For Amazon and Ecommerce Sellers
Do You Need an LLC for Amazon FBA?
You are legally the seller of every product you list, including ones you did not make. That is what makes this different from ordinary reselling.
Form your LLC, $399 all inMost Amazon FBA sellers should form an LLC once sales are meaningful. As the seller of record you carry product liability for goods you did not manufacture, often sourced from suppliers outside the reach of a US claim. Amazon also requires sellers to carry liability insurance above a monthly sales threshold, and having an entity makes that and supplier relationships simpler.
You are the seller of record
A customer injured by a product they bought from your listing can pursue the seller. If the manufacturer is overseas and effectively unreachable, that is you. Product liability is the main reason this business needs an entity, and it is a bigger exposure than most new sellers expect because it does not depend on you having done anything wrong. Alongside it sit two practical issues: Amazon requires commercial liability cover once you pass a monthly sales threshold, and inventory sitting in fulfilment centres across many states raises sales tax questions. None of that is fatal, but all of it is easier held by a company than by you personally.
What you are actually exposed to
Product liability
You are the seller of record. A defective product can produce a claim against you even though you did not make it.
Unreachable overseas suppliers
If the manufacturer cannot practically be pursued, the claim stops with the seller. That is the whole risk in one sentence.
Intellectual property complaints
Trademark and patent complaints against listings are common, can be filed by competitors, and can suspend an account quickly.
Multi-state sales tax exposure
FBA inventory moves between fulfilment centres in many states, which complicates where you may owe sales tax.
Amazon’s insurance requirement and sales tax
Amazon requires sellers to carry commercial general liability insurance once they pass a monthly sales threshold, and to name Amazon as an additional insured. That requirement is contractual rather than governmental, but it is enforced and it is separate from your business structure. On tax, marketplace facilitator laws mean Amazon now collects and remits sales tax in most states, which has simplified things considerably, but registration obligations can still arise depending on where inventory sits and what else you sell. Product category rules add another layer: supplements, cosmetics, electronics, and children’s products all carry their own compliance requirements that no entity satisfies.
How to set it up
- 1
Form in your home state
Form where you actually operate. Inventory sitting in Amazon warehouses in other states does not mean you should form there.
- 2
File your formation documents
We prepare and submit your Articles of Organization and track the filing to approval, with state fees included in the $399.
- 3
Get your federal tax number
An EIN lets you open a business bank account, register the Amazon account to the business, and deal with suppliers as a company.
- 4
Update the Amazon account carefully
Move the seller account to the business entity through Amazon’s process. Changing legal entity details is a verification step, so do it deliberately rather than mid-peak.
- 5
Get liability cover before you need it
Amazon requires commercial general liability above a sales threshold, with Amazon named as additional insured. Arrange it before you cross the line, not after.
Questions sellers ask
Do I need an LLC to sell on Amazon?
No. Amazon accepts individual sellers, so you can start without one. The argument for forming is product liability rather than eligibility, and it strengthens as your sales and the physical risk of your products grow.
Am I liable for a product I did not manufacture?
You can be. As seller of record you sit in the chain of distribution, and where the manufacturer is overseas and impractical to pursue, the claim tends to stop with you. This is the strongest reason for FBA sellers to hold the business in an entity.
Does an LLC help with Amazon sales tax?
Not directly. Marketplace facilitator laws mean Amazon collects and remits sales tax in most states now, which is the bigger factor. Registration obligations can still arise depending on where inventory sits and what else you sell, and those depend on activity rather than structure.
Can I change my Amazon account to an LLC later?
Yes, Amazon has a process for updating legal entity details, and it triggers verification. Plan it for a quiet period rather than during peak season, and have the formation documents and EIN ready before you start.
Which state should I form in as an FBA seller?
Your home state. Advice to form in Wyoming or Delaware is aimed at businesses with no physical presence anywhere. You operate from somewhere, and forming elsewhere means foreign registration at home as well.
What does it cost to form an LLC for Amazon FBA?
With StartGlobal it is a one-time $399 with every state fee included, covering formation, registered agent, and your federal tax number. After that you can stay compliant from $99 a year.
LLCs for other trades
Ready to form your LLC?
One flat $399 with every state fee included. Registered agent and your federal tax number come with it, and there are no upsells at checkout.