The e-commerce LLC, state by state.
Online sellers carry a tax stack with two layers: federal pass-through income tax on profit, and sales tax collected wherever you cross a state's economic nexus threshold. Forming the LLC is a one-state decision made once. Sales tax is a fifty-one state question that keeps moving as the business grows. Pick your state to see where yours draws the line.
Four things that change with your state.
Formation is the simple half and it happens once. The sales tax half keeps moving, because it follows your customers rather than your address. These four are where the two come apart.
One LLC, many states
You form the LLC in one state and it stays there. That entity signs the supplier contracts, holds the payment processor account and carries the liability. Growth rarely means more entities. It means more registrations attached to the same one, in states you have never visited.
Thresholds set state by state
Economic nexus is measured differently in different states. Some look at sales alone. Others pair a sales figure with a transaction count, which means a store shipping many small orders can cross first. The specific numbers live on the state pages, one state at a time.
Marketplace facilitator rules
Sales made through a large marketplace are often handled under marketplace facilitator rules, which move the collection duty onto the platform. That does not automatically cover the same goods sold through your own storefront, so the two channels can end up registered and reported differently.
Pass-through on profit
For federal income tax the LLC is a pass-through by default, so profit lands on the owners' returns whether or not it was withdrawn. That makes inventory and cost of goods sold worth tracking properly, because they are what turn revenue into the profit figure you file on.
One entity, one state. Sales tax follows your customers instead.
Pick your state.
Each state page covers forming the LLC there, that state's economic nexus threshold, how marketplace facilitator rules apply, when sales tax registration is required, and the ongoing work of running an online store through a single entity.
A clean handoff, in four steps.
Seven steps on the state pages, four here. The first two happen once. The last two keep going for as long as the store does, which is the part sellers underestimate.
Form the LLC
File in your home state and get the EIN. That gives you a business the payment processor, the marketplace and the supplier can all contract with under a single name.
Bank under the LLC
Open the business account and set up the payment processor in the LLC's name. Money that never touches a personal account is what keeps the liability separation real rather than theoretical.
Monitor nexus thresholds
Track sales by state against each state's threshold as you grow. Crossing one is a quiet event: nothing arrives to announce it, so the tracking has to be yours.
Register, then keep filing
Where you have crossed, register for sales tax and file on the frequency that state assigns. Keep inventory and cost of goods sold clean at the same time, because the federal return needs both.
The entity is settled in a week. Nexus is something you watch, not something you finish.
The rest of Industry & niche LLCs.
Every one of these is built the same way: a national explainer above its state pages. They are the filings that sit closest to this one.
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All 51 states →The full index lives on Industry & niche LLCs.
The questions people ask before they start selling.
Do I need an LLC to sell online?
Selling can start without one, and plenty does. What the LLC adds is separation: liability sits with the company rather than with you personally, banking and payment processing run under a business name, and the tax treatment becomes something you can choose rather than inherit. For sellers holding inventory or dealing with suppliers, that separation is usually the point.
Where should I form the LLC?
The formation state and the states where you owe sales tax are two different questions. Forming somewhere else does not move your sales tax obligations, because those follow your customers and your inventory rather than your paperwork. Most sellers form where they actually live and operate. Each state page describes what forming there involves so you can compare on facts.
What is economic nexus?
It is the idea that enough sales into a state can make you its tax collector even with no office, staff or inventory there. Each state sets its own threshold: some as a sales figure, some as a sales figure paired with a transaction count. Cross it and registration follows. Nothing arrives to tell you, which is why sellers track it themselves.
Do marketplaces handle sales tax for me?
For sales made through them, often yes. Marketplace facilitator rules put the collection duty on the platform rather than the seller. The catch is that they cover marketplace sales only. The same product sold through your own storefront is your responsibility, so a business selling on both sides can have quite different obligations for identical goods.
How is an e-commerce LLC taxed?
By default it is a pass-through for federal income tax: the business does not pay tax itself, profit lands on the owners' returns, and it lands there whether or not the money was taken out. Sales tax is separate and works differently, being collected from customers and remitted to states rather than calculated on profit.
Do I need a permit in every state I ship to?
No. Shipping to a state is not the same as having nexus there. The obligation begins where you have a physical connection or where you cross that state's economic threshold, which most sellers do in only a handful of states early on. The list grows with volume, which is why the tracking matters more than the first registration.
Keep going, in order.
Industry & niche LLCs
Every hub in industry & niche llcs, in one place.
Open the index → IndexAll 51 state guides
Every filing a business does, organised by jurisdiction.
Open the index → ServiceCompliance calendar
Every deadline that touches your entity, watched.
Track deadlines → ServiceTalk to a specialist
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