What Licenses Do You Need for An Ecommerce Business?

If you are thinking about setting up your very own online business, then you are probably wondering about the legal side of things.

Knowing about all of the rules and regulations that are in place when it comes to running your own eCommerce business is essential if you want to avoid getting on the wrong side of the law.

There are certain licenses or permits that you may need to get your hands on before you get started, otherwise, your business could be classed as illegal, which can get you in a lot of trouble.

Running your own ecommerce business comes with its own set of challenges, but we are here to help you through it. 

In this article, we are going to tell you everything that you need to know about the licenses that are required in order to set up an ecommerce business. This will help to ensure that you are running everything above board, and that you don’t get into any trouble.

Just keep reading to find out more.

What Licenses Do You Need for An Ecommerce Business?

There are many different licenses and permits that are often required when it comes to setting up your own ecommerce business, and we are going to explain more about each one below. You might not need all of them, but in some circumstances you will, depending on where you live.

Business Operation License

A business operation license is something that you will need in order for your ecommerce business to start trading in your city, county or state.

Almost every online business will need a business license in order to operate legally. Without this license, you can get in a lot of trouble.

The way in which you register for this license can vary depending on your location, so you will need to check with your local City Hall or check your state’s Secretary of State website to find out more. This will help you to find the right license.

It is usually a simple process to get this license in place, but you should be prepared to pay a small fee for it. You will also need to make yourself aware of the rules surrounding the renewal of this license because operating a business with an expired license can also lead to fines and fees.

Employer Identification Number

An employer identification number is a federal tax ID number that is issued by the IRS and can identify your business as a distinct tax entity. It is not technically classed as a license, but an employer identification number will ensure that your business collects payroll tax and stays on the right side of the law.

It is always a good idea to get one to avoid any tax-related issues that may occur when it comes to your ecommerce business.

If you do plan to hire employees in the future, or you want to open a business account to help manage costs better, you will need to have an employee identification number. You can obtain one through the IRS website.

Home Occupation Permit

There are lots of ecommerce business owners that will choose to operate their company from within their own home, especially those that are just starting out.

This will allow you to avoid having to get the licenses that come with commercial properties, but you will still need to get the relevant licenses.

If you are going to be trading from your home, you will need to get a home occupation permit to ensure that your neighborhood is zoned for home business activity.

This is to check that your business will not be adding any additional or unnecessary traffic or noise to the community. You can check your local government’s website to find out more about how to apply for this.

Doing Business As License

A doing business as license will allow you to operate your business under a name that is not your own. You might have a specific company name in mind that you want to trade under, instead of your actual name. 

You don’t have to obtain this license, but it is definitely something that you should consider, as it will fulfil some requirements when it comes to opening a business bank account and enforcing necessary contracts.

If you want to get a doing business as license, you will need to file with your county or state.

Seller’s Permit

A seller’s permit or license is typically a requirement for the majority of businesses that sell goods or services online. Most states will require you to have a seller’s permit before you can legally sell online. However, the exact requirements, fees, and details can vary by state. 

This is why it is so important to check with your state’s Licensing Office or Department of Revenue to ensure that you get the correct permits. You should also be aware of the fact that this license is still required even if you are selling digital products online.

Occupational License

Not all businesses will need an occupational license, and whether or not you need this will depend on the type of business that you have created.

If you are unsure whether you need this license or not, you can head to the National Occupational Licensing Database to find out.

If you are simply selling products online from your home, you probably won’t need this license, but it is important to be aware of it, just in case.

Do I Need to Create a Company to Sell Online?

Yes, more often than not, you will need to create your own company in order to sell online.

However, just like with many other things in the United States, the rules that are in place when it comes to businesses selling online will vary from state to state. This can make it quite difficult to provide the right information for you.

You will need to research your own state, county, and city regulations to find out exactly what you need to do. This is due to the fact that the licenses and permits that you need can vary depending on where you live.