If I want to open an online business through Amazon, can I open a LLC in any state without getting fined by the IRS? If all the operations are being done by Amazon?

UPDATED: Oct 1, 2022

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If I want to open an online business through Amazon, can I open a LLC in any state without getting fined by the IRS? If all the operations are being done by Amazon?

Which State to incorporate in? What all do I need? What kind of Entity should I be? What are my long-time ongoing requirements with this incorporation? What will my taxation look like? What do I need to set up a businesses ness bank account? And do I have to go in person?

Asked on August 11, 2018 under Business Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

1) You can form your LLC in any state you wish. While there are some differences between state laws on the subject, they are slight--there is very little advantage to one state over another. That said, forming it in your state is likely best, since that way, if some lawsuit or other legal matter comes up where your particular state's LLC law is relevant, it will be easiest for you to find an attorney conversant with it.
2) You need to form the LLC with the state (go to the state's department of state or department of revenue website) and get an EIN from IRS.
3) Both setting up the LLC and getting the EIN can be done online.
4) An LLC is the best choice: it offers you liability protection (protects you against most--but not all; there are always exceptions--debts owed by, obligations of, and lawsuits against your company), the same as a corporation, but involves somewhat less reporting and paperwork.
5) Yes, you will need a business bank account to help show that the LLC is "real" and not just an extension of you personally. The LLC must have an independent existence for you to get its protection.
6) When you set up the LLC, select "disregarded entity," "partnership" tax treatment, or "pass-through" treatment (terms may vary)--that way, there is no separate taxation of the LLC, but instead, profits (and losses, which provide a tax deduction) drop directly to your personal bottom line and are taxed with any other income you have.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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