Legal Entities for US Amazon Sellers ⚖️⚖️⚖️

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  1. Legal Entities for US Amazon Sellers 2. When opening a US Amazon seller account, you are required to determine whether you plan on working as a sole proprietor or if…
  • 1. Legal Entities for US Amazon Sellers
  • 2. When opening a US Amazon seller account, you are required to determine whether you plan on working as a sole proprietor or if you are going to form an Amazon legal entity
  • 3. Many people suggest creating an entity like an S Corp or LLC to operate your US-based business, and that’s something that we commonly come across with new Amazon sellers
  • 4. SOLE PROPRIETOR A sole proprietor is when you have mixed business and personal life. You will only have to file a single tax return, which has a separate page for business activity
  • 5. PROS The simplest and cheapest choice The default business type
  • 6. CONS Doesn’t come with the possible business deductions of a corporation Personal assets may be at risk in the event of a lawsuit
  • 7. LLC (LIMITED LIABILITY COMPANY) An LLC operates as its own legal entity kept separate from your personal assets, keeping them safe in the event of a lawsuit
  • 8. PROS Protects assets and might allow for extra deductions not offered to sole proprietors, depending on the arrangement of your LLC Sole proprietor taxation
  • 9. CONS More expensive to set up and maintain than sole proprietorship
  • 10. S CORPORATION An S Corporation, or a Subchapter Corporation, is a corporation with a pass-through taxation option
  • 11. PROS Offers more protection and potential tax savings compared to other forms, after your business reaches a certain size No double taxation
  • 12. CONS Less flexible for investors than LLC Costs more to establish and maintain than a sole proprietorship
  • 13. So which Amazon legal entity should I choose
  • 14. BEST AMAZON LEGAL ENTITY FOR BUSINESS PARTNERS  If you have gone into business with a business partner, then you should register an LLC or S Corp so that your partnership doesn’t threaten your personal assets  Always make sure that there is a partnership agreement in place that covers how much one partner can buy out the other for, and who retains partnership of things such as accounts and trademarks in the event of a split
  • 15. BEST AMAZON LEGAL ENTITY FOR EASY BOOKKEEPING  A sole proprietor is not legally required to have a separate bank account, but we recommend that you have one anyway.  For most people, I’d suggest that you work on getting your business up and running. Get yourself some products ordered and list them, and get some sales.  Whether you choose to be an LLC or an S Corp depends upon your own specific needs and situation and your location.
  • 16. WHERE SHOULD YOU CREATE YOUR AMAZON LEGAL ENTITY?  For example, if you are located in California but create an LLC in Wyoming, you still have to register the business in California and pay taxes there.  Make sure that you register your business in the state where your company is owned and operated.
  • 17. READ MORE accounting-blog/amazon-legal-entity
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