Quick Guide to Forming an LLC for Your Amazon Seller Business

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(This commodity was last published on Feb 21, 2017. It'due south been updated for accuracy and completeness.)

Launching your Amazon Sellers business relationship is a big bargain! It's the first of a business organisation venture that could turn into a serious source of income for y'all, especially if you discover the right product niche.

For whatever entrepreneur though, there's some dorsum office tasks to consider like protecting your business concern assets and managing your finances. While these aren't as heady as selling, they're crucial in setting up your business organisation for the long term.

And, one of the most frequent questions we hear from new Amazon sellers is whether you need a business concern license.

The short answer to the questions is technically no. Yous don't need to license or annals your business to be able to sell products online including for Amazon.  Only, registering your Amazon business as a Limited Liability Corporation (LLC) is a elementary and inexpensive process that has some major payoffs for your finances and reputation.

Let'southward await at when forming an LLC tin brand sense for an Amazon Business concern.

Why Set Upward an LLC?

An LLC, or Limited Liability Visitor, is a formal business structure that offers personal liability protection. An LLC is a "separate legal entity," which means that your business organisation avails are carve up from your personal assets. And so, whatsoever issues with your business (like getting sued) won't put your personal avails (i.e., your house) at risk.

While selling online is relatively low take a chance, it's always better to exist on the safe side.

Do I Need an LLC to Sell on Amazon?

Y'all aren't required by law or Amazon policy to set an LLC before you lot outset selling. But there are a number of benefits, including:

Boost Your Reputation

Customers are more than likely to buy from established companies with business names. I style of demonstrating you're serious about your business is to form an official business organization entity such equally an LLC.

Also, forming an LLC protects your business proper name. No two business entities tin accept the aforementioned name in the same land.

Protects Your Personal Assets

This is the main reason to course an LLC. Information technology gives you peace of mind about keeping your personal assets (like your business firm) protected. Subsequently all, you don't want any unforeseen challenges (debts, obligations and other liabilities) in your Amazon business concern to take a price on your personal finances.

Piece of cake to Fix and Manage

You tin can set up an LLC for your Amazon seller business in a couple of hours using an online business organization formation company. Information technology's and then overseen by your state government. There's much less complexity and paperwork than a corporation.

Inexpensive

Nigh small business owners like an Amazon seller choose to set up an LLC considering they're unproblematic to manage and cheap. You'll pay a onetime filing fee (and some states crave an ongoing fee every 1 or two years). On average, an LLC fee costs $89.

You'll become the same advantages for larger corporations, but without any of the expensive rules, regulations, legal compliance, and paperwork needed with other types of business organisation structures.

Simplifies Finances

With an LLC, you tin can create a dissever bank account for your business. Separating your concern finances from your personal makes tracking your income, outgoings and profits clear and concise.

This will also make tax flavor for your business crystal articulate when you take an account with only business expenses, instead of mixing personal and business concern expenses in one account.

Tax Benefits

Dissimilar a corporation that pays its own taxes, an LLC is a "pass-through" revenue enhancement entity. When your Amazon seller business makes a turn a profit, the income "flows through" to your personal tax return and is taxed as normal. This tin proceed your bookkeeping costs down.

Yous also won't be "double taxed" — larger corporations have to pay taxation on their profits and then individuals pay tax again when they receive stock dividends. LLC businesses are not subject to this double taxation.

Manage Business Partners

It'due south easy to add new business partners to an LLC. And, you can apply an LLC operating understanding to outline daily operations and gear up rules if whatever conflicts arise in the future. You can plan out duties and responsibilities and how to resolve whatsoever disputes.

How to Setup an LLC for Your Amazon Seller Business

Follow these easy steps to set up your own LLC for your Amazon business organisation.

1. Proper name Your LLC

You'll need to create an original name for your Amazon Seller business. If you already take an idea for a retail make or proper name for an ecommerce store, that could exist perfect for your LLC name (given that it'south unique).

You should conduct a business organisation entity name search in your state to ensure you don't cull a concern proper name that already exists. You lot volition need to include a "designator" in the proper name of your business organization to evidence it'south an LLC. This is normally through including a suffix of "LLC" or "Limited Company." For case: "Perfect Widget Solutions, LLC" or "Ruffpets, Limited Company."

Pro Tip: If needed, yous can register a DBA (Doing Business concern Every bit) if you would similar to conduct business under a name different than your LLC. Still, most LLCs don't demand this. You can use your LLC name equally your brand name and accept check and other payments nether it.

