Amazon Seller: Should You Start a Business as a Corporation or LLC?
As an Amazon seller, you have a few business entity choices: corporation, limited liability company (LLC), or sole proprietorship. In this video, we discuss which is best for you and for your Amazon business.
Corporation vs. LLC
When deciding how to run your business, it is important that you choose a model which is most effective for achieving your goals and developing a professional reputation. Typical options for operating a business are creating a corporation or a LLC.
A corporation is a business which is recognized by the law as a single entity who can borrow, lend, and sue. Corporations are typically owned by shareholders who elect a board to supervise the business, but the corporation is liable for all actions taken.
An LLC (Limited Liability Company) is owned by one or more individuals and is often utilized for the flexibility it provides owners in terms of share percentages, taxes, and management. In addition to this, an LLC separates the business and its choices from the owners by minimizing the personal liability the owner(s) incurs in the case of litigation and bankruptcy.
How to choose a business model
The best thing you can do to make the right decision concerning the type of business you want to utilize, is to seek advice from your accountant who has a thorough understanding of your finances and intentions.
The model that is most effective for you will depend on the type of seller you are and the factors which you prioritize for your business. A regular third party seller may benefit most from utilizing one entity that provides protection from liability. In contrast, a private label seller can utilize two separate entities which focus on different legal aspects. One entity should be considered with intellectual property rights of your business, while the other entity owns and operates your Amazon business.