Do I Need A Business License To Sell Online?
Do I need a license to sell online? The answer is YES; you need a business license for an online business. But there are a ton of questions, including what business license is, its types, why it is needed, how you can get it, and so on.
If your query is more specific, like, do you need a business license to sell online, or is it different from the brick & mortar business license, you must look for a more specific answer. Here you’ll find the solution.
Besides, do you need a business license for an online store? Modern technology makes the business world virtual. Now you can create your store virtually. But you have to go through several legal steps, including business licenses, permits, tax laws, etc., to establish your business credibility.
Well, let’s explore the common queries of the business owners or entrepreneurs who dream of starting an online business.
Are you worried about a business license? Do you want to start an ecommerce business, but you can’t decide what you should do?
Well, you are most welcome. Let’s have a look at what we can suggest to you.
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A business license is a certification or permission from a government to run a business within a certain location. Although a specific city, state, or country allows specific rules and policies to provide a business license, the main purpose is indifferent.
License and permits are common terms in business laws and regulations. A license is an authorization of doing or owning something from the desired authority, usually in exchange for a fee.
On the other hand, the permit is more specific or narrower than the license. It allows you to execute a specific event or activity like elevator permits, food service permits, and special event permits.
A business license helps the US business owner conduct the business operation by following the rules and policies of the local government.
Without having a business license, you can’t continue your business. Besides, you won’t establish the credibility of your business.
There are several purposes to get a business license. The primary three purposes of business license include-
- To provide a legal authorization of your business
- To protect and guarantee the rights and benefits of your employees, partners, and customers
- To make you responsible for all the occurrences and related consequences with the business activities
Plenty of business licenses are available. As an online business owner or ecommerce business owner, you should know about the common types of business licenses and permits.
Do I need a business license to sell on Facebook? It’s a common question as the biggest social media platform includes Facebook, YouTube, etc.
The below-enlisted types of business licenses and permits are useful for online business. You have to consider the licenses and permits types to comply with the tax laws and regulations.
Moreover, do I need a seller’s permit to sell online? Well, take a look at the below types and make your decision for online business.
8 Most Common Types Of Business Licenses and Permits For Online Business
General Business License
A business license is a must for a business. If you are an online business owner or want to sell your products online, you also need a business license as a brick-and-mortar business owner.
The policies are different from acquiring a business license in other states and cities. According to the local jurisdiction, you have to take your next step.
In the US, different states like Alaska, Delaware, Nevada, Tennessee, and Washington issue statewide general business licenses.
This type of business license is easy to follow. At first, you have to submit an online application and, after that, make a little payment to start your online business. You have to renew the license every year or every few years.
Please make sure that all required documents are provided correctly. It ensures a hassle-free process.
Employer Identification Number (EIN)
IRS issues the employer identification number. It’s a federal tax ID number. When you don’t have a business license technically, the EIN ensures that your business collects payroll tax.
You won’t face tax-related hassle if you have an EIN. The employer identification number is necessary if you plan to open a business account.
The EIN is recommended as it avoids tax issues. Generally, it’s a nine-digit number and also known as social security number.
Visit the IRS website to know more and the complete process to get an EIN.
Every state requires a seller’s permit to sell the products online. The seller’s permit is also known as a seller’s license.
The fees and other requirements to get a seller’s license can differ from state to state. State’s Licensing Office or Department of Revenue makes sure the seller’s permit.
If you are selling digital products or other intangible services, you should collect the seller’s license from the desired places in your state.
It’s a must to need a seller’s permit if you are selling products or services online. You don’t need to worry about seller’s licenses in some states like Alaska, Delaware, Montana, New Hampshire, and Oregon.
Besides, you can register for your ecommerce business through mail to the state’s revenue department. In this case, the fee is lower, and you have to send some documents with it, including tax identification numbers, office addresses, or revenues.
After a while, when your application is approved, you will get a state sales tax identification number.
Home Occupation Permit
You must need a home occupational permit if you operate your business out of your home. When ecommerce business owners work from home, they don’t need any kind of licenses and permits as the commercial business needs.
Maximum business owners in the USA conduct online business at home without having any business permit but a home occupation permit.
As an ecommerce business owner, if you want to include your neighborhood within your business, a home occupation permit is essential.
You can get your home occupation permit from your state government site. This permit offers you a hassle-free business operation at your home.
Suppose you purchase products or services from the manufacturers. And you sell the products as a third party. In this case, the reseller’s permit is essential for you.
It is also known as a resale certificate. The reseller’s permit helps you to avoid paying tax twice.
All states or cities don’t allow the reseller’s permit. Some states allow sales tax identification numbers instead of the reseller’s permit.
At first, check your state Department of revenue’s website and follow the required instructions to get the reseller’s permit.
