Should your Amazon business be a LLC or S-Corp?

From my experience, I would say that the best structure for a beginner seller on Amazon would be a LLC rather than a S-Corp. The reason is basically because it is much simpler to form and operate a LLC as opposed to a S-Corp — especially if you are going to be the only owner.

LLC

  • Offers limited liability to the owner(s)
  • Requires some formal governing documents, but much less than a S-Corp
  • Taxed at the corporate level and the individual shareholder level (double taxation)

S-Corp

  • Also offers limited liability to the owner(s)
  • Requires formal governing documents and operating agreements along with a board of directors and meeting requirements
  • Taxed only at the shareholder level, not the corporate level

One option that you could take to get the advantages of both structures is to set up your company as a LLC, but then elect to be taxed as a S-Corp. That way, you will have the simplicity of a LLC without the double taxation.

I hope this helps you get your company started. At LawTrades, we have helped over 1000 entrepreneurs and startup companies — visit our website to see how we can help you!