THE CONTENTS OF THIS PAGE ARE RELATED TO AMAZON FBA WHOLESALE MODEL. READERS MUST NOT TAKE THIS AS AN ADVICE. THIS CONTENT IS ONLY THE OPINION OF THE AUTHOR.  READERS MUST HIRE A PROFESSIONAL ATTORNEY FOR LEGAL ADVICE OR SPEAK WITH YOUR ACCOUNTANT.

 

If you already have an Amazon Approved Individual ID and you want to upgrade to a US-based LLC or Corporation, you will need to form a company in a state in the USA.

The FIRST question is: In which state should you register the company for Amazon FBA?

AMAZON is very particular about addresses being unique; your goal would be to form the company in a state where you can manage a UNIQUE address.

There can be TWO options:

  1. You have a friend/family member who allows you to use their address for the company. Perfect! You can save the cost of buying an address. PLUS, you will get a REAL UNIQUE address. BUT, that state may not be a perfect fit because of high state-level income tax rates. E.g., NY, NJ, CA, etc.
  2. You buy a commercial registered agent address (some people call it a virtual address) that provides a UNIQUE suite number. Your company will be registered at that address.

If you are left with the SECOND option, your goal should be to choose a state with a low or ZERO state-level income tax rate. Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — have no income taxes.

So far, Wyoming and Washington are states which are the most friendly and suitable for Amazon Wholesalers.

Costs involved: (Our fees are included)

 

WYOMING

        1. WYOMING Company Formation with EIN: $350
        2. Virtual Address with UNIQUE SUITE number: $250/year
        3. Applying for a Reseller Permit (For Dropshipping & FBA wholesale): $210

WASHINGTON

        1. WASHINGTON Company Formation with EIN: $450
        2. Virtual Address with UNIQUE SUITE number: $150/year
        3. Applying for a Reseller Permit (For Dropshipping & FBA wholesale): $150

FLORIDA

        1. FLORIDA Company Formation with EIN: $400
        2. Virtual Address with UNIQUE SUITE number: $150/year
        3. Applying for a Reseller Permit (For Dropshipping & FBA wholesale): $150

TEXAS

        1. TEXAS Company Formation with EIN: $550
        2. Virtual Address with UNIQUE SUITE number: $150/year
        3. Applying for a Reseller Permit (For Dropshipping & FBA wholesale): $150
        4. Texas State requires a SURETY BOND (security deposit) of $500 in order to release a Reseller Permit. This bond can be recalled after 2 years of satisfactory submission of all sales tax filings. We can manage this bond for an additional $25 fee.

Once you have figured out the address part and have chosen the state,  HQ Tax & Financial INC. can help you out with the company formation. Please email us with a subject line: <STATE> LLC FORMATION + RESELLER PERMIT 

We will send you the details of the information/documents required. Currently, due to the COVID pandemic, it takes around 90 days for the company formation and additional 14-20 business days for the Reseller Permit.

NOTE: We try our best to get the process done in a timely manner- however, after the submission of documents, it is beyond our control.

 

“FREQUENTLY ASKED QUESTIONS”

For non-US residents, LLC is a suitable option ONLY if they are NOT engaging a US resident/helper. 

  • The company will be in your own name. You will be a sole member of that LLC, and responsible for all the taxes.
  • EIN will be applied with your name.
  • To file annual income tax returns, you must have an ITIN.

For non-US residents who are engaging a US person/resident as an official partner.

They will form a multi-member LLC. (Multi-member LLC considered a partnership for tax purposes)

For non-US residents who are engaging a US person/resident only to open up a physical Bank Account.

They will form a Corporation/ C-Corp, and a US person will act as an initial director. There will not be any tax liability on a US person as long as a non-US resident claims 100% shares and report dividends on his personal tax return using ITIN.

YES, there is double taxation on C-Corps but you have to deal with it against the perk of having a physical bank account.

Question: Are LLCs formed in zero-income-tax states eligible to get Brands Approval for wholesale purposes?

Answer: It really depends on the Brand’s internal policy and where the Brand’s Head Office is registered.

 

 

 

 

Author:
Hassan Abbas
IRS Enrolled Agent
President HQ Tax & Financial INC.