With the development of the digital age and online stores, it is possible for almost anybody with a computer to start buying and selling various different products. Thanks to platforms such as Amazon, consumers all around the world can set up their own businesses as sellers. Statistics showcase that there are over 9.5 million Amazon sellers, making the platform a lucrative online market for potential business growth.
Businesses operating on Amazon need to do whatever they can to get a leg up in the market, as the online platform is filled to the brim with competition targeting the exact same niche. Luckily, there is a multitude of ways entrepreneurs can change things up and make new additions to improve their overall performance as an Amazon seller.
Starting a Limited Liability Corporation (LLC)
One might think that being an Amazon seller is an informal type of job that requires no type of logistical formalities such as being tied to a specific business entity. But, this is not the case, as notable businesses operate as sellers on Amazon. This online platform should be treated just like any other type of business venture in the real world. Starting an LLC could give Amazon sellers a large advantage.
What is an LLC
An LLC is a type of business entity that is becoming extremely popular in America due to all of the benefits and opportunities associated. LLCs are easily established by following rules such as electing a registered agent who will organize all legal matters and filing articles of organization.
LLCs cater to the growth of small and large businesses alike, and they are perfect for those who operate solely on the digital sphere, as LLCs can be established in any state from anywhere in America and the world at large. Amazon sellers can greatly benefit from establishing an LLC to further solidify themselves on the market and create more opportunities for growth and success.
Personal Asset Protection
One of the greatest advantages of LLCs is that they provide limited liability protection. This means that members of the LLC and their assets will be completely protected and covered in case the business is sued or runs into any other legal issues.
This is especially important for Amazon sellers, the risk of legal troubles is always on the horizon as the online sphere can be a tricky and sometimes dangerous place to operate.
Various complications with customers could result in legal troubles. Examples include running into copyright issues or having one of your products cause injury to someone.
LLCs, ensure that the risk is completely avoided thanks to personal asset protection.
Additional Tax Benefits
LLCs provide Amazon sellers with a list of tax benefits. An LLC is taxed as a pass-through entity. What this means is that the net income of the business will pass through to the LLC owner’s tax return. This means that the net income of the business is then subject to income taxes.
If an LLC chooses to elect an S Corporation as an IRS tax status, then business owners will be treated as employees of the business which is great for tax purposes.
A Greater Sense of Credibility
When consumers are buying on Amazon, they want to make sure that they can trust the specific company they are buying from. Whilst the digital realm comes with a whole list of advantages and benefits, there are a few downsides relating to cybersecurity and trust.
If consumers feel as though they can trust a specific seller, they are more likely to pick that seller. Even if a business might not provide the best quality or best price, the element of trust can go a very long way to stand out in the crowd.
For this reason, Amazon sellers should establish an LLC so that they look like a legitimate business that can be trusted in the eyes of the consumers.
LLCs are the key to more growth and success for Amazon sellers. This business entity is an inexpensive way for Amazon sellers to create more credibility whilst benefiting from advantages related to personal asset protection and better tax rates. Having a certified and official business can lead to growth and provides more opportunities, such as being able to take out loans and apply for grants, which might be crucial even for Amazon sellers.
Many people ask: do you need an LLC to sell on Amazon? While the answer is no, there is no denying that having an LLC can be extremely beneficial.