Out-of-state LLC for Amazon Associates?

I'm planning on launching a website that revolves around product recommendations and reviews, which would make use of the Amazon API to take advantage of their affiliate program.

I was surprised to learn, however, that as a resident of North Carolina I wasn't eligible for the program! Apparently, long story short, there was a dispute over taxes and Amazon decided to pull out of NC.

It is my understanding that simply renting a UPS mailbox outside of the state for the purpose of doing the affiliate program would be illegal, since technically my business would be based in NC (because it is where I was planning on forming the LLC).

Does anyone know if this is in fact true?

I'm now thinking about forming an out-of-state LLC in order to rent the mailbox and then simply have the mail forwarded to my current address in NC. For the registered agent, I saw that Intuit's MyCorporation service was recommended in response to a question similar to mine: http://www.mycorporation.com/business-formations/registered-agent-services.jsp.

Besides all of the tax hassles, are there any other potential pitfalls that may be involved with this approach?

And if anyone has any possible alternatives to this problem, I'd love to hear them!

Building a business that can only make money based on Amazon Associates sounds like a very bad idea right now. A number of states have passed new sales tax laws that have tried to tax sales made via Amazon Associates. Amazon's response in every case has been to drop that state from the Amazon Associates program.

Whether or not your approach is legal makes little difference. You have a business model where your entire business can be wiped out by a change in sales tax law in a different state. And numerous states have made that sales tax law change.

You can use http://www.viglink.com as an alternative. They allow you to link to Amazon as well as hundreds of other merchants. They do take a 25% commission, but 75% is better than nothing!

While I don't know whether Amazon is treating NC affiliates precisely the same as CA affiliates, when a CA entrepreneur asked a similar question, I concluded that he still could not be a Amazon affiliate because he resided in CA.

Please see "Re-incorporation Won’t Save Amazon Affiliate from Termination" at http://danashultz.com/blog/2011/07/06/re-incorporation-wont-save-amazon-affiliate-from-termination/.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

I am also not a lawyer nor should you construe this as legal advice but I believe that the information you have been given by the other answers is incorrect.

The reason that businesses are started is because they are an entirely different entity, subject to tax laws in the area where they are domiciled.

For example, if you are a US company and set up a separate company in the UK, any revenue that goes into the UK company will be taxed at UK rates, and will remain in the UK company until you bring it back into the US company.

In your case, if you are a CA resident and set up an LLC in Washington (where Amazon is located and one of the only places that you will never lose affiliate status since they already pay sales tax there), all revenue is assumed to be earned by a Washington business, not a California resident.

You WILL need to set up separate bank accounts for your WA business, but unless you transfer the funds back into your personal account, you will never have to pay taxes in excess of what you pay for your LLC.

This may be too much work though unless you plan on making a LOT of money with your business, as you will have to file both personal and business taxes and there is a decent capital investment in setting up another bank account, business entity, etc.

I'm also a NC resident who has recently looked into Amazon web stores. Like you I discovered that we can't do it. I also emailed Amazon and got the same answer. I see lots of other ways you can open a web store. A few I have looked at include eBay, Yahoo, Google, PayPal, BigCartel, Shopify, etc. Many/most allow you to charge NC sales tax when applicable so you don't run into trouble with the state. If you have a good web based retail idea, don't let the Amazon situation stop you. I'm seriously considering Shopify or BigCartel. Good Luck!