• Published by
  • 9-June-2023

Best States to Form an LLC for Online Business on Amazon

Running an Amazon business in the United States is not easy. From securing the best possible price for your Amazon product to finding the best state to form an LLC, all are pack and parcel for launching your new Amazon business. However, choosing the correct legal structure for your Amazon business is equally important. And the best way to kick-start your online business on Amazon is to register your LLC in the most profitable US state.

Quick Answer Cheapest State to Form an LLC

Kentucky is the cheapest state to form an LLC with a filing fee of $40. Kentucky also offers various business owner incentives to boost their GDP. Currently, Kentucky ranks number 28th on the highest GDP US states index.

Form an LLC in Kentucky

Which States Are Best to File an LLC for Online Business on Amazon

There are 50 states at your disposal to kick-start your Amazon FBA business. So how do you know the best state to form LLC for online business?

Wyoming – Lowest Tax State

Wyoming is the top choice among Amazon sellers to register their LLCs because this state has little to no tax for business owners. Due to low taxes, Wyoming was ranked number 1 on the Tax Foundation State Tax Climate Index. Here’s a quick breakdown of what taxes you’re liable to pay in Wyoming for the following business niche.

  • Clothing 4%
  • Prescription 4%
  • Prepared Food 0%
  • Raw materials 0%

These taxes are great for LLC registration for Amazon FBA, but you might be subjected to higher taxes in some countries where you sell your product.

Pro Tip Cheapest Way to Form an LLC in California

The cheapest way to form an LLC in California is through the new free LLC registration program. Valid till 30th June 2023, business owners can register their LLC for free. However, you’ll be subjected to annual LLC charges.

Form an LLC in California

Nevada – Business Support Programs

Every US state is on a mission to boost its GDP, offering various support programs. Nevada is an exceptional US state with many business assistance programs and tax policies. Here’s a list of all the support programs you can avail.

  • • Estate tax
  • • Unitary tax
  • • Franchise tax on income
  • • Personal income tax
  • • Inheritance or gift tax
  • • Corporate shares tax

You are liable to submit your sales tax to Nevada if you have an economic nexus in the state. In addition, you can avail nexus regulation if your annual sales reach $100,000.

Delaware – Best For E-commerce Businesses

Delaware is the best state to form an LLC for online businesses because this state has been ranked in the top 3 for E-commerce businesses. In addition, Delaware offers a host of business support programs to boost its GDP. Here’s a quick list of all the perks you get when you register your LLC in Delaware.

  • • Low property tax
  • • Solid asset protection
  • • Easy access to Amazon warehouses
  • • Seemly company incorporation

Final Thoughts

Choosing the best state to form an LLC for your online Amazon business depends on tax relaxation and other business growth incentives. While Wyoming and Nevada have low taxes, Delaware is great for having an onsite business. However, if you’re looking for a state that has a strong consumer market, the golden state is the place to be.

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