Do I need a US LLC to sell on Amazon FBA as a non-US resident?

Amazon's seller registration guide answers the question directly. It says you don't need to be an LLC or registered business, or otherwise incorporated, to sell in the Amazon store; an individual selects "None, I am an individual" as the business type.^[1] For location, you select the country where your business is registered, or, as an individual or an unincorporated business, the country where you do business.^[1]

• Marketplaces. An account created from sell.amazon.com can be used to sell in the US, Canada, Mexico and Brazil.^[1]
• Bank account. The guide's answer to "Do I need a US bank account?" is no: the Amazon Currency Converter can pay your sales proceeds into a bank account outside the US.^[1]
• What to have ready. A government-issued ID, a chargeable credit card, a bank account, tax information, and a proof of residential address dated within the last 180 days, such as a bank or credit card statement.^[1]
• Identity check. After you submit your store information, you upload your documents and then either take a photo of your face with your ID or join a video call with an Amazon associate; the guide says verification usually takes three business days or less.^[1]

Amazon runs that verification and decides on every account, with or without an LLC. A US LLC changes whose details you give, not who makes that decision.

Founders who form a US LLC for an Amazon business usually want one of three things:

1. 01

   A US business identity for payment providers

   Some providers serve businesses only in listed countries. Stripe's global availability page lists the United States among its supported countries and offers Stripe Atlas to incorporate a US company from anywhere in the world;^[2] a US LLC applies as a US business, and the provider decides.

2. 02

   A US tax ID for the business

   The company gets its own employer identification number (EIN), which the IRS issues free of charge.^[4] It identifies the business on US forms, bank accounts and provider applications.

3. 03

   A business kept apart from your personal affairs

   An LLC is a business structure allowed by state statute, and each state has its own rules.^[3] How far it separates the business's obligations from yours is a question of that state's law, so a lawyer in the formation state is the person to ask about liability.

If one of these fits your plans, our formation pages set out the steps and prices: US LLC formation for non-residents, and for founders in Pakistan, LLC registration in the USA from Pakistan.

The LLC brings a short list of US paperwork with it. Each item below is set by the IRS or a state, not by Amazon.

An EIN

The IRS online EIN tool needs the responsible party's SSN or ITIN, and it can't be used when the principal place of business is outside the US; in that case the IRS says to apply by phone, fax or mail.^[4] The IRS also notes you never have to pay a fee for an EIN.^[4]

A Form W-8, not a W-9

Amazon asks for tax information when you set up the account.^[1] The IRS forms decide which one applies. Unless it elects otherwise, a single-member LLC is treated as a disregarded entity for federal tax,^[3] and the Form W-9 says that if the owner of a disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9, even if the foreign person has a US TIN.^[5] The Form W-8BEN instructions add that the single owner of a disregarded entity is considered the beneficial owner of its income, and that the owner, rather than the entity, submits the form.^[6] For an individual owner that is Form W-8BEN. Our answer on what a disregarded entity is covers the classification itself.

Form 1099-K reporting rules

The IRS says a payment app or online marketplace must report payments on Form 1099-K when the payments you receive for goods or services through the platform exceed $20,000 in more than 200 transactions, and that you may receive one below those levels.^[7] The Form 1099-K instructions set out exceptions for payments to a payee with a foreign address whom the payer has documented as a foreign person,^[8] so whether a form arrives depends on the tax information Amazon holds for you. When one does arrive, it rarely equals your deposits; why your 1099-K doesn't match your sales explains the gap.

Sales tax Amazon collects as marketplace facilitator

Each state sets its own marketplace rules. California is one example: since October 1, 2019, a marketplace facilitator is generally responsible for collecting, reporting and paying the tax on retail sales made through its marketplace for delivery to California customers.^[9] CDTFA says a marketplace seller whose retail sales are all facilitated by a registered marketplace facilitator is not required to hold a California seller's permit, while direct sales to California customers, a physical presence, or more than $500,000 of sales for delivery in California can bring a registration duty of your own.^[9] The same guide explains when stored merchandise counts as a place of business in the state. Other states write their own versions, so check each state you ship to.

A yearly Form 5472

The Form 5472 instructions treat a foreign-owned US disregarded entity, meaning a domestic disregarded entity wholly owned by a foreign person, as a corporation for these reporting rules, so it reports its transactions with its owner each year.^[10] The instructions set a $25,000 penalty for a reporting corporation that fails to file Form 5472 when due.^[10] Our Form 5472 instructions answer covers who files, what it reports and where it goes. We prepare Form 5472 with its pro-forma 1120 as part of our Form 5472 service.

Every one of those items reads its numbers from the books. Amazon pays in settlements, with refunds and fees already taken out, so each deposit is broken back into its parts before it is recorded. Sales tax Amazon collects as marketplace facilitator is recorded apart from your sales, since the marketplace pays it to the state. Money you put into the LLC or take out is logged in US dollars, because those are the transactions Form 5472 reports.^[10]

The deposit is 7,748.40, but the business sold 12,480.00 and paid 4,091.60 in fees. Recording the deposit as sales would understate both, and the sales tax lines would not belong in income at all. Our page on Amazon seller accounting shows how each settlement is reconciled.

If you sell on Amazon through a US LLC from outside the US, our US bookkeeping for foreign-owned LLCs reconciles every Amazon settlement, closes the books each month and logs every dollar you put in or take out, so the year's Form 5472 figures are already kept.