Introduction to LLCs
LLC stands for “limited liability company.” This business structure offers owners liability protection and combines advantages of corporations and partnerships. LLC owners are called members and LLCs limit owners’ personal liability from business debts or lawsuits.
Amazon Seller Business Entities
Different business entities impact structure and liability in Amazon selling. Sole proprietorships, partnerships, corporations, and LLCs differ. It is recommended to consult with an attorney on entity choice.
Benefits of LLC for Amazon Sellers
- An LLC legally separates the owner(s) from the business, providing protection from debts and lawsuits.
- LLCs can have multiple members unlike a sole proprietorship.
Fulfilled by Amazon and LLC Taxation
- "Fulfilled by Amazon" sellers store at Amazon. Amazon handles storage, shipping, customer service, and returns. FBA costs more.
- LLCs usually aren’t taxed.
- Get an EIN from IRS website. It’s fast and free.
Setting Up an LLC for Amazon Business
- Open an LLC as your business grows and once you plan to take your ecommerce venture seriously.
- From the end of 2023, Amazon may need to send a 1099-K to disclose sales made on the platform.
Do Amazon Sellers Need an LLC?
Forming an LLC is not mandatory to start selling on Amazon. However, it offers several advantages and protections that can benefit your business in the long run.
Conclusion
Opening an LLC for selling on Amazon can provide asset protection and overall benefits for your business growth.