Entrepreneurs starting a business are motivated by their passion for their service or product. But, chances are, you’re not well-versed in the intricacies of business law when you first labeled yourself an entrepreneur. Even if you are, you may still have problems making legal decisions left and right to protect your business assets and finances. In that case, it is essential to know about Amazon Corporate LLC.
Amazon Corporate LLC started in 2000 and is located in Seattle, WA, United States. It’s part of the Telecommunications Services Industry. The line of business of the company includes selling products by catalog, mail-order, and television. Buying a business on Amazon can give entrepreneurs instant exposure to millions of customers worldwide. Finding Amazon businesses for sale has been made easier with the use of the internet and advertisements.
Establishing an Amazon Sellers account is an excellent opportunity for people in business selling online. It’s a fact that Amazon is one of the best known, most prominent, fastest-growing, and most highly valued companies globally. This said, starting a business with Amazon can become a fantastic source of income for anyone.
What Is an LLC Business?
There are several factors you need to consider when choosing the form of your business. This includes personal liability, management, ownership, the process of registration, and taxation.
Limited Liability Company or LLC is a formal business structure created to limit business owners’ personal liability, similar to corporations. It’s also designed to allow the business to be taxed. Owners of LLC are called members (in the same way shareholders are in a corporation.)
Why is forming an LLC business important? The reasons you need an LLC include:
- It limits your personal liability for business debts. This is the most important reason to form an LLC. With LLC, only the assets owned in the name of the LLC are subjected to the claims of business creditors. Including lawsuits against the business. Personal assets of LLC members can’t be claimed to satisfy business debts.
- It gives you tax advantages. The profits or losses of LLC are passed on to the members, as they will be in a partnership. Usually, there is no separate tax levied on the LLC itself.
- It provides more capital from investors. Businessmen can raise money by bringing in other members who can contribute property, funds, or services to the business.
What Is Amazon LLC?
Amazon LLC is officially set as Amazon.com LLC. This is a subsidiary of the larger Amazon.com, Inc.
Although Amazon is a massive and complex company with several shareholders and publicly traded stocks, they still need to use LLCs in their business operations. The same is true with Amazon.com, Inc. There are different products sold by Amazon LLC.
Amazon is doing business in all 50 states and ships products from distribution centers around America. As part of these operations, Amazon chose a business structure that will favor serving its customers while reducing its overall tax liability.
Do You Have to Have a Business License to Sell on Amazon?
Even with the many opportunities that accompany a business with Amazon, there are still frequent questions sellers ask. This includes: “Do I need a business license to sell on Amazon?”
The answer to these types of questions is no. You do not need to register your business or have a business license to sell products on online platforms, including Amazon. What’s important is to register your Amazon business as a Limited Liability Corporation (LLC). This is crucial in starting a business that you want to run for the long term. It’s also an inexpensive and straightforward process that can significantly affect your finances and reputation.
Advantages of Having an Amazon LLC
By owning different LLC subsidiaries around other states, Amazon can reduce its burden on income tax. They may also avoid collecting sales tax in some states that don’t require it. Having Amazon.com, Inc. while still owning Amazon LLC subsidiaries gives Amazon maximum flexibility to manage its business operations while alleviating significant taxes.
Another reason why Amazon and other big companies set up multiple subsidiaries, such as LLCs, is to have a separate legal entity. This entity can be dedicated to different products, services, or business operations. This way, even if something goes wrong at one part of the company’s business, the overall parent company will be left unharmed by any subsequent lawsuit. Through this system, liabilities are contained to just one LLC subsidiary. Amazon LLC is an effective Amazon strategy and is more applicable to big and publicly traded companies that need to pay corporate income taxes.
Even if you own different brands and businesses, it is better to use one LLC as an umbrella organization for the business and then do business under multiple names. Using “Doing Business As” or DBA is another way to operate a business under a name beside the name of the legal entity.
If you have questions and inquiries, feel free to contact Amazon LLC.
Do you need help figuring out how the cash flow of your e-commerce business works? Contact PIRS Capital for assistance.
Step-by-Step Guide to Setting Up Your Business Amazon Account
Now that you know what LLCs are, you’re probably wondering how to do business with Amazon. Take note that LLC is not required for sellers or entrepreneurs to start Business Amazon accounts. However, forming an LLC business in the platform can give you many advantages.
Here are the following steps to set up your Amazon business:
Name Your LLC Business
1 It’s necessary to create an original or unique name before setting up your Amazon seller business. It’s wise to search for names of business entities in your state first to make sure that you’ll not choose a business name that’s already existing. If there is another LLC business with the same name, you will not be able to use it.
