How to Start an LLC for Amazon FBA

Why you need an LLC for this

• Product liability claims stay at the business level (Amazon's $10K coverage runs out fast)
• Required to register for a wholesale account with most suppliers
• Lets you deduct inventory, ads, freight, and software cleanly
• Looks legitimate when you apply for the Amazon Brand Registry

The tax angle

Inventory-based businesses have unique tax treatment — you can't fully deduct inventory until it's sold (Cost of Goods Sold). Once net profit clears $50K, S-corp election saves real money. Use accrual accounting, not cash, if inventory is significant.

Step-by-step

1. Step 1
   Pick a state to form in

   For most FBA seller owners, your home state is the right answer. Forming in Delaware or Wyoming sounds clever, but if you operate from another state you'll have to register as a foreign LLC there too — double the fees and paperwork.

2. Step 2
   Name your LLC

   Search your state's business database to make sure the name is available. It must include 'LLC' or 'Limited Liability Company.' Avoid restricted words (Bank, Insurance, etc.) unless you have the right licenses.

3. Step 3
   File your Articles of Organization

   This is the legal document that creates your LLC. Filing fees range from $40 to $500 depending on the state. Most states process online filings within a few business days.

4. Step 4
   Get an EIN from the IRS

   Free at IRS.gov. Takes 5 minutes. You need it to open a business bank account, hire employees, and file taxes.

5. Step 5
   Open a business bank account

   Critical for the liability shield. The moment you mix personal and business money, a lawyer can argue your LLC is a sham and pierce the veil. Keep it separate from day one.

6. Step 6
   Register the LLC on Amazon Seller Central

   Update your account to 'Business' and add the LLC info and EIN. This affects your 1099-K and the legal entity Amazon recognizes if there's ever a claim.

7. Step 7
   Skip all of that and use Tailor Brands

   Tailor Brands files your Articles of Organization, gets your EIN, sets up your registered agent, and drafts your operating agreement in one flow. Most people finish in under 15 minutes. If you'd rather not deal with state websites, this is the fastest path.

What people get wrong

• Skipping product liability insurance because you have an LLC (Amazon requires it once you hit $10K/month)
• Co-mingling inventory funds with personal money
• Not registering for sales tax in states where FBA holds your inventory

FAQ