There are several pros and cons to consider when deciding whether to set up a business entity or operate as an individual when starting an Amazon business.

If you end up not sure, take this quiz here to help you make your choice.

Setup as a Business

Pros of Setting up a Business Entity

• Legal protection: Setting up a business entity such as an LLC can provide legal protection by separating your personal and business assets. This means that if there are any legal issues with your Amazon business, your personal assets will not be at risk.
• Potential tax benefits: Operating as a business entity may offer certain tax benefits, such as the ability to deduct business expenses and potentially lower your overall tax burden.
• Ability to get ungated for products: Setting up a business entity may be required in order to get approved to sell certain brands or within certain categories on Amazon.
• Sales tax exemption: As a business entity, you may be able to apply for a resale tax exemption certificate, which allows you to purchase inventory without paying sales tax at certain retailers such as Walmart.
• Access to business banking and credit cards: As a business entity, you may have access to business banking and credit card options that offer great perks and benefits specifically designed for businesses.

Cons of Setting up a Business Entity

• Filing business taxes: If you operate as a business entity, you'll need to file separate business taxes in addition to your personal taxes.
• Cost: There are costs associated with setting up and maintaining a business entity, such as filing fees and annual maintenance fees.

Setup as an Individual

Pros of Operating as an Individual

• Simplicity: Operating as an individual is the simplest and quickest option, as there is no need to set up a separate business entity.
• No additional taxes: As an individual, you'll only need to file your personal taxes rather than separate business taxes.