounts if you plan to sell on Amazon.com, so USD payouts from Amazon deposit directly without forced conversion at unfavourable rates.
Create Your Amazon Seller Account
Register for an Amazon Professional Seller account at sellercentral.amazon.ca. Use your corporation's legal name, business address, Business Number and business bank account. Amazon will verify your identity (utility bill, bank statement, government ID). The verification process takes 1 to 5 business days. Once approved, you can list products, enrol in FBA and access advertising tools.
| Amazon Account Detail | What to Use |
|---|---|
| Legal business name | Your corporation's legal name as registered with Corporations Canada. |
| Business address | Your registered office address (home or virtual office). |
| Bank account | Your corporate business bank account. Amazon deposits payouts here. |
| Tax information (W-8BEN-E) | If selling on Amazon.com, you must file Form W-8BEN-E to claim the Canada-US treaty rate (0% withholding on business income). Without this, Amazon withholds 30% of US revenue. |
| Amazon.com vs Amazon.ca | You can sell on both from a single account (North America Unified Account). Amazon.com has 10x the customer base but requires USD bank sub-account and W-8BEN-E. |
Source Your Product
Choose your sourcing model. Each has different startup costs, margins and complexity.
| Sourcing Model | Description | Startup Cost | Typical Margin |
|---|---|---|---|
| Private label (China via Alibaba) | You create your own branded product manufactured by a Chinese factory. You own the brand, listing and Buy Box. Highest long-term margin but longest lead time (8 to 12 weeks from order to FBA). | $3,000 to $10,000 (first MOQ) | 25% to 40% after FBA fees |
| Wholesale (Canadian or US distributor) | You buy existing branded products from authorized distributors and resell on Amazon. Lower margin but faster to start. No brand building required. Risk: Buy Box competition. | $2,000 to $5,000 | 15% to 25% after FBA fees |
| Retail arbitrage | You buy clearance or sale items from retail stores and resell on Amazon for a profit. Lowest startup cost but not scalable. Time-intensive. Restricted categories may block listings. | $500 to $2,000 | 20% to 50% (per item, but low volume) |
| Online arbitrage | Same concept as retail arbitrage but sourced online (other e-commerce stores, liquidation sites). Software tools identify price gaps. Moderate scalability. | $1,000 to $3,000 | 15% to 35% after fees |
Import Your Inventory into Canada (If Sourcing Internationally)
If you are importing product from China, the US or any other country, you need a customs broker, an import/export account (RM number) and an understanding of duties, taxes and compliance requirements.
| Import Step | What You Need |
|---|---|
| Customs broker | A licensed customs broker clears your shipment through CBSA (Canada Border Services Agency). The broker files the customs entry, calculates duties and collects HST on import. Cost: $50 to $150 per entry. |
| HS code (tariff classification) | Every product has a Harmonized System code that determines the duty rate. Duty rates range from 0% to 18% depending on the product and country of origin. Your customs broker assigns the HS code. |
| Import HST | HST is assessed on the value of the imported goods (purchase price + freight + insurance + duties). If you are registered for HST, the import HST is recoverable as an ITC. On $10,000 in imported goods, the import HST is $1,300 (Ontario 13%). |
| Product compliance | Certain products require Health Canada approval (cosmetics, health products), CSA certification (electronics), CFIA compliance (food) or Industry Canada certification. Verify before ordering. |
| Landed cost calculation | Landed cost = product purchase price + freight + duties + customs brokerage + import HST (if not recoverable). This is your true inventory cost per unit and the basis for COGS calculation. |
Ship to Amazon FBA and Create Your Listing
Once your inventory arrives in Canada (or directly from the manufacturer), you ship it to Amazon's FBA warehouse. Amazon assigns a fulfilment centre. You create a shipping plan in Seller Central, label each unit with an FNSKU barcode (Amazon's internal identifier) and ship via courier or LTL freight. Once received, Amazon stores, picks, packs and ships every order. You create your product listing with a title, bullet points, description, A+ content (if brand registered), images and backend keywords. The listing quality directly determines your conversion rate and advertising efficiency.
