Since the Internet was made, a lot of people sell things online. As e-commerce grows, most business owners aren’t sure if they need a license to sell online. “Do I need a business license to sell online?” can be answered quickly with “Yes.” But there are a lot of things you need to think about before you start your online business.
If you want to sell things online, you need a business license. It’s important for the growth and development of a business. A business license is proof to your customers that your online business is legal and does not break the law. Let’s talk about why you should get a business license and how you can get one to sell online:
What is a license for a business?
Before we talk about why you need a business license and the different kinds of permits and licenses, let’s talk about what a business license is.
A business license is a permit from the government that lets a business run in its territory. For your online business, you may need more than one business license. What your online business does or sells will determine how many types of business licenses you need.
Also, the licenses or permits your business needs depend on where it is. But they both do the same thing, which is to show that the government has given you permission to run your business in a certain area.
Why I need a license to do business online
If you want to sell online, you need a business license or permit to make sure everything goes well. A business license shows your customer that what you’re selling is legal and not a scam.
There are three main reasons why you might need a license or permit for your business. First, they are legal papers that show that your business follows the law. You, as the owner of the product, are responsible for everything that happens during the selling process and what happens next. Also, these documents can be a way to protect and guarantee your employees’, partners’, and customers’ rights and benefits. Last but not least, a business license will keep track of all your financial obligations for tax purposes.
So, you need to pay more attention to getting a business license to make sure you can start your online business smoothly and legally.
Licenses and permits you need to sell online, with examples
After you know what a business license is and why you need one for your online business. Let’s look at the main types of licenses and permits you might need for your online business:
- Seller’s permits: You might need one if you plan to sell in a place where sales tax is required, like California in the US or Britain in the UK (except for food, books, and children’s clothes).
- When you buy materials or products to sell to your customers, you usually need to get a reseller’s permit. It’s also called a “resale certificate,” and it lets you buy things without having to pay sales tax.
- Business license in general: It might be required by the law where you live. It could be different, since in some places you need both a general business license and a license for a specific type of business.
- Licenses for professionals and businesses: If your business does things that are regulated, you may need a license from one or more levels of government. For example, if the business is about accounting, real estate, transportation, food preparation, or regulated goods like alcohol, tobacco, or gambling.
How do I go about getting a business license?
After you’ve figured out what kinds of business licenses and permits you need for your online business, you’ll need to follow the steps for each license to apply for it. There may be different rules for each of these licenses or permits. Some may let you apply online or by mail, while others may require you to show up in person.
Most important, some business licenses are only good for a certain amount of time. You should write down their expiration dates so you don’t run an e-commerce business with a license that has already run out. But you need to know the answers to the following questions before you apply for one:
When do you need to apply?
When you should get a business license to sell online depends on where you want to sell. In some situations, you have to apply before you can sell. In some places, you might need to be a certain size before you can get licenses and permits. So, if you want to figure out your exact timeline, it might be a good idea to talk to your legal resources and local business resources.
What would it cost?
When getting a business license, the cost might not be too much of a problem. A basic business license costs a few hundred dollars or a small amount of money. There are, however, still some permits you can get for free.
How do you apply?
It’s important to find out exactly what the rules are in your area. You can use these requirements to figure out what you need to get a license to sell online. But you should get some documents ready ahead of time to speed up the process.
That means you should make sure you know what kind of business entity you have. Also, if you need inspections or special permits for the products you’re selling, it should be clear what name you’ll be doing business under.
As a new online store owner, you need to think about a lot of things for your online start-up business. These include choosing products, e-commerce platforms, the market, and inventory, as well as getting ready for finances, web design, branding, or marketing. When you’re excited about starting a business, it’s easy to forget about the legal steps and never really think about them.
So, you should know that having an e-commerce website isn’t enough to run an online business. The online store is the same as regular stores, so the same level of compliance is needed. It means that you need a license or permit to run a business. From the public’s point of view, businesses that have the right licenses look more trustworthy.