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Do I Need a Business License for an Online Store?

If I'm getting started in the world of online retail, and I am trying to find out what steps to take as far as license, permits and so on. Do I need a business license before I launch my online store? Are the requirements different for independent sellers on websites such as Etsy and eBay than they are for business owners with dedicated websites for selling their merchandise?

If you’re selling special products to a regulated industry (e.g., medical devices or holistic health care supplements), you’ll need to check with your state to see if you need to be licensed to provide those kinds of products or services. But generally, the sale of digital information, clothing, or handcrafted items (made in the USA) doesn't require a special business license. Rather, the business licensing required for an online retail business is not substantially different than that of a storefront business:

  • You will want to form a business entity in your state.
  • You will want to register with your state to collect and remit sales tax on any sales that you make in your state.
  • If you will be holding substantial inventory, you will also want to check your lease or deed/zoning codes to see if there are any prohibitions on running a business like the one you’re contemplating out of your home.

Also, make sure to invest in the appropriate business insurance covering your activities. Get a local business attorney and accountant on your team right away to put the right building blocks in place.

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