Set Up Your Bookkeeping and Tax Compliance
Your bookkeeping must be set up correctly from the first settlement report. Amazon FBA bookkeeping is not the same as standard business bookkeeping. Settlement reports have 40+ line items. FBA fees, refunds, advertising, reimbursements and currency conversion must all be tracked separately. Inventory must be valued with landed costs. HST must be filed with every ITC claimed.
| Setup Item | What We Do |
|---|---|
| QBO configuration | QuickBooks Online set up with an Amazon-specific chart of accounts: revenue by marketplace (Amazon.ca, Amazon.com), FBA fees by type (referral, fulfilment, storage, advertising), COGS, inventory with landed costs and HST tracking. |
| Amazon settlement integration | Every bi-weekly settlement report reconciled line by line: product sales, referral fees, FBA fees, storage fees, advertising costs, refunds, reimbursements and adjustments. Matched to bank deposits. |
| Inventory valuation | FIFO or weighted average. Landed cost per unit: product cost + freight + duties + brokerage. Unsold inventory carried as a balance sheet asset. COGS calculated only when units sell. |
| HST filing | HST return prepared and filed every period. ITCs claimed on all eligible startup expenses: inventory, FBA fees, shipping, advertising, software, packaging, professional fees. Amazon-collected HST reconciled. |
| Monthly financial statements | P&L by marketplace, gross margin, FBA fees as a percentage of revenue, advertising ROI, inventory valuation and cash flow delivered monthly. Year-end ready for your T2. |
| T2 corporate tax return | Filed FREE for every bookkeeping client. Financial statements, T2, GIFI, all CRA schedules, e-filing and CRA audit support included at no additional charge. |
Amazon FBA Bookkeeping from $150/Month. T2 Filed FREE.
Settlement reconciliation, FBA fees, inventory, HST, monthly financials. Set up correctly from day one.
Launch, Advertise and Scale
Once your listing is live and inventory is in the FBA warehouse, launch your Amazon PPC campaigns. Start with Sponsored Products (automatic targeting) to discover which keywords convert, then switch to manual targeting with exact match on the top-performing keywords. Monitor your ACoS (Advertising Cost of Sales) weekly. A healthy ACoS for a new product is 25% to 40% during the launch phase, decreasing to 15% to 25% as organic rankings improve. Track your true profitability monthly by reviewing the financial statements we deliver: revenue minus COGS minus FBA fees minus advertising minus all other expenses equals your actual net profit. Scale by adding new products, expanding to Amazon.com (US marketplace) or adding Shopify as a second sales channel.
Amazon FBA Startup: Real Client Results
Private Label Launch, Kitchen Products
A first-time Amazon seller in Ontario incorporated through us, registered for HST voluntarily and launched a private label kitchen product sourced from China. Total startup investment: $12,400 (incorporation $273, inventory $7,200, shipping $1,800, photography $350, barcodes $30, PPC budget $2,747). We set up QBO with Amazon-specific accounts from day one, filed for HST ITCs of $1,612 on startup costs in the first period and delivered monthly financials from month one. The seller reached $14,800/month in revenue by month 6 with a 32% net margin after all FBA fees and advertising.
Wholesale FBA, Health and Beauty
A Canadian seller launched an Amazon FBA wholesale business buying from authorized Canadian distributors. No importing required. We incorporated the business, registered for HST, set up QBO and configured the chart of accounts for wholesale tracking (purchase orders, landed costs, supplier payment scheduling). The seller started with $4,200 in inventory across 8 SKUs and reached $8,600/month by month 4. Margin was tighter (22% after FBA fees) but inventory turnover was fast (3 to 4 weeks per batch).
Amazon.ca + Amazon.com Expansion
An existing Amazon.ca seller doing $18,000/month expanded to Amazon.com. We filed the W-8BEN-E (0% US withholding), set up a USD sub-account at the bank, configured QBO for multi-currency tracking and added Amazon.com as a separate revenue stream in the chart of accounts. USD revenue was converted at the actual settlement rate with FX gains/losses tracked separately. The US marketplace added $26,000/month in additional revenue within 5 months. Combined gross margin: 29%. ITCs on Canadian expenses allocated against zero-rated US exports produced a net HST refund of $4,200/quarter.
