Selling on Amazon FBA (Fulfillment by Amazon) is a powerful way to build an eCommerce business. But as your sales grow, you’ll need more than just a great product—you’ll need legal and financial protection. That’s where forming an LLC (Limited Liability Company) becomes a smart move. In this guide, we’ll explore why an LLC is ideal for Amazon sellers, how to start one, and what to expect in 2025.
Why Amazon FBA Sellers Should Consider an LLC
1. Legal Protection
An LLC separates your personal assets (like your house or car) from your business. If someone sues your Amazon store, your personal finances are protected. This is crucial when dealing with customer complaints, product liability, or vendor disputes.
2. Business Credibility
An LLC adds professionalism to your business. Suppliers, freight forwarders, and even Amazon take you more seriously when you operate under a formal business entity.
3. Tax Flexibility
LLCs can be taxed as:
- A sole proprietorship (default for one-member LLCs)
- A partnership (for multi-member LLCs)
- An S Corporation (for possible self-employment tax savings)
This flexibility allows Amazon FBA sellers to optimize tax strategies as they grow.
4. Easier Business Scaling
As your Amazon FBA business grows, it becomes easier to add team members, secure funding, or partner with other businesses when you operate under an LLC.
How to Set Up an LLC for Your Amazon FBA Business
Step 1: Choose the Best State
While you can form your LLC in any U.S. state, most non-U.S. residents or remote sellers prefer:
- Wyoming – low fees, privacy-friendly
- Delaware – startup-friendly legal system
- Florida – no state income tax, low annual fees
For sellers living in the U.S., it’s often best to form your LLC in your home state.
➡️ Compare LLC filing fees by state (official gov links)
Step 2: Pick a Unique Business Name
Make sure the name is available in your chosen state:
Step 3: Hire a Registered Agent
A registered agent is required in the state where your LLC is formed. You can hire a service like:
Step 4: File the Articles of Organization
This is the official formation document. It’s typically filed online with your Secretary of State’s website.
Step 5: Get an EIN (Employer Identification Number)
An EIN is like a Social Security Number for your business. You’ll need it to open a U.S. bank account and to register your Amazon seller account.
➡️ Apply for free via the IRS website
Step 6: Create an Operating Agreement
Even if not required in your state, this document outlines how your LLC will operate. It’s useful for internal organization and proving legitimacy to Amazon and banks.
Registering as an Amazon Seller with Your LLC
Once your LLC is set up:
- Use your LLC name and EIN when registering on Amazon Seller Central.
- Amazon may request documents like:
- Articles of Organization
- Utility bill or bank statement (matching your business address)
- EIN confirmation letter
Make sure your documents are clean, scanned clearly, and in English.
Best Online Banks for Amazon LLCs
You’ll need a U.S.-based business bank account to receive payments, pay for inventory, and manage taxes. Here are some of the best online banks for LLCs:
- Mercury – Free, no minimums, great for international founders
- Relay – Great for bookkeeping and multi-account setup
- Bluevine – Offers high-interest checking
Tax Considerations for Amazon FBA LLCs
You’ll need to:
- Report Amazon sales income on your personal or business tax return
- Pay self-employment tax (unless you elect S-Corp status)
- Collect and remit sales tax in states where you
LLC Taxes for Amazon Sellers
An Amazon FBA seller running an LLC can choose how the IRS taxes them:
- Default (Pass-Through): Profits go directly to your personal tax return.
- S-Corp Election (for U.S. residents): You may save on self-employment taxes.
- C-Corp (less common for Amazon sellers): Flat 21% corporate tax, but profits are taxed again when distributed.
For non-residents, tax implications depend on whether you have U.S. effectively connected income (ECI). Consult a cross-border tax expert or check the IRS international business guide for clarity.
Final Thoughts: Is an LLC Right for You?
If you’re serious about growing your Amazon FBA business in 2025, forming an LLC is a foundational step. It gives you credibility, protects your assets, and keeps your business legally compliant.
And best of all—it’s affordable and doable even if you’re operating from abroad.