In recent years, many Indian business owners have resorted to Amazon FBA and US LLC in order to sell their products to American consumers. The US continues to be one of the biggest e-commerce countries in the world, and growing an e-commerce brand with a U.S. company can help Indian sellers understand how a US entity supports global expansion.
Nevertheless, entering the American market is not just about identifying lucrative products. Indian sellers have to know how to register as a company in the US, how to get tax registered, pay taxes and meet all annual compliance requirements to avoid any penalties and account problems.
Here you can learn about setting up 2026 tax and compliance as an Indian seller doing Amazon FBA and US LLC.
Why Indian Sellers Use an Amazon FBA and US LLC
The Limited Liability Company (LLC) is among the top structures used by non-US sellers who are looking to trade through Amazon.
Advantages of an LLC:
- Access to the Amazon US marketplace
- Improved credibility when dealing with suppliers or financial institutions
- Separation of personal liability from that of the business
- Possibility to open a US business bank account
- More straightforward operation of the business than some other US business structures
LLCs such as Wyoming LLCs and Delaware LLCs are often preferred by Indians due to low maintenance and favorable regulations.
Step 1: Choose the Right State for LLC Formation
Wyoming LLC
Suitable for: Small and medium-sized Amazon sellers
Benefits:
- Low annual state charges
- No state income taxes
- Privacy protection
- Easy compliance
Delaware LLC
Suitable for: Companies looking to generate investments or grow considerably
Benefits:
- Internationally accepted company laws
- Investor friendly formation
- Flexible management guidelines
If you are new to US company formation, read Step-by-step guide: Forming a U.S. LLC as a non-resident for a detailed explanation of the LLC registration process for international founders.
Step 2: Obtain an EIN from the IRS
After forming the LLC, you must apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
The EIN is required for:
- Amazon seller account verification
- US business bank account opening
- Tax filings
- Payment processor registration
- Supplier and wholesale account setup
Non-US residents can obtain an EIN without a US Social Security Number (SSN).
Step 3: Open a US Business Bank Account
Amazon generally pays sellers into a bank account that can receive USD payments.
Common options include:
- Mercury
- Relay
- Wise Business
- Payoneer
- Airwallex
You will typically need:
- LLC formation documents
- EIN confirmation letter
- Passport
- Address proof
- Amazon seller account information (sometimes)
Keeping business transactions separate from personal finances is essential for accurate accounting and tax reporting.
Step 4: Understand Amazon FBA and US LLC Sales Tax Nexus
This is definitely one of the least understood aspects by Indian sellers.
By employing Amazon FBA and US LLC, your inventory is housed in Amazon warehouses located in different US states. Your inventory housed in a particular state may establish sales tax nexus and hence would need you to register for sales tax in that state.
Key 2026 update
Under the Marketplace Facilitator Laws, Amazon acts as the sales tax agent on behalf of marketplace sellers in most states.
- What does this imply?
- Sales tax is collected by Amazon from customers.
- Sales tax is paid by Amazon to the respective states.
Sellers might still need to register and file informational tax return in some states depending on their inventory location.
Step 5: Federal Tax Rules for Indian-Owned LLCs
Single-Member LLC Owned by an Indian Resident
By default, the LLC is often treated as a disregarded entity for US federal tax purposes.
The LLC itself may not pay income tax, but it still has reporting obligations.
Required IRS filings may include:
| Filing | Purpose |
| Form 5472 | Reports transactions between the US LLC and its foreign owner |
| Pro Forma Form 1120 | Filed together with Form 5472 |
| Schedule C equivalent records | Internal accounting support |
Filing deadline
For calendar-year LLCs, the filing is generally due by 15 April, with extension options available.
Failure to file Form 5472 can result in substantial IRS penalties, so this requirement is extremely important for Indian owners.
Step 6: Do Indian Sellers Pay US Income Tax?
The answer will depend on whether the company is classified to earn Effectively Connected Income (ECI) from a US trade or business.
For many Amazon FBA sellers working out of a US LLC and running the business from India, the situation might not be simple and can become based on factors like:
- Structure of the inventory
- Usage of Amazon’s warehouses
- Activities carried out in the US
- Provisions of the India-US tax treaty
As this is a complicated topic, it is best for the seller to consult a cross-border tax expert.
Step 7: Indian Tax Obligations Still Apply
Filing an LLC in the United States doesn’t necessarily exempt you from any Indian tax obligations.
Indian citizens typically get taxed on their worldwide income unless there is some exemption for them.
It’s possible that you would need to file taxes for:
- Profits generated by Amazon business
- Foreign bank accounts
- US LLC ownership
- Any foreign property that is held in accordance with Indian law
Working together with your Indian Chartered Accountant and US tax expert is strongly advised.
Step 8: Maintain Proper Accounting Records
It is very important for Amazon performance analysis as well as tax compliance to keep accurate books.
Here is the list of items that should be tracked each month:
- Amazon sales revenue
- FBA fees
- Marketing expenditures
- Sourcing costs
- Shipping and customs fees
- Subscription to accounting software like QuickBooks, Xero, or Zoho Books
- Refunds and chargebacks
- Foreign currency fluctuations
Step 9: Annual LLC Compliance Checklist for 2026
Federal Compliance
- Form 5472
- Pro Forma Form 1120
- Maintain EIN Record
State Compliance
- File annual report
- Renew registered agent
- State franchise/license fee (where applicable)
Amazon Compliance
- Business address
- Identity documents
- Correct tax interview (W-8BEN or equivalent forms)
- Sales tax monitoring
Common Mistakes Indian Amazon Sellers Make
Using a personal bank account
It results in accounting discrepancies and could possibly cause problems during verification by the payment processor.
Ignoring Form 5472
Many foreign business owners incorrectly believe that a disregarded LLC does not have to file anything.
Registering for sales tax in every state unnecessarily
Since Amazon is a marketplace facilitator in most states, it is usually not required.
Mixed up accounts for Indian and US expenditures
Separate accounts should be maintained for:
- Indian procurement activities
- US marketplace activities
- Personal activities
How E-Startup Can Help
To set up an Amazon FBA and US LLC business, it needs more than just incorporating your company because it includes applying for an EIN number, setting up your bank accounts, IRS compliance, etc. E-Startup offers comprehensive solutions to entrepreneurs from India who want to incorporate a US LLC, register an EIN, get help in setting up their Amazon seller account, bookkeeping, and annual IRS compliance. E-Startup also provides a complete overview of its formation and compliance support services in How E-Startup Helps You Launch Your Business Faster
Conclusion
The selling of products using Amazon FBA and US LLC in America presents great opportunities for growth to Indian businessmen, but the key to success is establishing a proper legal and taxation framework from the start. The steps to be taken for the year 2026 by Indian sellers include establishing the right US LLC, getting an EIN number, opening a US bank account for business, knowing all about sales tax for Amazon FBA, and complying with the relevant IRS filing requirements.
