Do You Need a Business License to Sell Online? – NerdWallet

Selling goods on-line has never been more popular. As e-commerce grows, many are wondering if you need a clientele license to sell on-line. not only does getting a business license — and respective other required permits — give your business credibility, but it ’ s besides required to operate legally and establish your company. We ’ ll go through the answer to this question vitamin a well as many other considerations to take into account as you ’ ra establishing your on-line business.

What is a business license?

Simply put, a business license gives you license to run your business. The specific business license you ’ ll indigence varies state by state, but their determination is common : They show you have government approval to operate your business in the area in which you ’ ve been approved.

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Do you need a business license to sell online?

The short answer to whether a occupation license is a necessity for on-line sell : yes. A business license is a necessity for on-line sell and it ’ s a all-important depart of establishing your business as legitimate and legal. But getting an on-line clientele license is not a childlike as precisely applying for a document. There are several other considerations to take into history.

Do you need a business license to sell online if you’re an existing brick-and-mortar store?

No, you don ’ t need an extra on-line business license. The authoritative thing here is that you have a business license period, which enables you to sell your goods and besides registers you to pay the taxes for which you ’ re creditworthy. If you ’ re a physical retailer looking to add an on-line part to your existing store, you don ’ t need any foster paperwork.

Requirements for online selling: 6 common types of business licenses and permits

Although there is a document called a “ business license, ” there are besides several requirements for selling on-line that you ’ ll need to go through in order to begin your e-commerce business. Some of them will not apply directly to you, but it ’ sulfur substantive to know about all of them so you can make certain you have the correct operating paperwork before you start selling on-line.

Business license (general license)

A business license, sometimes called a “ general license ” or “ clientele operating license, ” gives you license to operate as a company in a certain area — broadly your city, county, or state. about every commercial enterprise — both on-line and otherwise — will need a business license to operate. The requirements for obtaining a business license will vary among areas, as will the fees to obtain one ( normally, these are relatively low ). Business licenses will need to be renewed every few years.

Seller’s permit

If your caller sells products that qualify to be taxed, most states require you to obtain a seller ’ s let — whether your store has a physical placement or is online-only. You ’ ll need to collect sales tax, which is what a seller ’ s license allows you to do. At the like time, it may enable you to purchase certain products from suppliers without paying sales tax. This happens through what ’ s called a “ resale certificate, ” which shows that the products that you ’ rhenium buying will be sold through your store either wholesale or retail. again, this requirement varies submit by state, so you ’ ll want to check in with your local jurisdiction to figure out whether or not you need a seller ’ randomness allow. additionally, if you physically operate in multiple states — evening including housing inventory — you may be required to obtain multiple seller ’ s permits for each country. One extra matter to note : In some states, such as California and Idaho, there are what ’ south called “ irregular seller ’ sulfur permits, ” which enable you to sell on-line temporarily if that ’ s all you need.

Sales tax license

An significant separate of being able to sell products online is charging customers sales tax. It ’ s a prerequisite, not an option — meaning, you ’ ll receive fees if you don ’ t. As such, you ’ ll need a sales tax license. As you might expect, this differs from state to submit as sales tax differs from state to state a well. It ’ s a commodity mind to check in with all of your local municipalities and the jurisdictions in which you do business. Your state might besides require some extra sales tax let, therefore, again, make certain you check in with the regulations in your area.

Employer identification number

An EIN is crucial for every business. The employer recognition number is something like a social security number for your clientele : It identifies you as a business and enables you to stay compliant with taxes and other regulations. If you ’ re going to incorporate as a business entity other than a lone proprietorship, it ’ sulfur essential. Another thing an EIN enables you to do is get a clientele bank history. This might seem secondary, but you ’ ll need your earnings to go into a discriminate business account, since it ’ randomness all-important to separate your commercial enterprise and personal assets. To get an EIN, you ’ ll go through the IRS web site.

“Doing business as” license

Most businesses register their business name when they register their occupation with their state. however, not all commercial enterprise entities are required to register — namely, sole proprietorships and general partnerships. In this case, the identify of your clientele defaults to your legal list.

however, if you don ’ deoxythymidine monophosphate want to operate your business under your own name — or if you want to operate under a business name other than the one you registered with your department of state — then you ’ ll want to look into a DBA license. This will give you permission to operate under a deal name. If you ’ re using a different name, you ’ ll besides likely need your DBA license to execute certain contracts, such as opening a business bank report .

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This will lone apply to some businesses, but, again, you ’ ll want to check in with your department of state to figure out what regulations they have around DBA licenses. If you ’ ve previously used another identify and you ’ d like to change it, it ’ south specially authoritative that you look into it.

Home occupation permit

If you ’ re operating out of your dwelling, which is common for many on-line sellers, you may need a home occupation let. This is a reasonably common license, particularly for businesses that are shipping from home. If you ’ re hiring employees, you will likely need a dwelling occupation permit as well. Again, unlike cities, counties and states will have different rules around whether or not a home plate occupation license is required. This allow can help you avoid breaking regulations if your business does things like hang a commercial sign of the zodiac, or have a set of foot dealings from shipping companies or from seeing customers.

Determining which business licenses you need to sell online

You won ’ triiodothyronine be surprised to hear this : Your local legal power will determine what kind of licenses you need to sell on-line. Some may require some licenses and permits that are not on this tilt and that may be proprietorship to your area. You ’ ll want to check federally arsenic well as on the state, county and town grade. The licenses you need besides may depend on the types of products that you ’ ra deal. For example, if you were selling fireworks, you ’ d probable need a different license than if you were selling jewelry. No matter what, it ’ s absolutely crucial that you figure out what applies to you and your specific business. It ’ s constantly a good mind to consult with your business lawyer during this process to ensure you ’ re obtaining all of the necessary business licences for selling on-line.

How to apply for an online business license

After you ’ ve figured out which online business licenses and permits you need, you ’ ll follow the directions for each specific license. They may be different — some may allow you to apply on-line and some may require you to mail in forms or show up in person. Remember that many clientele licenses expire after a sealed sum of time. You might even want to put a note in your calendar for their dates of death so you don ’ deoxythymidine monophosphate let your licenses sink.

When should you apply for a business license?

As with other pieces of the process, when you should apply for a business license to sell on-line will vary depending on where you ’ re sell. In some instances, you may need to apply before you begin selling. In other areas, you may need to grow to a certain size before you ’ re required to obtain licenses and permits. again, consulting your legal resources and local business resources will help you determine your exact timeline.

How much does a business license cost?

fortunately, you don ’ t have to worry about shelling out thousands of dollars for a business license. A basic commercial enterprise license will either have a nominative fee, or price a couple hundred dollars. Some permits might not cost anything at all. Don ’ thyroxine forget that you ’ ll besides incur some fees when you want to renew your licenses — some will be less when you renew. The biggest expense around a business license is not getting one at all. You could get hit with big fees if you ’ re found operating without the proper licensure or an die license.

What do you need to apply for a business license?

It ’ second crucial to look into the specific requirements for your local jurisdiction to figure out what precisely you need to apply for a license to sell on-line. however, there are some documents that you can pull in promote to make the process easy. Make certain you have information about your business entity character, any necessitate inspections or permits that are specific to the products you ’ ra betray, the mention you ’ ll be operating under and, in some cases, an EIN. This article originally appeared on JustBusiness, a auxiliary of NerdWallet .

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