You’ll also need to add a “designator” in the business name that you pick. A designator typically includes the suffix “Limited Company” or “LLC.” For example, Amazon Retail LLC, Amazon LLC, or Amazon Corporate LLC.
Ensure that the name of your LLC fits the requirements of your state. Some states may not allow some words such as “insurance” or “bank.”
Tip: If you like to do business under a different name from your LLC, you can register a “Doing Business As” or DBA, if necessary. You can still use your LLC name as your brand name and still accept other payments or check under it.
Give the Address of Your LLC
2 Your new business should have a place of operations. If you have a distribution center, your address can be where the distribution center is located. If the company is running at your home, the address can be your home address. If you have multiple locations, your address will be where the “head office” is situated.
Tip: The address must be a physical street address and not a P.O. box.
Assign a Registered Agent for Your LLC
3 When forming an LLC business, you need to have a registered agent. This agent will be the person who will receive official legal and tax correspondence and will be responsible for filing your Amazon Seller business.
Tip: There are online business formation companies that can designate a registered agent for you.
Include the Names and Addresses of the LLC Members
4 Most states will ask you to give all the members’ names and addresses when forming an LLC business. These LLC members are the people who run and own your Amazon business.
Tip: Addresses of LLC members can be registered as P.O. boxes or street addresses.
State the Purpose of the LLC
5 Some states require you to explain the purpose of your company. However, this will not limit you to engaging in that type of industry solely. This is because you can expand into new and other areas later on.
Tip: Since you will be selling on Amazon, the purpose of your LLC can be as an “e-commerce retailer” or “Amazon retail LLC.”
Provide Articles of Organization
6 After gathering all the information you need for your LLC, you will need to file the formal documents with your state office or agency. Articles of organization must include information about how the LLC will be managed and whether the LLC members will be hands-on or there will be a hired management.
Tip: There are online formation companies who can do your Articles of Organization for you.
Have a Federal Tax ID (EIN)
7 You need to have a Federal Tax ID or EIN to open a business account at a bank. It’s free to have an EIN with the IRS online.
Tip: Before going to the bank to open your account, make sure to secure your EIN.
Where Should You Build Your Amazon Business?
As an entrepreneur who will sell on Amazon, you will be catering to different parts of the world. Still, it will not influence where you will build your Amazon business. If you plan to conduct or manage your business from your home state, it will make sense if you form your LLC and start your Amazon business there.
However, if you conduct a business in other states, you will need to file as a “foreign LLC.”
When to Establish Your Amazon LLC
Suppose you already have a business in Amazon, and you still have not officially formed a business entity. In that case, it is an excellent time to establish your Amazon LLC.
Or, if you are planning to start an Amazon business in the future, this will be an excellent time to begin planning and forming your business correctly. Doing so will make you become a successful Amazon Seller when you start your Amazon business.
Your LLC Responsibilities
Forming an LLC comes with the following responsibilities:
- Filing an annual report with the secretary of state on the state you are located
- Paying an annual charge or fee (the annual fee varies per state
- Reporting income lost or gained on your Amazon Seller LLC for your personal tax return (all LLC members are required to do this)
- Providing a business report to other members of the LLC (This report is not a legal document or requirement, but it is a best practice)
How to Manage Your Amazon Seller Account
To become a successful seller on Amazon and manage your Amazon Sellers Account properly, take note of the following:
- Stay compliant with your taxes. This includes the sales tax (consumption or use tax) and other tax tips.
- Be mindful of Amazon’s Marketplace. As an Amazon seller, you are expected to adhere to Amazon’s Selling Policy and Seller Code of Conduct. If you have offenses and provide illegal content, this will result in the suspension of your Amazon account. Amazon’s Seller code of conduct requires sellers to act honestly and fairly to ensure a safe buying and selling experience.
- Know and manage your Amazon Payout Schedule. In most cases, Amazon pays sellers every two weeks. Every payment includes fourteen days of your orders minus Amazon fees delivered at least seven days ago. Amazon pays the proceeds seven days after the latest estimated delivery date because it values customers’ satisfaction.
- Learn the Basics of Amazon Seller Insurance. As your business in Amazon grows, your level of liability increases. The right insurance policies can help you ease your mind while you continue to sell on your Amazon Business.
- Prevent Amazon Account Suspension. As an Amazon seller, you need to know that the performance notification, which indicates an acceptable Plan of Action or POA, is essential to maintain your seller account privileges.
Although forming and maintaining an LLC can be beneficial to businessmen, it’s also quite expensive. If you are having a problem with the cash flow of your e-commerce business, feel free to contact PIRS Capital today and let us help you! We will provide the cash flow solutions for your online business.