does llc protect against lawsuits against amazon [Expert Review]



Last updated : Aug 11, 2022
Written by : Olive Chiappari
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does llc protect against lawsuits against amazon

Which state is best for LLC for Amazon FBA?

In absolute terms, Wyoming, Delaware, and Nevada are considered some of the best states to form LLCs for Amazon FBA. Wyoming is known to have no or lowest sales tax on a list of product categories sold on Amazon.

How do I get liability insurance on Amazon?

Yes, Amazon requires some third-party sellers to provide proof that you have general liability insurance with at least $1 million in coverage. You may also be asked to provide a certificate of insurance with Amazon listed as an additional insured. Our general liability coverage meets Amazon's insurance requirements.

Is Amazon same as Amazon LLC?

Many people don't realize that Amazon is also an LLC. This giant corporation utilizes an LLC structure to optimize its tax strategies. Amazon LLC is officially set up as Amazon.com LLC, which is a subsidiary of the larger Amazon.com, Inc.

Does Amazon have liability?

According to Amazon Seller Central, starting from September 2021, sellers with a gross sales revenue of USD 10,000 in any month are required to obtain commercial liability insurance with limits of at least USD 1 million. The liability insurance policy must also name Amazon as an additional insured party.

Do Amazon sellers need an LLC?

In short, no. You do not need an LLC to sell on Amazon. You can start selling immediately under your name as a sole proprietor. If you are beginning to explore ecommerce and want to test the waters of selling on Amazon, having a sole proprietorship is perfectly fine.

What business type is an LLC for Amazon?

Amazon Seller as an LLC You can also set up a business to sell on Amazon as an LLC (limited liability company). Unlike a sole proprietor who runs an unincorporated business, an LLC exists as its own legal entity separate from the owners.

What happens if I don't get Amazon liability insurance?

If you meet the sales threshold that Amazon has in place, then you will be required by them to have insurance. If you do not and they request proof, then they may suspend your account.

How much does Amazon liability insurance cost?

The average Amazon seller insurance cost is $41 per month or $492 per year for $1 million general liability insurance policies.

What type of insurance do you need for Amazon?

  • Products liability.
  • Products/complete operations.
  • Bodily injury.
  • Personal injury.
  • Broad form property damage.
  • Broad form contractual coverage.

What Does LLC Mean on Amazon?

You don't need to license or register your business to be able to sell products online including for Amazon. But, registering your Amazon business as a Limited Liability Corporation (LLC) is a simple and inexpensive process that has some major payoffs for your finances and reputation.

What is Amazon LLC stand for?

LLC stands for “limited liability company.” It's an officially registered and recognized legal entity that is formed as part of an overall business structure.

What does sold by Amazon LLC mean?

It means that the product is sold by Amazon itself (not by a third-party seller). The thing is that the item may have been purchased from a third party seller by Amazon.

Where is Amazon LLC located?

Amazon Services LLC offers many of the Web service platforms that are Amazon offers. The Company was founded in 2006 and is based in Seattle, Washington.

Does Amazon require general liability insurance?

Amazon requires sellers to take out policies with at least a $1 million liability coverage. The $1 million coverage should be for every occurrence and in aggregate. These policies should include coverage for product liability, products operations, bodily harm, personal injury, property damage, and contractual coverage.

Is Amazon liable for product safety?

Amazon can be held liable for defective products that they sell from third parties on its Marketplace and are “Fulfilled by Amazon.” In August 2020, an appeals court in California reversed a 2019 trial court ruling and stated that federal law does not shield Amazon from third-party defective product liability.

Do I need a tax ID to sell on Amazon?

Amazon requires sellers to provide a tax identification number so that they can identify sellers and report sales to the IRS. Most businesses will need to provide an EIN, but some businesses—such as US-based sole proprietors with no employees—can use their SSN instead.

Do you need a business bank account to sell on Amazon?

By selling on Amazon, you have the opportunity to reach a global market. Thus, you need a bank account to protect profits when trading in multi-currencies. Your business bank account should help you save money and connect with global customers for less.

Is selling on Amazon considered a business?

The short answer is no. You don't need a business license to sell products online including Amazon. This is because most products that are being sold on Amazon are not Federally regulated. In general, most products sold online are consumer products that don't require the governments approval.

How do I set up a LLC on Amazon?

