.Entrepreneurs in the retail realm have a lot to consider when getting their startup off the ground. Finances, inventory, marketing, branding, operations and customer service are just a few of the critical, and somewhat obvious, components that require upfront planning. What many new business owners might not think about when getting ready to sell products is licensing, particularly if they don’t have a physical location.
Download Do I Need A Business Permit Or License Check
But retail businesses may have to have permits or licenses to legally complete transactions. Now that you are asking yourself, “Do I need a business license to sell online?” (and just felt that brief moment of panic), let’s get to it.
It’s all about locationWhether you need a license sounds like a yes or no question, but like most things in life, it’s not so black and white. To get the answer that applies to your specific situation, take a look at the business license requirements of both the state you live in and the jurisdiction in which you actually intend to locate your business. The licensing regulations are different from city to city and state to state.For example, in Los Angeles County, California, a standard business license is not necessarily required, but there are rules you have to follow.
A business must file for a (DBA), get a resale permit, and run an announcement about the DBA in a local paper for four weeks before selling any products. If you move to another county in California, as soon as you change the address on your resale certificate and send your taxes to the state, you may be contacted by your new county and informed that now you DO need a business license.Knowing what is required by your state or county can save you a lot of hassle later, so before officially opening any type of business, even if online, find out the local rules.The Small Business Administration (SBA) has compiled links to to make it easier to do so. Sellers that make $1 million or less in annual sales and have no physical presence in the state would be exempt from this requirement.For easy reference on the rules regarding sales tax, devoted to the different requirements of different states (some of which have no sales taxes at all).The short answer to your question, “Do I need a business license to sell online?” is yes.If you are going to start a business, it doesn’t hurt to get a business license, even though it may not be required in your jurisdiction. It can even be a benefit, as having one may make your company seem more legitimate and gives you the ability to claim tax deductions for business expenses.At the end of the day, a license can save you potential heartache, it doesn’t cost much and it makes your company look more professional. It might even make you more successful.The above content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.Image by: via /. Francine Hardaway, Ph.D, a serial entrepreneur, now runs Stealthmode Partners, a coaching program for startups in Phoenix, Arizona.
A lifelong advocate for growing the entrepreneurial ecosystem, she failed with her first company, sold her second to Intel, and became an early adopter of technology and the internet. Through Stealthmode she has counseled and advised over 1,000 startups.
She blogs regularly about the intersection of technology and humanity as well as startup culture at Medium, The Phoenix Business Journal, and the Huffington Post. She currently serves on the advisory boards of several startups, including Eldersense and StatSocial, and on the Board of Directors of SySTEM School, a STEM middle school for high needs kids.