🏢 LLC for Resellers
Reseller Guide
Business Structure Options
| Structure | Liability | Taxes | Cost |
|---|---|---|---|
| Sole Proprietor | Personal liability | Schedule C on personal return | Free (maybe DBA fee) |
| Single-Member LLC | Limited liability | Schedule C (default) or S-Corp election | $50-500 state filing |
| S-Corporation | Limited liability | Separate return, salary + distributions | Higher, more complexity |
Benefits of an LLC
- Liability protection: Personal assets separated from business debts
- Professionalism: Looks more legitimate to platforms, suppliers
- Business bank account: Easier to get with LLC
- Resale certificate: Required for tax-exempt wholesale buying in most states
- Credit building: Build business credit separate from personal
When You DON'T Need an LLC
- Just starting out: Test the waters first
- Part-time hobby: Under $5k/year probably fine as sole prop
- Low risk inventory: Selling clothing vs heavy machinery
- Cost concern: State fees + annual reports add up
💡 General Rule: Consider an LLC when you're consistently profitable, doing $10k+/year, or selling higher-risk items where liability matters.
How to Form an LLC
- Choose a name: Check availability in your state
- File Articles of Organization: With your state's Secretary of State
- Get an EIN: Free from IRS (irs.gov)
- Create Operating Agreement: Even single-member LLCs should have one
- Open business bank account: Keep business funds separate
- Get resale certificate: For tax-exempt purchases (state-specific)
DIY vs Services
- DIY: File directly with state, cheapest option ($50-200)
- LegalZoom, ZenBusiness: $150-400+, they handle paperwork
- Attorney: $500-1500, best for complex situations
Ongoing Requirements
- Annual report: Most states require yearly filing ($25-500)
- Registered agent: Someone to receive legal documents
- Franchise tax: Some states charge annual tax (CA = $800 minimum)
- Separate finances: Don't mix personal and business funds
⚠️ California Warning: CA charges $800/year minimum franchise tax regardless of income. Consider forming in your home state first.
Business Banking
- Separate account: NEVER mix personal and business funds
- Business debit card: Use for all business purchases
- Options: Local credit unions often have free business accounts
- Online banks: Mercury, Relay, Bluevine = no fees
Resale Certificate
A resale certificate lets you buy inventory without paying sales tax (you collect tax when you sell instead).
- Apply through your state's Department of Revenue
- Usually free or small fee
- Present to suppliers for tax-exempt purchasing
- Not all states require it—check yours
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