  1. Step 1: Choose a state to register your LLC for Amazon FBA.
  2. Step 2: Choose a legal name for your LLC.
  3. Step 3: Assign a registered agent for your LLC.
  4. Step 4: Create your LLC's operating agreement.
  5. Step 5: File article of Incorporation with Secretary of State.
  6. Step 6: Submit form IRS to obtain EIN for your LLC.

What is the best business type for Amazon?

  • 2.1. Limited Liability Company (LLC) Forming an LLC for Amazon FBA is one popular decision for many entrepreneurs on Amazon.
  • 2.2. C Corporation.
  • 2.3. S Corporation.
  • 2.4. Sole proprietorship, or sole trader.
  • 2.5. Partnership.


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does llc protect against lawsuits against amazon


Comment by Jermaine Gaglia

can you personally get sued if you have an llc this is sam bryant from bryant law where we help business owners protect the legacies they work so hard to build there might be a misconception out there that if you have an llc you have this blanket protection from ever getting sued but that's simply not the truth first of all anyone can sue anybody for anything and i tell clients this all the time we said that what that really means is if i have an llc and i sign a contract in the name of my business and the person on the other side decides to sue myself and the business i still as an individual have to respond to that lawsuit now i may get dismissed from the lawsuit depending on the circumstances and then the llc still has to continue but i still have to go through those preliminary processes of defending myself so to say that you can never get sued is just factually incorrect now the other thing i think what people really want to know is can you legally be held liable personally if you have an llc and the answer to that question is also yes there are certain circumstances in which you as an individual can be held liable even if you have an llc and that usually comes about if you as an individual are doing something wrong yourself so you can't look at an llc as this umbrella under which you can just do something you can commit some sort of action against or wrongdoing against another person and use your llc to protect yourself so people who engage in fraudulent schemes or activities or negligence or gross negligence in the name of a business can still be sued personally where an llc really protects you is if you have a business partner and your business partner does some wrongdoing then you as a as the other as the non-wrongdoer are usually protected so another way of putting it is an llc really provides a blank a protection against the actions of others who are owners of the business so to sum it all up if you are an owner of an llc don't think that you are just um excused from any type of activities and you can never be touched and never be sued that is not the case you can be sued you can't be held individually liable even if you have an llc in certain circumstances so when you engage in business as an llc you want to be careful of that be careful of what your actions are or be careful of your actions because you are personally liable for your own individual actions anyone else associated with the llc will generally not be held personally liable for your actions and vice versa i hope this clears some things up because there are a lot of misconceptions even though there's a lot of inner information on the internet we still get a lot of questions about this and i have to have this conversation a lot so i hope putting this type of content out there will really help demystify some of these misconceptions


Thanks for your comment Jermaine Gaglia, have a nice day.
- Olive Chiappari, Staff Member


Comment by RatW

do locs protect against lawsuits this is sam bryant i'm a business attorney with brian taylor law and the answer is no locs do not protect against lawsuits in a general sense i usually tell everyone whether clients or people who are interested in legal services i tell them that anyone can sue anybody for anything the real question is can you be held liable for a lawsuit against you or your llc and by liable i mean can you be in a situation where a judge forces you to pay money to another party as a result of a lawsuit so the answers to that question basically would be it depends um if you have an llc your llc will generally have to be liable for anything that the llc does so if the llc is involved in a lawsuit and the llc loses the llc is responsible for the judgment you as a personal individual that owns the llc in the general context or generally speaking will not be held personally liable for the actions of the llc even if it's involved in a lawsuit am i personally liable i mean that if the llc has to pay a judgment that judgment gets paid out of whatever the llc owns so the llc bank account if you have your own personal bank account and you have your own assets that are not owned by the llc you generally don't have to worry about those personal assets having to take the responsibility of the judgment it's basically whatever the llc owns is subjected to that judgment so if we go back to the original question does do llcs protect against lawsuits they really don't because there really is nothing that can protect you from a lawsuit you can be involved in a lawsuit doing for for any reason it's just a matter of how quickly can you get out of the lawsuit and that will depend on a lot of different circumstances but as a person who owns a business if you are involved in the lawsuit in a sense that your personal name is attached in a lawsuit so you are named as a your individual name is uh included as a defendant in a lawsuit what the llc will do is it will protect against you having to pay a judgment out of your personal assets so again an llc does not protect against lawsuits an llc that is executed and ran correctly will protect your personal assets from being exposed to any judgment against the llc so i hope you found that video helpful if you need to speak to a florida business attorney our contact information is in the description below and then we have a plenty of other videos that can help protect and grow your business


Thanks RatW your participation is very much appreciated
- Olive Chiappari


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