Sometimes you can’t get the permit if your merchants are from another state. In this case, you need to fill up an independent registration form. While filling up this form, you must use your sales tax identification number.
All ecommerce businesses don't require an occupational license. It mainly depends on what types of industry you have and what you do.
Suppose you are an accountant; you have to continue your business with credibility. In this case, you must need an occupational license.
National Occupational Licensing Database can give you a guideline on whether you are eligible or not to get an occupational license.
When you are selling merchandise online, you don’t need an occupational license. But if your business needs special training, education, and license to run it legally, it’s a must to have an occupational license.
Sales Tax License
When you are running a home-based business, but your products or services are taxable, you have to pay tax on the sold items.
In this case, you need a sales tax license. The sales tax differs from state to state. You can take a look here to find out the sales tax in your desired state.
Besides, you need to check the rules and policies of your state where you want to continue your business. Outside of the sales tax license, sometimes you may need the other licenses or permits.
You should make sure that before starting your journey; otherwise, you have to pay hefty fees.
Doing Business As (DBA) License
Well, doing business as a license is known as DBA. It helps the business owner to operate a business under a name instead of its own name.
Suppose your name is John Smith. But you want to run your business with the name Jack Home Made Candle Company.
In this regard, DBA is required. Although it’s not mandatory, you need a DBA license when you open a business bank account.
The requirements, procedures, and fees for filing a fictitious business name vary by state. Some states allow you to go to the county office and pay the registration fee to apply.
On the other hand, you might be required to put the fictitious name on the local newspaper for a while first. The cost of filing this document is different, ranging from $10 to $100 depending on your area.
However, the license for your online business is mandatory as a citizen. In the US, you can’t skip this crucial step while starting your business. You can take a look at your territory or local government site to know the requirements of the desired licenses or permits for your online business.
Yes, you must have a business license to sell online. Let’s take a look at the different scenarios.
If the answer is NO, are you surprised? Okay, if you are a business owner and have a brick-and-mortar business, you already got your business license.
In this case, you don’t need any separate or new license to start an online business. But make sure that your previous business license is not expired.
Every business license gets one year or two years validity. After exceeding the time, your business license needs to be renewed.
A business license allows you to operate your business operation in any location. It’s mandatory to legalize your business in any state. In addition to this, the scope of the business license is more general and not time-restricted.
On the other hand, a seller’s permit is a specific type of business license. It recognizes you as a collector of sales tax. The seller’s permit mainly registers your business to remit state sales tax.
A business license is provided to the business owners for authorizing their business locally. It gives a timeline to the license owners. After finishing the timeline, the business owners need to renew the licenses.
On the contrary, the seller’s permit can be temporary. It varies from state to state. All states don’t provide the seller’s permit.
Moreover, the business license is not free, and you have to pay a fixed amount to get a business license.
On the other hand, the seller’s permit is free. You don’t need to pay to get a seller’s permit.
The licensing of a business is an essential process, and it differs from country to country. For every business, including online business and brick and mortar business, you must have a business license in the USA.
On the other hand, the UK allows the business license and seller’s permit for the business owners. But an online businessman doesn’t need to have a license or permit.
To know more about UK business licensing, you can go through the license finder site of the UK. Likewise, you can find your country’s website to know about your local laws and regulations.
Avoid Overlapping Regulations
If you sell your products to another country, one problem you may confront. It’s overlapping regulations.
In this regard, you don’t want to pay double sales taxes – to your native country and the US. One way to go about this is to incorporate your business as a legal entity in the US. This separates what you get from your US ‘branch’ from your HQ.
If you stay far away from the USA, no need to worry, you can find the US mailing address or phone number easily from here.
Besides, you can know more about the taxes if you consult with a CPA. Actually, the seller’s permit brings confusion for non-US residents. They can sell the services to the US or purchase from the suppliers of the US.
Sometimes your home country’s documents are adequate, but you should concern your suppliers to gather the required documents.
A business license is a first and foremost requirement to start a business, either it’s brick and mortar or online business.
Some information that you need while applying for a business license. At first, you have to follow some steps, and then, you should decide when and where to apply for it.
Information To Get A Business License
- The business’s legal structure: Either its proprietor or limited corporation, you have to continue your legal process based on it.
- Business activities: You have to know about your business details and purposes. You have to answer the questions while pursuing the license.
- Sales Tax license: You can have it from your state agency.
Moreover, before applying for the state level, you have to get this first if you require a federal permit or license.
How Should You Apply For A Business License?
Every state has different laws and regulations. The local government decides based on the time and situation which rules and policies will be the best for the locality.
Some states allow the business license after a particular stage of your business. On the other hand, before starting your business, you have to issue a license or permit in some states.