2. Provide the Address for Your New LLC

Your new business organisation will demand to have a designated address. If you're running a visitor from domicile, this can be the same as your home address. If yous accept a distribution middle, it could be that. If you have multiple locations, it would be the address where your "head office" is. This must be a concrete street address, non a P.O. box.

three. Assign a Registered Amanuensis for Your LLC

Every LLC must have a registered agent. For smaller LLCs, this might be the aforementioned person as the director or possessor. The registered agent is but the person who receives official legal and tax correspondence and has responsibility for filing for your Amazon Seller concern. A number of online business organisation formation companies will designate a registered agent for you as function of the formation package.

4. Provide the Names and Addresses of LLC Members

The LLC members are the people who ain and run your Amazon business. They can take profits out of the business to pay themselves. Most states require yous to list the names and addresses of all members when you register the LLC. Y'all can register these addresses as street addresses or P.O. boxes.

5. Land the Purpose of Your LLC

Some states require you to explain the purpose of your company. This does not limit you to engaging solely in that type of business — information technology'due south fine to expand into new areas later. Considering you're selling on Amazon, you tin country your purpose as an ecommerce retailer.

vi. File the Articles of Organization

Once you've gathered all the data together for your LLC, you'll need to file formal documents with your country agency. Over again, usually online formation companies volition exercise this part for you.

8. Become a Federal Tax ID (EIN)

You lot can't open a business business relationship at a bank without a Federal Tax ID, likewise known as an EIN. It'southward completely free to apply for an EIN with the IRS online.  Be sure to secure your EIN before heading into a bank to open your business relationship.

Who Can Form an LLC?

Almost anyone in good legal standing who has the right to live and work in the U.S. is able to form an LLC.

But, non all businesses can operate as LLCs. For instance, businesses dealing with banking or insurance are typically prevented from forming as an LLC. In that location are also restrictions from state to country, for example California prevents some types of professionals from starting LLCs.

Fortunately, there are no rules preventing you from starting upwards an LLC if you're selling on Amazon.

Where to Form Your Amazon Seller LLC

If you plan to manage and conduct your business from your home land, it makes sense to grade your LLC in that location. As an Amazon seller, you lot'll exist selling across the land (and possibly effectually the world). That doesn't need to influence where you course your LLC.

Although there can be some advantages to forming an LLC in Delaware, Nevada or other "business friendly" states, in most cases those benefits won't utilize to your LLC.

Additionally, you lot will need to file equally a "Strange LLC" if you conduct concern in other states. Then if, for case, you comprise in Delaware so conduct concern in North Carolina (like opening a brick-and-mortar store), you'd take to file and pay fees to the government of Northward Carolina.

When to Form an LLC

If you're already running your Amazon business and haven't officially formed a business entity for it still, information technology'due south a good time to form an LLC.

If you're starting an Amazon business organization in the hereafter, taking a few minutes right now to brand sure you form your concern properly will give you peace of mind, and let you lot get on with growing into a thriving Amazon Seller when yous launch.

Ongoing Responsibilities for an LLC

Once your LLC is formed, you will take ongoing responsibilities you need to carry out. These include:

  • Filing an annual report with your country's secretary of state.
  • Reporting income earned (or lost) by your Amazon seller LLC on your personal revenue enhancement render. Each member of an LLC will need to practice this.
  • Paying an annual fee, varies by state.
  • Providing business concern reports every bit needed to other LLC members. (This is not a legal requirement, just a all-time practice.)

Managing Your Amazon Sellers Account

After that, hither'due south a few other back office tasks to think about when managing your Amazon Sellers account:

  • Staying compliant with sales revenue enhancement and other tax tips
  • Amazon's Marketplace rules and regulations
  • Managing Amazon's Payout Schedule
  • Basics of Amazon'southward Sellers Insurance
  • Preventing Amazon Account suspensions

Ready to Have Your Amazon Business organization to the Adjacent Level?

Get Fast Funding to Scale Upwardly

Payability offers fast funding to Amazon sellers based on their sales history. You're eligible in one case you're doing over $10,000 a calendar month in sales. Nosotros accept 3 fast funding programs for Amazon businesses.

  • Instant Advance provides up to $250k in funding for eCommerce sellers gear up to calibration.
  • Instant Access offers accelerated daily payouts for online marketplace sellers who are tired of waiting for the funds from their sales.
  • Advance Line provides a flexible line of credit for business organization owners who want to fund business growth without compromising control over their company.

Encounter your options at present. No commitment, no credit check.