If you’re a person who wants to make money off selling things on Amazon, Amazon FBA Wholesale could be a great fit for you.
But before starting any business whether offline or online, an entrepreneur has to make numerous important decisions. One of the most important decisions you have to make is choosing a legal business entity for your business.
As a small business owner, you have many options for legal business entities. Limited Liability Companies (LLCs) are among the most considerable legal business entities for many entrepreneurs.
A Limited Liability Company (LLC) is one of the popular and recommended business structures for small businesses because of its numerous benefits.
The Limited Liability Company offers many benefits to start-up businesses. It provides protection of your business’s assets, minimizes your business’s taxes, is affordable and easy to form, and has some other tax benefits.
You can form your Limited Liability Company anywhere in the United States because LLCs are recognized in almost every state in the United States. This guide will help you choose the best state to form an LLC for Amazon FBA Wholesale.
Which is the Best State to Form an LLC for Amazon FBA Wholesale (2022)
- 1 Benefits of Forming an LLC for an Amazon Business
- 2 Best State to Form an LLC for Amazon FBA Wholesale
- 3 How to Setup an LLC for Amazon FBA Wholesale
- 4 Hire a Professional Service
- 5 Do It Yourself
- 6 Conclusion
Benefits of Forming an LLC for an Amazon Business
There are numerous benefits of forming an LLC for an Amazon Business. Some of the notable benefits are:
Improve Your Business Credibility
Customers and Brands like to work with established companies with business names. One of the best ways to improve your business reputation and credibility is to register your business with a legal business structure like LLC.
Protects Your Personal Assets
The biggest reason business peoples consider forming an LLC is to protect their personal assets from their business.
By forming an LLC for your Amazon business, you can protect yourself from liabilities and other unexpected financial challenges that could come up in running your Amazon business.
LLCs, pay no tax at the company level. Instead, their income passes through to the LLC owners and is reported on the owner’s personal tax return.
When you make money from your Amazon business, that money typically flows through to your personal tax return. This can reduce your accounting costs.
Manage Partners Efficiently
An LLC enables you to manage your partners more efficiently by drafting your LLC Operating Agreement.
An Operating Agreement is a document that sets out the rights and responsibilities of the company’s partners. It helps you to avoid disputes among the partners.
Small business owners, including Amazon business owners, often select Limited Liability Company over any other business entity because it is more affordable and simpler to manage than other types of businesses.
You need to file a one-time state filing fee to form an LLC. Some states also charge an ongoing fee every 1 or 2 years.
Best State to Form an LLC for Amazon FBA Wholesale
When choosing a state to form an LLC for Amazon FBA wholesale business, you must keep in mind those states where there is no income tax.
You can read this guide for finding more information about the states that do not have an income tax.
We have selected three of the nine states with no income tax and offer some other amazing benefits for Amazon’s FBA wholesale business.
Texas is the first state that I recommend to my readers to form an LLC for Amazon FBA Wholesale. It has the highest rate of monthly sales, no income tax, and no annual fee. Texas also has a higher brand response rate. That’s why it’s a good choice for Amazon FBA Wholesale.
After Texas, I recommend forming an LLC in Florida if you plan to sell wholesale on Amazon. Florida is one of the most tax-friendly states, with no state income tax.
Florida has the highest rate of monthly sales and a higher brand response rate, making Florida the second best state to form an LLC for Amazon FBA Wholesale.
Wyoming is also among the best states to form an LLC for Amazon FBA Wholesale. According to our experience in US Business Formation, 80% of business owners prefer Wyoming over other states.
Wyoming has a $100 state filing fee with a $50 annual fee. Wyoming does not require you to pay corporate or personal income taxes with 4% sales.
Wyoming is a great choice if you have a tight budget for forming your LLC for Amazon FBA Wholesale business.
How to Setup an LLC for Amazon FBA Wholesale
Generally, there are two ways to form an LLC:
- Hire a professional service
- Do it yourself
Hire a Professional Service
You’ve come to the right place if you’re thinking about starting your LLC for your Amazon FBA business and looking for a professional incorporation service.
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Do It Yourself
Forming an LLC yourself is straightforward. Here are the five steps you need to follow:
- Decide the Name for your LLC
- Appoint a Registered Agent
- File your Certificate of Formation
- Draft an Operating Agreement
- Apply for an EIN
Decide the Name for your LLC
The first step to forming an LLC is to select a name for your LLC. Generally, you will need to follow this naming instruction:
- You must include the word limited liability company or LLC in your company name.
- You have to avoid restricted words such as a bank, trust, Law, Attorney, etc.
- You should not include such words in your company name that confuse your LLC with a government agency.
- I also recommend registering your LLC name’s web domain even if you do not want to create your business website today.
Appoint a Registered Agent
The next step to form an LLC is to appoint a registered agent. A registered agent is also known as a statutory agent or resident agent.
A registered agent is a person or a company who sends and receives legal papers on behalf of your LLC. These legal papers include official correspondence like legal summons and filing documents.
Your registered agent must be a resident of a state where you want to start your LLC. If your registered agent is an individual, then he will be a member of your LLC along with you.
Draft an Operating Agreement
An LLC operating agreement is a legally binding business document that entails the ownership of its members, how the company is managed, and the structure of the LLC or limited liability company.
It can provide details such as one meeting being held naming a registered agent, selecting managers, and adding and dropping members.
An operating agreement is not required in every state, but it is highly recommended to have an operating agreement to avoid internal disagreements between LLC members.
Apply for an EIN
The final step is to apply for your Employer Identification Number (EIN) which is also called a Federal Tax Identification Number.
What are the Purposes of EIN?
- An EIN is necessary for your business tax purposes.
- It is also required to open a business bank account in the United States.
- It is also needed when you want to hire employees legally.
Applying for an EIN is quite simple and free of cost. You can quickly obtain this by visiting the IRS.gov website.
This is a complete guide about LLC for Amazon FBA Wholesale that you will find on the internet.
It delivered you all the information benefits of an LLC for Amazon FBA Wholesale, the best states to form an LLC for Amazon FBA Wholesale, and a complete guide to forming an LLC for Amazon FBA Wholesale. I hope you will find this guide helpful.