Do I need a business license to sell online?

To run an online business you need a business license, which allows you to legally sell and register your products. E-commerce business As a tax paying entity, you'll need to obtain a business license. However, business licenses vary in name and cost. Check your city or state government website for more information.

As your business expands, you may need additional licenses, including licenses in other states. For example, if you sell products that are subject to sales tax, you may need a sales permit or vendor's license in the state where your customers are located.

Here's what you need to know about licensing for your online business.

a Business license It indicates that you have government approval to operate in a particular region. There are no licenses specifically for e-commerce businesses, and the licenses required vary from state to state.

A business license may also be called a “general license,” “business operating license,” or “business privilege license.” Nearly every business, online and offline, needs a business license to operate. Requirements to obtain a business license vary by state and city, and fees can run into the hundreds of dollars per year.

While Texas does not require a general business license, you may need a license for your specific industry.

No, you do not need an additional online business license to expand your brick-and-mortar operations. E-commerceA business license allows you to sell goods and register to pay any taxes you owe, but it doesn't distinguish between online and in-person sales.

Besides a business license, there are a variety of other requirements for selling online, some of which don't directly apply to your business. Online Business — At least not yet, but it's important to know about all of this so you can make sure you have the right operating documents in place before you start selling online.

If your business sells taxable products, most states require you to obtain a sales permit or vendor license. online store If you have a physical location or are online only, you must collect sales tax as permitted by your retail license.

At the same time, a sales permit may allow you to purchase certain goods from suppliers without paying sales tax.Resale CertificateThis indicates that the product you are buying will be sold through stores, either wholesale or retail.

Again, the requirements vary by state, so you'll need to check with your local jurisdiction to see if you need a sales permit or vendor license. Additionally, if you operate in multiple states (including if you store inventory in multiple states), you may need to obtain a sales permit in each state.

Some states offer a “temporary sales license,” which allows you to sell for a limited period of time without registering for a full sales license.

An important part of selling products online is charging sales tax to your customers. You are required to collect and remit sales tax to the appropriate state government, and may be fined for failing to do so.

That's why you'll need a sales tax license. In some states, like California and Ohio, a retail permit can satisfy this requirement. In Texas, you don't need a general business license, but you will need a sales and use tax permit.

many E-commerce website builder We provide tools to help you collect sales tax from your customers and pay it to state governments where required.

If you sell on marketplaces like Amazon or Etsy, you may not need a seller permit or sales tax license because these platforms collect and remit sales tax on your behalf. Refer to your state's requirements for more information.

Ann Employer Identification Number An EIN is like a Social Security number for your business. It is the number the IRS uses to identify your business. If you are incorporating as a corporation, Business Entity If you are not a sole proprietor, you must have an EIN.

Another thing you can do with an EIN is to open a business bank account. NerdWallet provides a Open a business checking account It helps to separate business and personal finances.

you can Get your EIN It only takes a few minutes to complete on the IRS website.

Most business owners choose a business name when they register their business with a state. However, not all entities must register in every state. For example, if you're a sole proprietor, your business name will default to your legal name.

If you do not want to operate the business under your own name or under a name other than the name you registered with the state, consider the following: Applying for a DBAThis gives you permission to operate your business using a trade name.

You are running Home-based businessA common requirement for many online retailers, you may need a home business permit to avoid violating city and state regulations when operating your business, such as putting up a commercial sign, setting up in a high-traffic area, or hiring employees.

Home-based business permits are typically issued by cities, not states.

The types of licenses you need to sell online vary by city and state. You might also need licenses and permits that aren't listed here.

The licenses you need also depend on the type of product you sell. For example, if you sell fireworks, you may need a different license than if you sell jewelry. And if you operate in an industry that's federally regulated, like firearms, alcohol, commercial fishing, or agriculture, you may also need a federal license.

A business attorney can help you understand state and city regulations and obtain the proper licenses. Your local small business development center may also be able to help.

Once you know which online business licenses and permits you need, follow the instructions for each one. Some states and cities allow you to apply online, while others require you to mail in forms or go in person.

Either way, you'll likely need the following:

• The name of the company owner or registered agent.

• Your EIN (if you have one).

• Your DBA, if you have one.

• Information about a business's revenue in a particular state.

Keep in mind that many business licenses expire after a certain period of time, so it's a good idea to keep track of the expiration dates on your calendar to make sure your licenses don't lapse.