If you sell products on Amazon FBA, forming a Limited Liability Company (LLC) can bring major tax advantages — but only if you understand how the tax system works. Whether you’re a U.S. resident or a foreign seller, your LLC structure can determine how much you actually keep from your profits.
In this 2025 guide, we’ll explain everything you need to know about LLC taxes for Amazon FBA sellers, including federal and state tax rules, the best setup for non-US residents, and how to avoid double taxation.
🔹 What Is an LLC for Amazon Sellers?
An LLC (Limited Liability Company) is a legal business entity that separates your personal assets from your business operations.
For Amazon FBA sellers, it provides two main benefits:
- Legal Protection: Your personal money and property are safe from business debts or lawsuits.
- Flexible Taxation: The IRS allows different taxation methods depending on how your LLC is structured.
💼 How LLC Taxes Work in the U.S.
By default, the IRS doesn’t tax an LLC directly. Instead, profits “pass through” to the owners (members), who report them on their personal tax returns.
There are four main ways an LLC can be taxed:
| LLC Type | Tax Treatment | Who Pays Taxes? |
|---|---|---|
| Single-Member LLC (Disregarded Entity) | Profits reported on Schedule C | The owner |
| Multi-Member LLC (Partnership) | Profits divided among members | Each member |
| LLC taxed as S-Corp | Owner receives salary + profit distributions | LLC & owner |
| LLC taxed as C-Corp | Separate corporate tax filing | The company itself |
For Amazon FBA sellers, the single-member LLC is usually the simplest structure — especially for international sellers who want to minimize paperwork.
🌍 Taxes for Non-US Amazon Sellers with an LLC
If you live outside the U.S. and sell on Amazon.com, here’s what matters most:
- No U.S. Income Tax if your LLC has no U.S. office, warehouse, or employees.
- Amazon FBA Inventory Rule:
If your inventory is stored in a U.S. fulfillment center, your LLC might create a “U.S. trade presence,” making you subject to U.S. income tax. - Sales Tax / Marketplace Facilitator:
Amazon automatically collects and remits sales tax on your behalf, so you usually don’t have to handle it manually. - EIN and W-8BEN-E:
You must apply for an EIN (Employer Identification Number) and submit a W-8BEN-E form to Amazon to confirm your foreign status.
🧾 Example: How LLC Taxes Apply to an Amazon Seller
Let’s say you own GlobalShop LLC, a single-member LLC based in Wyoming.
- You live in Morocco.
- You sell products via Amazon FBA USA.
- Amazon stores some of your inventory in Texas and California.
Here’s what happens:
- You don’t pay U.S. federal income tax if you don’t have a permanent establishment.
- However, Texas and California may impose state-level tax obligations because inventory is stored there.
- You’ll file a Form 5472 + Pro Forma 1120 annually to stay compliant with IRS rules for foreign-owned LLCs.
💡 LLC Tax Advantages for Amazon Sellers
✅ No Double Taxation (profits pass directly to you)
✅ Limited Liability Protection
✅ Flexible Ownership — perfect for one-person eCommerce operations
✅ Easier Banking and Payments — most U.S. banks require an EIN and LLC to open accounts
✅ Tax Deductible Expenses — shipping, Amazon fees, advertising, and software costs are all deductible
⚠️ Common Tax Mistakes to Avoid
🚫 Using a personal account for Amazon payments
🚫 Forgetting to file Form 5472 if you’re a non-resident
🚫 Storing inventory in multiple states without registering for state taxes
🚫 Not tracking deductible expenses properly
Pro tip 💬: Always use accounting software like QuickBooks or Xero integrated with Amazon Seller Central to automate your financial reports.
🏛️ Best States for Amazon FBA LLCs in 2025
If you’re forming an LLC for your Amazon business, these states are the most popular choices:
| State | Advantages |
|---|---|
| Wyoming | No state income tax, strong privacy, low annual fees |
| Delaware | Great for scaling and adding partners later |
| Texas | Large Amazon warehouses and local tax advantages for residents |
| New Mexico | Cheap and private for foreign sellers |
For most international Amazon sellers, Wyoming LLC remains the top pick in 2025 for its simplicity and cost-effectiveness.
📚 Required Tax Forms for Amazon LLCs
- EIN Application (Form SS-4) – To open a bank account and register on Amazon.
- Form 5472 + Pro Forma 1120 – Mandatory annual filing for foreign-owned LLCs.
- Schedule C (if U.S. resident) – For reporting business income and expenses.
- State Annual Reports – Depending on the LLC’s registered state.
🚀 Pro Tips to Save on Taxes
💰 Track all business expenses — even small ones like domain renewals or logo design.
📦 Use 3rd-party fulfillment (3PL) to avoid taxable presence in U.S. states.
🌎 Register your LLC in a no-tax state (Wyoming or Delaware).
🧾 Hire a U.S. CPA familiar with foreign-owned LLCs.
Conclusion
An LLC is one of the smartest structures for Amazon FBA sellers — offering flexibility, credibility, and potential tax savings. However, the tax situation depends on where your inventory, operations, and residency are located.
By choosing the right LLC setup and following compliance rules, you can legally minimize taxes and scale your Amazon FBA business with confidence in 2025 and beyond.