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Best State To Form LLC For Amazon FBA

Amazon LLC

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Are you wondering what is the best state to form LLC for Amazon FBA? You don’t have to form the Amazon FBA business LLC in the state which you reside. In fact, you can open an LLC in any state within the United States. However, some states have some advantages that we’ll cover in this article. 

Amazon has potentially more than 310 million customers worldwide. Therefore, it’s the biggest e-commerce platform with the best earning potential. However, to get the most out of the platforms, you’ll need to form an LLC. 

The Advantages Of LLC Formation For Amazon Business

Let’s start by figuring out why forming an LLC for your Amazon business is a good idea in the first place. This will help you understand why taking the step is worth your time and resources. 

  • Liability protection: without an LLC, disgruntled Amazon customers can sue you directly for damages. However, with an LLC, there’s a layer of protection since it’s the LLC that gets sued and is liable for damages – not your personal bank account. 
  • Money management: you can receive all business payments to the LLC and manage the funds there. This is helpful when you have business partners, and you want to promote transparency with your partnership. 
  • Fast and cheap: forming an LLC for your Amazon business is inexpensive and fast. In fact, you only need to allocate a small portion of your start-up funds. Also, you can complete the registration process in just one sitting. 
  • Bank loan: you increase the chances of a successful bank loan approval when you form an LLC for the Amazon FBA business. This gives you more funds to start the business and order a bigger batch of products. 
  • More trust:  suppliers and customers pay attention to the business they are dealing with. Some trust businesses more when they have taken the step of registering an LLC. This shows they are serious about their operation. 

Best State To Form LLC For Amazon FBA

Now that you understand what LLC business formation brings to the table let’s consider the best states to register one. 

  • Nevada: this is a good state to register an Amazon business because they have no tax policies and have programs that assist Amazon sellers. With lower taxes, more of the revenue will go towards profits. Also, there are many Amazon fulfillment centers in Nevada, which is handy if you want to deliver goods from a location within the state. 
  • Wyoming: this is another frequently liked state by Amazon sellers. That’s because it has low sales tax and no corporate tax. Also, there’s no personal income tax, so any profit you earn from the Amazon business you can keep. 
  • Delaware: this is one of the strongest states for e-commerce business owners. The combination of no sales tax, low property tax, and strong asset protection means it’s a dream come true for Amazon sellers.  

Amazon LLC

Top Things To Look for In A State

The laws and regulations for how states tackle e-commerce are constantly changing. It depends on what policies politicians want to enforce, so you cannot rely on a single state to always provide the best rules for housing an Amazon business. 

Therefore, in this section, we’ll share the top factors of consideration when deciding the best state for your Amazon business. By the end of this section, you’ll be fully equipped to look at the list of states in the US and choose the best one for yourself. 

Taxes

Taxes are a big consideration of any business since they significantly reduce the amount of profit you can put in your pocket. However, some states have tax-friendly laws for businesses. This might be a low tax rate for sales or a 0% corporate tax. 

However, it depends how you set up your business. If you don’t have an LLC, then personal tax is the more important variable. You’ll want to avoid states like California, where the personal tax is very high. 

Your Home State

Generally speaking, it’s easier to open up an LLC in your home state. That’s because there’s less paperwork, and the process is faster. However, while this is a minor-bonus, it shouldn’t be the deciding factor for where you register your LLC. That’s because your home state may not have the best rules for getting an advantage with your Amazon business. 

Fees

You may have to pay annual fees for your LLC, but the amount you pay varies depending on the state where you register. Any money you can save on fees can go towards building your business, so keep this in mind when comparing the fee requirements of each state. 

Amazon FBA Warehouses

Do you want to send products to Amazon FBA warehouses directly from your home? Then look for states that have the most warehouses since you’ll have more options to save money on shipping fees. 

At the time of writing, the states with the most warehouses include Delaware, California, Arizona, and Alabama. However, you don’t have control over what specific warehouse you need to ship the products to. Once you create a product listing and are ready to send the goods, Amazon will tell you where to send products. Although, they do take into account the location of your goods to reduce the shipping time and costs. 

Best State To Form LLC For Amazon FBA – What To Do Next?

Now that you understand what to look for in a good state to form an LLC for your business, it’s time to compare the different options. You can also consult with a tax accountant to help you decide on the state that has the most favorable terms. 

Do you want to take advantage of a service that offers low-cost LLC registration services? Then use Business Anywhere to help improve your Amazon business with company formation. 

 

About Author

Picture of Rick Mak

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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