If you’re launching a business in Amazon, trade experts will tell you to form an LLC for its tax flexibility. But apart from that, deciding your company’s place of registration remains one of the trickiest business decisions out there.
Fortunately, our resident entrepreneurs are here to discuss what you should consider before picking the best state to incorporate your new business.
Top Considerations in Choosing a State to Form an Amazon FBA LLC
Incorporation Process
If you’re an Amazon seller with a limited budget, a lengthy incorporation process can pose a problem in the financial and operational aspects of your business. Our team doesn’t encourage spending much upon registration because forming LLCs for your Amazon business only involves simple procedures and takes a few days.
And if you don’t have the time, there are online incorporation services that can handle the legwork for a low price.
State Fees
You may not know, but every state has different state fees. Because of this, it’s highly advisable to check the incorporation costs of the city you want to incorporate in.
State fees are implemented through the government’s mandate. So if you want to save money, you may consider choosing states that offer $0 fees or require low annual payments.
Taxation
No matter what kind of business you’re running, a state that offers the most tax benefits saves you more money in the long run. But for some places with sales tax nexus conditions, online sellers must file sales tax to the state where their buyers reside.
The good news is that certain states exempt businesses from paying sales tax. If you’re eager to lessen your tax obligations, our business experts urge you to research the best tax exemption policies in the state.
Legal System
The best states to form an LLC for Amazon FBA business should have organized legislation procedures. Running into legal troubles is a common dilemma in the business world[1], so it’ll save you time if the legal system in place is properly established.
Proximity of Amazon Warehouses
It’s not a secret that your products are sent to the warehouses before reaching your buyers. So if your business comes with a physical office, it’d be more cost-efficient if your place of registration is near the proximity of Amazon’s warehouse.
Market
Last but not least, your business is best registered in a state where most of your buyers reside. Why? Because it takes less time and money to transport goods and makes the filing of sales tax a lot easier.
The Best States to Form an Amazon FBA LLC
#1: Home State
Easy LLC Incorporation
Many experts recommend incorporating in your home state because of the fast registration process. Since you’re present in the same state, the registration legwork yourself wouldn’t be as complicated as in other states.
Regulations & Legal System
Another reason why our team recommends home state registration is because you’re most likely familiar with the regulations in place. You’d know the mandatory requirements and obligations to comply with to avoid legal troubles.
No Registered Agent Fees
Given that you’re in the same state where your Amazon FBA LLC is registered, you have the option not to hire a registered agent. As you know, registered agent services cost separate fees.
#2: Delaware
Amazon Warehouses
Delaware may not be as big as other states, but this place houses four of Amazon’s warehouses. So if you want to save money from logistics, this is the state we highly recommend.
Tax Advantages
Other states have low sales taxation, but Delaware completely exempts that category in regular tax collections. And if you intend to operate an LLC with a physical warehouse or office, we’re sure it’ll delight you to know that the state has low property tax.
#3: Wyoming
Low Annual Fees
Wyoming’s $60 annual payments are known as one of the lowest in the country. You may not know, but states like New York require $200 yearly fees while California has $800.
Re-domiciling Regulations
If you’re planning to transfer your LLC registration due to high costs, Wyoming’s re-domiciling policies can surely help you. This regulation meant that there’s no need to dissolve your old business entity when you register in the state.
#4: Nevada
Amazon Warehouse Network
If Delaware has four Amazon warehouses, you’d be surprised to know that Nevada has a larger network. As of writing, they have 13 Amazon operation facilities in the state.
Taxation Exemptions
Nevada has many tax exemptions for businesses operating in the state, from corporate income tax to estate tax. However, you’ll need to file for sales tax if you have a physical store for your LLC.
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Conclusion
The best state to form an LLC for Amazon FBA businesses depends on your company’s needs. Whether you choose to settle for tax advantages or asset regulations, always remember that this decision determines the future of your business.
If you’re having trouble deciding, our resident entrepreneurs recommend seeking advice from experts to prevent wasting money and time in the long run.
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