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What Business License Do I Need to Sell Online?

08/09/2022 09:44:18 +0000
What Business License Do I Need to Sell Online
If you plan to run an online sales business—an e-commerce store—you are probably focused on many things.
 
You must choose a niche, products to sell, do market research, obtain funding, do marketing, etc. With everything there is to do, it's no surprise many forget about licenses.

Indeed, to sell online, it is almost always the case that you will need a business license or permit.
 
So, what business license do I need to sell online? This is the central question we will discuss, and to help answer it, we will look at some of the most common business licenses you may need when selling online.
Different Types of Business Licenses to Sell Online
The government uses business licenses and permits to monitor business activity within its borders.

A business license is required to run a business in a specific location, whether online or otherwise. It means you are approved to run your business within a particular country, state, or city.

However, the type or types of business licenses or permits will depend on your location, as each state has its own laws to regulate commerce.

Moreover, it will also depend on the nature of your business. Not all types of businesses will require you to have the same licenses and permits. Let's look at the different permits and licenses you may need to sell online, particularly from home.
A Business Operation License

A Business Operation License gives you the authority to sell and conduct business in your state, county, or city. Generally, every business, whether online or otherwise, will need one of these licenses to operate within a legal realm.

The qualifications and regulations differ from state to state, so we recommend researching the necessary licensing where you want to operate and how to apply for one. Thankfully, the qualifications for getting a Business Operating License are not very stringent.

An EIN

You will also need an EIN or Employer Identification Number. This is a tax number issued by the federal government by the IRS that identifies you as a business. Moreover, it also shows that your business is a distinct tax identity.

Technically speaking, this is not a license, but an Employer Identification Number ensures that your online business pays payroll taxes and stays in line with local tax laws.

Although not all types of businesses, especially sole proprietorships, will need one by law, it is recommended to have one to make it easier to do your taxes. If you hire employees, start a corporation, or have a separate business bank account, you need an EIN.

A DBA License

DBA stands for Doing Business As, which means that your company is under a different name than your own. This license gives you the right to use a name other than your own to operate an online business. For instance, your name might be John Black, but you want to run Bob's Online Pets' Toy Store.

Whatever the case, you will need a Doing Business As license to operate an online business under a name other than yours. Moreover, you may also need a DBA license to open a bank account. If you plan to run a home-based e-commerce business, this is something we recommend looking into.

A Sales Tax License

If you are a business based in your home and plan to sell services or products online, you will require a sales tax license because you must pay sales tax on all goods and services you sell online.

Not only does this license prove that you are paying sales tax on those items, but it also allows you to do so in the first place. But, again, check the laws and regulations for your state, as these can differ from one area to another.

You may also want to research if you need other tax licenses for your residence. Remember that there can be heavy fines and other legal ramifications if you try to collect sales tax without a Sales Tax License.

A Seller's Permit

Most businesses that sell services or products online will need a Seller's Permit.
The fees and requirements to get a seller's permit differ from one state to another, so research these costs.

Always check local agencies to ensure you get the right type(s) of license(s). Remember that even selling intangible or digital goods requires a seller's permit.
However, you can always apply for a Temporary Seller's Permit, which is easy to obtain. Then, as the name implies, you can sell goods online for a short period, usually, 90 days before the permit expires.

A Home Occupation Permit

If you plan to run your online sales business from home, you will need a Home Occupation Permit. This license allows you to run a business from home instead of a commercial property. This also allows you to avoid commercial permits.

You should file for one of these permits as it ensures your area is zoned for running a home business and that your business doesn't add to unnecessary noise or traffic in the community.

An Occupational License

You may be required to get an occupational license depending on the type of online business you have. For example, you may not need one for selling basic goods, but it will depend on where you reside. Therefore, always research whether or not your type of business requires an Occupational License before you start.
What Business License Do I Need to Sell Online
Final Thoughts
You should now have the information you need about the various licenses you might be required to have to sell online, particularly from home.
About the Host
Sophie Howard is the founder of Aspiring Entrepreneurs, a community designed to help people develop the skills and confidence to build a business and a life that serves them. Sophie began online in 2013 with an Amazon firm, which she sold for more than $1 million in 2015.

Sophie has lectured on stages all around the world, encouraging and teaching other ambitious entrepreneurs. She has established instructional programs educating thousands of students how to sell online, in addition to releasing over 1000 products.

Sophie has also written a book titled "Aspiring Entrepreneurs: A Guide to Finding Your Best Path to Financial Freedom."
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