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Create Business Entity (LLC etc) before starting sell on Amazon?

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EsJay

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Hi All,

I am interested in starting an e-commerce business and currently doing all the reading and learning I could do. I think I understand the basic concepts and challenges etc, what I could not find is, do I need to setup a legal business entity (say LLC etc) and do import and selling against company name or I can do all of it as an individual.

If LLC formation etc is not required, are there any advantages doing this activity against company rather than as individual? and Is there a threshold where I should consider forming a business entity?
 

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MHP368

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Hi All,

I am interested in starting an e-commerce business and currently doing all the reading and learning I could do. I think I understand the basic concepts and challenges etc, what I could not find is, do I need to setup a legal business entity (say LLC etc) and do import and selling against company name or I can do all of it as an individual.

If LLC formation etc is not required, are there any advantages doing this activity against company rather than as individual? and Is there a threshold where I should consider forming a business entity?
Im fairly certain amazon will ask for company info , go to the seller central amazon site and the requirements will be located in a faq section im sure
 
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EsJay

EsJay

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Thanks I also browsed Legal section of forum (didn't know it existed when I posted my message). I am now taking a first step and going ahead with LLC formation.

While that happens, its time to read forum, search for a product and order samples (bit way over simplified but I think I got the gist of it right)

Im fairly certain amazon will ask for company info , go to the seller central amazon site and the requirements will be located in a faq section im sure
 

Walter Hay

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Hi All,

I am interested in starting an e-commerce business and currently doing all the reading and learning I could do. I think I understand the basic concepts and challenges etc, what I could not find is, do I need to setup a legal business entity (say LLC etc) and do import and selling against company name or I can do all of it as an individual.

If LLC formation etc is not required, are there any advantages doing this activity against company rather than as individual? and Is there a threshold where I should consider forming a business entity?
Selling under your business name is essential, but there are distinct benefits in buying under another name if you are intending to import.

In this post: Trademark your name NOW! I go into some detail on that subject by posting a chapter from my labeling book.

Walter
 

Scot

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If memeory serves me when I created my seller account a few months ago I needed to supply my EIN and bank statements for proof I was a real business entity.
 

Philip Marlowe

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I can't speak to Amazon's requirements, but you can get an EIN number as a sole proprietor (i.e., just you doing business as you - no LLC, S-corp., etc.). To your question, being a sole proprietor is very much a "legal business entity" and most of it actually revolves around any State/local business licenses you need. The first year it doesn't really feel like a "business" but eventually after your first tax filing you do start paying estimated taxes. If everyone had to pay quarterly business taxes I think people might look at federal spending differently...

I'm not trying to dissuade you from forming an LLC, but it may not be necessary yet. And even a single-member LLC can be "pierced" for legal reasons so if you're looking to protect yourself it would be good to both get insurance and form a multi-member LLC (which then requires an annual member meeting, typically to be filed by an attorney who supervises the meetings). I'm guess that varies by state.

Good luck!
 

jlwilliams

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This may or may not be applicable to your situation, but let me tell you how I once screwed myself.

A few years ago I tried getting into supplements. Among other things, I paid a lawyer to set up my Llc. Sure, I could have gone the DIY route, but I had never done one myself so I wanted it done right. I also paid to get a few other things done because I wanted tyem done right. In reality I was "action faking" and the one thing I did best was fool the hell out of myself. I spent a few grand before making a single sale. Incidentally, much of what I "wanted done right" was done wrong because even though I paid pros, they were following my flawed instructions. Long story shortened, I lost a few grand flailing aimlessly in a business I knew nothing about. My net gain was that I learned not to spend money on all that before getting the all important momentum of SELLING. I posed for my victory portrait before I ran the race. Oops, my bad.

So, again, my story may not fit your circumstances. Still when I hear "should I....?" my gut screams. It's screaming at me, but if you read this and it sounds a shade too familiar then I'm glad to have spoken up. If I'm the only guy in the room wearing this dunce cap, that's ok too.

Carry on.....
 

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