Sole Proprietor to Corporation Conversion
A Canadian Amazon seller who started as a sole proprietor reached $220,000 in annual revenue and was paying personal tax rates on all profit (approximately 43% marginal rate in Ontario). We incorporated the business, performed a section 85 rollover to transfer inventory and assets to the new corporation tax-free, registered the corporation for HST and set up corporate bookkeeping. The corporate tax rate dropped to 12.2% (SBD rate). Annual tax savings: $18,600. The section 85 rollover cost $2,200 but avoided $7,400 in tax that would have been triggered by a direct transfer.
10 Most Common Mistakes New Amazon FBA Sellers Make
| # | Mistake | Consequence | How to Avoid It |
|---|---|---|---|
| 1 | Not incorporating before buying inventory | Section 85 rollover required later ($1,500 to $2,500). Tax triggered on transfer. Personal liability exposure on all Amazon operations. | Incorporate first ($273 to $360). All purchases flow through the corporation from day one. |
| 2 | Not registering for HST at launch | HST paid on startup inventory, equipment and advertising cannot be recovered as ITCs. On $10,000 in startup costs, $1,300 lost permanently. | Register for HST voluntarily before your first purchase. Claim ITCs on every startup expense. |
| 3 | Recording Amazon deposits as revenue | Revenue is understated by 15% to 30% (the amount Amazon deducted for fees, refunds and advertising). P&L is wrong. COGS is wrong. Tax return is wrong. | Record gross sales, then track each deduction (FBA fees, referral fees, refunds, advertising) as a separate expense line. The deposit is the net amount. |
| 4 | Not tracking inventory with landed costs | COGS is inaccurate. Freight and duties are expensed immediately instead of capitalized into inventory. Gross margin is overstated. Year-end inventory valuation is wrong. | Capitalize all landed costs (product + freight + duties + brokerage) into inventory. COGS is recognized only when units sell. |
| 5 | Mixing personal and business bank accounts | CRA audit risk. Unable to prove which expenses are business. Bookkeeping costs double because transactions must be separated after the fact. | Open a dedicated corporate bank account. Every business transaction goes through this account. No personal purchases. |
| 6 | Not filing W-8BEN-E for Amazon.com | Amazon withholds 30% of US revenue. The withholding is recoverable via tax treaty but the cash flow impact is immediate and the recovery process takes months. | File W-8BEN-E through Amazon Seller Central before your first US sale. The Canada-US treaty rate is 0% on business income. |
| 7 | Ignoring FBA storage fees on slow-moving inventory | Monthly storage fees accumulate. Long-term storage surcharge hits at 181 and 365 days. A $5 product sitting in FBA for 12 months can cost more in storage than the product is worth. | Monitor inventory aging monthly. Remove or liquidate slow-moving inventory before the long-term surcharge threshold. We flag aging inventory in monthly reporting. |
| 8 | Underfunding PPC advertising at launch | New listings have zero organic ranking. Without PPC, nobody finds your product. Sales velocity never builds. The listing dies. | Budget $20 to $50/day for the first 3 months. Start with automatic campaigns, then switch to manual targeting on proven keywords. Monitor ACoS weekly. |
| 9 | Not claiming Amazon reimbursements | Amazon loses, damages or destroys FBA inventory. Reimbursements appear in settlement reports but many sellers do not verify them against actual inventory losses. | Reconcile reimbursements against inventory records monthly. If Amazon has not reimbursed for lost or damaged units, file a claim through Seller Central. |
| 10 | Not having a CPA who understands Amazon | Settlement reports are reconciled incorrectly. FBA fees are lumped together. Inventory is not tracked. ITCs are not claimed. The T2 is filed with errors. CRA audits the return. | Work with a CPA who reconciles Amazon settlement reports, tracks FBA fees by category, values inventory with landed costs and files HST with every ITC claimed. Amazon Seller Services → |
Frequently Asked Questions: Starting an Amazon FBA Business in Canada
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