Last Updated on 4 weeks by Komolafe Bamidele
Have you recently opened your Amazon seller account and are ready to start selling, you may be worried about legal formalities.
If you want to grow your business and succeed big, you can form an LLC.
If you’re in a hurry to quickly set up the LLC, let “Zenbusiness” do the work for you for $0 + state fee, which includes company formation paperwork, finding registered agents, and setting up the USA bank account. etc
In this article, we will walk you through step by step how you can set up your LLC as well as its advantages.
Let’s dive in.
What is Amazon FBA LLC?
Through the Fulfilment by Amazon (FBA) scheme, a person or business can set up an Amazon FBA LLC and sell goods on Amazon.
Under this setup, Amazon’s legal company is the LLC.
Amazon FBA LLC sellers don’t have to worry about much, the tax process is easy, and there is room for growth and scale-up.
With FBA, sellers can store their goods at Amazon fulfilment centres, and Amazon will handle shipping, customer service, and refunds.
This setup lets merchants run their online stores with more freedom and flexibility, while still using Amazon’s technology and customer base.
What are the advantages of becoming an LLC for Amazon sellers?
LLC is a Legal entity that shields business owners from debt and liabilities. The LLC separates your business and personal assets, protecting them from corporate claims.
An LLC protects your assets from client claims if your product fails them. Sole entrepreneurs can be sued using their assets.
Benefits of LLC for your Amazon business.
It Aids Business Growth
LLCs let you grow your business. You may build your company with financial security. It’s easy to form an LLC because it protects you from many of the hazards lone proprietors face.
Foreign-based Operations.
You can launch a U.S.-based Amazon business using an LLC if you live abroad. LLC members get access to many business-building tools.
Secure Limited Liability
The liability protection provided by LLCs is one of their most important features. This reduces your financial damages if someone sues your firm. A claim like this might cost you your house and savings if you don’t form an LLC.
Easy Taxes
Amazon selling generates cash. Given your earnings and tax filing status, you may have to file taxes and pay the IRS. LLCs enable pass-through businesses. Their taxes go through Amazon. Individual taxation replaces business taxation.
That allows you to reduce some taxes. LLCs file taxes without paying federal income taxes, which boosts earnings.
How to Register an LLC for Your Amazon Business.
Step 1; Name Your Business
Make sure your business name is unique and meets state content requirements. Check if you need a DBA.
If you want to register your business name on Amazon but operate under a different name, even with slight modifications, you may need a “Doing Business As” (DBA) designation.
read more on Transitioning from a DBA (Doing Business As) to an LLC (Limited Liability Company)
Step 2; Select Registered Agent
LLCs must have a Registered Agent in every state. Your LLC must comply with legal standards, so research your Registered Agent. Resident agents are people or businesses in the state where you plan to do business.
Your organization relies on them to receive critical documents and legal alerts and must be physically present in the state.
Your Registered Agent must be able to receive formal Secretary of State notifications for any purpose, including legal action against your firm.
It is noteworthy that Zenbusiness provides a complementary resident agent service for the first year.
Step 3; Submit Articles of Organization.
Most states require LLCs to submit Articles of Organization or a similar document. This could result in charges. It informs the situation of your business’s ownership and administration.
Step 4; Get an EIN.
Like an SSN, an EIN is an employer ID. Thus, it helps the IRS identify your firm. Setting it up on the IRS website costs nothing and takes minutes. It can be used for hiring and tax and government requirements.
Step 5; Complete the LLC Operating Agreement
An LLC operating agreement should explicitly identify all stockholders, especially if there are many people. Every LLC member must sign and agree to this form.
Even if you’re the only member of your LLC, this document gives it structure and order.
The paperwork should state each member’s ownership share, voting rights, earnings distribution, and LLC dissolution.
Step 6; Create Amazon Business Financial Accounts.
After getting your EIN and completing business paperwork, you can open business bank accounts for your company. It’s vital to separate personal and corporate income and spending.
This will help during tax season and distinguish personal from business taxes, decreasing responsibility.
Step 7; Get All Business Licenses.
Business licenses and permits may be needed to lawfully sell on Amazon, depending on your location. The breadth of your business and operations depends on state rules.
Federal business licenses are required for alcohol, agriculture, logistics, and guns. It’s also important to know state and local firm license regulations. These criteria aren’t limited to Amazon sellers.
Amazon FBA LLC FAQ
What Is FBA for Amazon Wholesale?
Put simply, this is the process of reselling products from other brands on Amazon.
How Much Time Is Needed to Get Sales Started?
The maximum amount of time needed is three months from the date your inventory went live and sales began.
Does Amazon FBA Require An LLC?
It’s not required, but it’s strongly advised for credibility and liability protection.
What is the best state to form an LLC to use for Amazon FBA?
1. Florida
2. New Jersey
3. New York
4. Texas
5. Michigan
6. Delaware and Wyoming
Delaware and Wyoming are considered the best options because of their advantageous business regulations.
Do I Need Ein For Amazon FBA?
A heads up; Do not apply for an EIN before anything else. Hold off until the LLC gives its okay. Apply for your EIN as soon as you have the approval in hand.
When Is The Right Time To Open?
when you want reputation and liability protection and you take your business seriously.
Do they need utility bills for Amazon FBA LLC?
No, utility bills are not normally sent with the registration of an Amazon FBA LLC.
Can I set up Amazon FBA LLC if I don’t live in the US?
Indeed, you can, but there are a few more stages and things to think about.
Can Foreigners Register LLC with their Passport or Require SSN?
Non-citizens can register an LLC with their passport; however, it is not necessary to have an SSN.
In Conclusion
Overall, an Amazon FBA LLC helps sellers secure their assets and handle corporate ownership. Sellers can make informed business structure decisions by understanding LLC formation.
From business names to licenses, each step is vital to legal compliance and business success. The process may appear complicated, but this tutorial strives to simplify it.
Each seller should carefully consider forming an LLC based on their circumstances and aims.