Guide 35 · Founder personas
Selling on Amazon with a US LLC: nexus, 1099-K and the $800 California trap
Amazon is the reason many foreign founders form a US company at all — and the channel that punishes casual compliance fastest. The US LLC solves the identity problem for Seller Central. It does not solve sales-tax nexus, it does not stop the 1099-K, and if your inventory sleeps in a California warehouse, the state wants $800 a year for the privilege. The full picture, before your first shipment.
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Seller Central and the identity the LLC gives you
Seller Central verifies a business, not a hope: legal entity name matching the EIN record, a US bank account for disbursements, a chargeable card, and identity verification of the beneficial owner. The US LLC gives the account a domestic identity that survives review; the discipline that keeps it alive is consistency — the same legal name and EIN across Amazon, Stripe and the bank, exactly as our 1099-K guide requires. Founders who form the company after the account, or open the account in a trade name, spend their first quarter in re-verification instead of selling.
Nexus: inventory and economics
Nexus is the connection that makes a state entitled to tax you, and FBA manufactures it two ways. Physical nexus: your inventory sitting in Amazon's warehouse in a state is your property in that state — the classic trigger, and Amazon chooses the warehouses, not you. Economic nexus: every state with a sales tax sets a threshold (commonly $100,000 of sales into the state) past which even a seller with no physical presence must collect. A growing FBA business can acquire nexus in a dozen states without a single decision being made — the decisions are made by Amazon's logistics network and your sales volume.
What marketplace-facilitator collection does not settle
Most marketplace sales themselves are collected for you: marketplace-facilitator laws in every sales-tax state make Amazon collect and remit sales tax on sales through its marketplace. Read what that does not cover: your own website's sales (your obligation entirely), wholesale or B2B sales, states where you hold inventory for income/franchise tax purposes — sales-tax collection by the facilitator does not settle a state's claim that you are 'doing business' there — and foreign-qualification duties that inventory presence can trigger. Facilitator collection is a service for one tax on one channel, widely mistaken for a general absolution.
The $800 California trap
If Amazon stores your inventory in California, or you sell into California past its $500,000 economic threshold for franchise-tax purposes, California treats your LLC as doing business in the state — and an LLC doing business in California owes the $800 annual LLC tax, plus a graduated fee on California-source income, plus a Statement of Information, whether or not the LLC was formed there. A Wyoming or Delaware LLC does not escape this; foreign qualification in California is how the liability is regularised, and the Franchise Tax Board finds FBA sellers from marketplace data. The trap is not the $800 — it is discovering three years of it at once, with penalties, in a notice forwarded by your registered agent.
The seller's year: 1099-K, 5472 and the calendar
- January: Amazon issues the company's 1099-K for the prior year's gross sales. Reconcile it to your books gross-to-net, as our bookkeeping guide sets out.
- April 15: Form 5472 with the pro-forma 1120 — unchanged by the channel; see the 5472 explainer. California's LLC tax is also an April-season obligation for calendar-year filers.
- All year: inventory reports are nexus reports — pull Amazon's inventory placement data quarterly and map where your stock physically sat; that map is the answer to every state's first question.
What the bundle carries for a seller
What a Sethhost membership carries for a marketplace seller is the chassis, not the tax work: the company formed with the agent of record who forwards state notices the week they arrive (the FTB letter above reaches you through exactly this channel), the EIN the marketplace verifies against, the compliance calendar holding the federal date, and the document shelf where the 1099-Ks accumulate. Sales-tax registration, nexus studies and state filings belong to a sales-tax adviser once the map says you need one — and for a scaling FBA business, the map eventually says so. Form the company as if you will succeed; the nexus arrives with the success.
Verification. Checked 2026-11-12 against the California Franchise Tax Board's LLC pages ($800 annual tax, graduated fee, doing-business standards including the economic threshold), IRS.gov marketplace-facilitator and Form 1099-K material, and Amazon Seller Central's published tax-collection documentation.
Reading is step one. The paperwork is the rest.
Sethhost handles formation paperwork, the EIN workflow, registered agent service, your website, a US number, and a compliance calendar — one company, one bill. Hosted is $79 per month and formation is included in your first term; the state filing fee is always shown separately.