Starting an Amazon FBA, also known as Fulfillment by Amazon business, offers many opportunities. However, a big question when setting up this type of model is which legal structure to choose. LLCs, or Limited Liability Companies, are very popular among sellers due to their flexible nature, legal protection, and tax benefits.
An LLC for Amazon FBA provides you with liability protection for your assets, which means that your finances won’t be affected, in any form, by your company’s debts or lawsuits. The entity also has tax flexibility, which allows you to be taxed under different categories based on your end financial goals. In this post, we will explore how an LLC can be the best structure for your Amazon FBA business and the top jurisdictions you can choose to set up your business.
What is Amazon FBA?
Amazon FBA acts as a bridge that allows sellers to send their products to storage within already identified fulfilment centres. Amazon will then define and carry out storage, packaging, shipping, customer services, and returns for them. With this program, businesses can utilize Amazon’s vast logistics network to fulfil orders and effectively grow their businesses.
Reasons for Opting LLC for FBA
The following are the reasons for choosing Amazon FBA LLC:
Limited Liability Protection
Amazon FBA LLC has gained popularity due to its limited liability protection feature. Because of this, your assets are protected from your business’s debts and liabilities. If, in any case, your FBA faces a lawsuit, your assets will not be affected. This protection is crucial in the world of e-commerce, where product liability claims or other unforeseen issues can arise.
Tax Benefits and Flexibility
When you choose LLC Amazon FBA, you can avoid double taxation, which means you will only be taxed once on your income. You can also enjoy pass-through taxation, where your business’s profits and losses are passed to your personal income tax return.
Professionalism and Brand Credibility
Establishing an LLC for Amazon FBA helps you come across as more professional to your customers and suppliers. An LLC also enhances your business’s credibility. It can also attract more customers as many individuals often prefer to buy from established companies with professional identities.
Easier Business Expansion
When you set up an Amazon FBA LLC, it becomes easier for you to get investors or partners and expand your business. Having a stable structure also makes acquiring loans comparatively convenient and process hurdle-free.
Which Jurisdiction Should You Choose for Your LLC Amazon FBA?
Now, you must be wondering which jurisdiction you should choose. No one answer can fit best. This depends on multiple factors, and you have to understand your business needs well before making this decision. However, we have our top three picks that can help make the decision to set up an LLC for FBA easier for you.
Delaware
When you choose to set up your LLC for Amazon FBA in Delaware, you can expect 0% state sales tax. However, the jurisdiction does impose a certain percentage of franchise tax. The jurisdiction is also known for its well-established corporate law. It has gained a strong reputation in the business world as a booming hub. Delaware is also known for its established Amazon FBA network.
Florida
Florida does not impose a state income tax on Amazon FBA LLCs, but it does charge a certain percentage of sales tax. The jurisdiction also has less specialized corporate law. It is noteworthy that Florida is not mainly known for LLCs. Although it has a good infrastructure, it is not as top-notch as Delaware.
Wyoming
Wyoming does not have a state corporate income tax, franchise tax, or sales tax for LLCs. The jurisdiction is called a tax haven because of its multiple tax exemptions. It offers a business-friendly environment that can help your LLC Amazon FBA grow and thrive. Wyoming has also gained popularity for its privacy laws and low incorporation costs. Although the jurisdiction has a world-class infrastructure, it houses limited Amazon fulfilment centres.
Points to Consider Before Choosing a Jurisdiction for Your LLC for FBA
You should keep the following in mind before selecting a jurisdiction for your Amazon FBA LLC:
- Tax benefits and costs of set up
- Business-friendly regulations
- Ease of registration and maintenance
- Banking and payment processing
- Future business growth
By now, you know why choosing an LLC for Amazon FBA can be the right business move and which are the top jurisdictions for setting up your business. Now, the question arises: how can you navigate your way through the legalities, documentation, and a hundred more administrative issues? The answer is simple. You can easily breeze through all your huddles by partnering up with a business consultancy like Business Setup Worldwide. They can make the process simple for you. You can contact them today or book a free consultation to learn more!
Prime Star 
Backlinks Hub