Amazon Individual vs. Professional Plan, and When to Form an LLC or S Corporation (2026)
The Individual plan costs $0.99 per item sold and Professional $39.99 a month, so above about 40 items a month Professional wins. The plan and the entity are separate questions: U.S. residents can sell under an SSN and file Schedule C, form an LLC for liability protection, a brand or partners, and compare an S corporation once profit is steady. Changing entities later means re-verification.
On Amazon.com the Individual plan charges $0.99 per item sold with no monthly fee, and the Professional plan charges $39.99 a month with no per-item fee, so at a steady 40 or more items a month Professional is cheaper. The plan and the entity are separate decisions: a U.S. resident can sell under an SSN and report on Schedule C, form an LLC for liability protection, a brand or partners, and look at an S corporation once profit is steady and higher. Changing the entity after the account is live means a new tax interview and identity verification, so decide before you register.
How the two plans differ
Fees. The Individual plan has no monthly fee and charges $0.99 per item sold. Professional is $39.99 a month with no per-item charge. Both pay referral fees (15% in most categories, with a $0.30 per-item minimum in most), and both pay FBA fees if they use FBA.
Features. Professional sellers are eligible for the featured offer (the Buy Box) on product pages, can run Sponsored ads, list in bulk, use reports and APIs, and apply for Seller Fulfilled Prime and categories that need approval. On the Individual plan those tools are generally unavailable or limited.
China-based sellers. Sellers registering through Amazon Global Selling need a Professional North America unified account and a company business license; individual business licenses aren't accepted.
The math: 40 items is the break-even
$39.99 divided by $0.99 is about 40.4. At 40 items a month, the Individual plan costs $39.60 and Professional $39.99, essentially even; every item above that favors Professional.
Example (hypothetical numbers, to show the method): a seller moves 120 items a month. Per-item fees on the Individual plan come to 120 × $0.99 = $118.80 a month against $39.99 for Professional, a difference of ($118.80 − $39.99) × 12 = $945.72 a year. At 15 items a month, the Individual plan costs $14.85, saving $25.14 a month.
Per-item fees aren't the whole story, though. Sellers who plan to advertise, ship in volume to FBA or compete for the Buy Box often start on Professional before they reach 40 items.
Selling under your own name: how it's taxed
Amazon says plainly that you don't need to be an LLC or registered business to sell. A U.S. resident selling as an individual completes the tax interview with a W-9 using an SSN or ITIN.
Federal income tax. Revenue and expenses go on Schedule C. Revenue is the gross amount customers paid; referral fees, FBA fees, ads and storage are deducted item by item; product cost, inbound freight and duties go into inventory and are deducted when the units sell.
Self-employment tax. 92.35% of net profit is taxed at 15.3%, with the Social Security portion capped at a $184,500 wage base for 2026.
Form 1099-K. Above $20,000 and 200 transactions in a year, Amazon issues a 1099-K. It shows gross amounts and needs reconciling to settlement reports; no 1099-K doesn't mean no income to report.
A single-member LLC is taxed the same. An LLC owned by one U.S. person with no election still reports on Schedule C. Forming an LLC doesn't cut taxes by itself.
When an LLC makes sense
What an LLC mainly adds is legal liability protection and one entity that holds the store, the payouts and the brand. Set one up before you register on Amazon if:
Your products carry liability risk. Electronics, children's products and anything ingested or applied to the body can draw lawsuits; an LLC separates personal assets from the business, as long as company and personal money stay apart.
You're building a brand. The trademark, Brand Registry and the account are best held by one entity, which keeps a later investment or sale of the store clean.
You have partners. Two or more owners use a multi-member LLC taxed as a partnership, each receiving a K-1.
You'll deal with other platforms and banks. Walmart, TikTok Shop and most banks want company formation documents and an EIN; running several platforms through one company keeps the details consistent.
Form the LLC in the state where you live in most cases. Forming elsewhere and operating at home means registering as a foreign LLC in your home state too, with a second annual fee.
When to look at an S corporation
Once profit is steady and meaningful, the LLC can elect S corporation status: the owner takes a reasonable salary subject to payroll taxes, and the remaining profit passes through without self-employment tax.
Example (hypothetical numbers, to show the method): net profit is $80,000. On Schedule C, self-employment tax is about $80,000 × 92.35% × 15.3% = $11,304. As an S corporation paying the owner a reasonable salary of $40,000, employer and employee payroll taxes are about $40,000 × 15.3% = $6,120, a difference of about $5,184. Payroll processing, the Form 1120-S and any state-level costs come off that first, and the salary can't be set artificially low. The example leaves out the qualified business income deduction and state taxes.
Foreign persons can't be S corporation shareholders; for foreign sellers, entity choice turns on W-8s, Form 5472 and U.S. income tax instead.
Changing entities after the account is live
Moving from an individual to an LLC, or from one company to another, means updating the legal entity in Seller Central and retaking the tax interview with the new entity, which often triggers identity re-verification and can pause payouts. Seller forums have plenty of reports of updates that dragged on through rounds of document requests.
The better order: model the profit and pick the entity, form the company, get the EIN and a company bank account, then register on Amazon in the company's name.
Bottom line
Pick the plan by volume, with 40 items a month as the break-even; pick the entity by risk, brand and profit, with the LLC for liability protection and the S corporation for self-employment tax, and settle both before you register on Amazon.
Identity verification, the tax interview, fees and the full entity decision table are in our guide; S corporation details are in the S corporation guide and choosing a state in the formation guide. To run the numbers for your own store, book a free 15-minute call or reach us on WeChat at YCLUSA.
Questions this article answers
How much do Amazon's Individual and Professional plans cost?
The Individual plan has no monthly fee and charges $0.99 per item sold; Professional is $39.99 a month with no per-item fee. $39.99 ÷ $0.99 is about 40.4, so at a steady 40 or more items a month Professional is cheaper. Both plans pay referral fees, 15% in most categories.
Do I need a company to sell on Amazon?
No. Amazon lets U.S. residents sell under their own name, giving a W-9 with an SSN or ITIN and reporting on Schedule C. China-based sellers using Global Selling need a company business license. If you want liability protection, a brand or partners, form the LLC before registering.
If I sell through an LLC, do I avoid self-employment tax on Amazon income?
No. A single-member LLC owned by a U.S. person with no election still files Schedule C, and 92.35% of net profit is taxed at 15.3%. Only after an S corporation election, with a reasonable salary paid, does the remaining profit escape self-employment tax.
Can I switch my Amazon account from an individual to a company later?
You can request it, but you update the legal entity in Seller Central and retake the tax interview, which often triggers re-verification and can pause payouts. It's smoother to choose the entity, form the company and get the EIN before registering on Amazon.
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