So, it’s clear that it’s your responsibility where you are and where you want to conduct your business. You have to go to the city hall to do some paperwork. Besides, you can download the form online and fill it up. Then send it via the desired person.
In the case of only online business, you are just dropping off the forms or taking your fingerprints. Moreover, you can go through the SBA if your business is federally regulated like an alcohol business.
You can also consult with legal personnel to know about the perfect process for your business type and the exact timeline.
The business license cost can be two types including-
- DBA Cost
- State issued business license cost
The DBA cost varies from state to state or country to country. You will need $10 to $50 to get a DBA license. In most cases, the cost range is $20 to $25. DBA license expires after three to five years.
On the other hand, the state-issued business license is more expensive than a DBA license. You will require $50 to $400 to get it. Here, you may include some extra dollars, like $25.
Generally, the timeline of a business license is one year, and after expiring the deadline, you will have to renew your business license. It expires at the end of the fiscal year.
Although the process of licensing is complicated, and you can feel it as a pain, the renewal process is easy. You can renew it online, by mail, or in person.
Suppose you are operating a business without a license. And you are offering your services both online and offline. It’s illegal, and your local government will provide you with a penalty.
How to sell online is a big question nowadays. As the customers’ fee is more comfortable to buy something online, the business owners focus on developing the online services.
For example, restaurant business owners tend to provide food services online. The pandemic situation constrains them to conduct their brick-and-mortar restaurant.
In this case, they adopt restaurant management software to run the business even in a pandemic situation. The online food ordering system and the food delivery system make the foodservice industry more pragmatic and time-worthy.
The punishment differs from state to state and business type and size. But certainly, the illegal business operation faces serious consequences.
The Consequences of Illegal Businesses
The penalty for conducting business without legal documents or licenses can be several.
- Hefty Fines: You must give a fine as you run your business illegally. Besides, it depends on your business size. The amount of fine can vary from state to state.
- Stop Selling Online: You will be forced to stop your online business. At first, you are warned, and within a given timeline, you have to obtain a license. At this time, you are not allowed to sell any product online.
- Potential Lawsuits: Sometimes, your customers can be the reason for your penalty. Suppose an aggravated customer could have a case for suing you for fraud.
It’s a risk that you are conducting your business without a license or permit. It’s certainly not worth taking the risk. So it’s clear that do I need a business license to sell online or not.
Yes, the business structure greatly affects the licensing needs. Maybe you are a sole proprietor or an owner of the LLC. In this case, the licensing process and requirements are different.
You may conduct your business within the country or state. Besides, you can choose to do business outside the state. In this case, the requirements of your license process are specific.
On the other hand, you are conducting a small business. You provide services online, and your manufacturing process is home-based. In this case, the licensing process is specific.
However, the business structure significantly impacts the business license.
Ecommerce business is totally online-based, and nowadays, a thousand entrepreneurs dream their future with it. You can minimize your startup cost of a business and cover a worldwide space to conduct your business.
Most business licenses need renewal annually or biennially. You’ll also want to check licensing authority websites periodically for announcements concerning license requirements.
Once a year, you have to check either you are eligible to hold the license you have.
Get Your Business License When It Makes Sense
Once you have a business license from your state, you are a legal businessman, and you are running your business in a legit way.
If the illegal process is the roadblock of your business, you must consider removing the barrier to your business’s future.
At first, you have to make your business viable, and then you should take your next step to get a license or permit for your business based on your business size and type.
Get a business tax ID, and it helps to open a bank account. Now integrate a PayPal account for your business to your site.
Ensure you get all your licenses or permits before it turns into a warehouse warzone, provided that you start a home business.
It is strongly recommended that you can check your state’s website and follow the instructions to get different categories of licenses and permits.
Online business permission is mandatory in some regions or territories. So checking your city office or website or consulting with legal personnel is the best way to solve your exact queries.
Integrate The Best Ecommerce Shopping Cart Software
Although the first and foremost of your online business is licensing, the most important thing you must consider that you are ready to launch your products online or not.
Well, let’s explore.
Modern technology helps the business world to make it more convenient for business owners and customers.
As a result, the business management software is the untitled business owner at present. It becomes useful and productive to the business owners.
The ecommerce shopping cart software will care for your business and manage, organize, monitor all your essential activities.
- Invoicing and POS invoicing
- Product management
- Purchase management
- Vendor management
- Customer management
- Inventory management
- Supplier management
- Vat and Taxing etc.
The best and complete ecommerce shopping cart software is the ultimate solution for your online business.
Do I need a business license for an online business? Now you are ready to answer the question. Besides, you know the significance of reseller permits for online business.
The licenses or permits are the basic need to conduct your business. But productivity and sustainability depend on the productive decision.
So grab the digital software to execute your online business in the long run. I hope you’ve got the answer to the question, “do I need a business license to sell online?”
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