Do I Need a Business License for eCommerce?
Most states consider the place from which you manage your online business to be a business location, even if it is your home, so they require you to have a business license. You may need multiple licenses depending on the type of business you run and whether your state has tax agreements with neighboring states.
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Business License
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It might seem logical that your online business has no physical location and so does not require local and state business licenses. Yet most governments consider your business as having at least one physical location, regardless of what kind of business it is, whether that physical location is your home, an office or a distribution center. This is due in part to zoning laws. For example, since your business might cause an increase in deliveries in your neighborhood -- a residential area -- your local government considers it as any other business in this regard. Apply for business licensing through a city licensing agency in every place that you have what might amount to a business location. Each governing entity may not require you to have a license, but err on the side of caution by inquiring.
Occupational License
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Some industries -- such as food, medicine and engineering -- are more apparently hazardous than others. Online businesses based in such industries require occupational licensing from state agencies, so contact your secretary of state to find out which agency is responsible for licensing your business. Even if your product is not apparently hazardous -- such as textiles or accounting advice, for example -- it still may require licensing, so contact your secretary of state to find out.
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Sales Tax License
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In states where there is a sales tax, you must have a license to legally collect sales taxes from customers within your state. Contact your state tax agency to find out whether this is the case and whether your state has any agreements with other states that may require you to tax customers from those states as well. Under such agreements, you must obtain sales tax licenses from the other states involved to be able to tax their residents. You submit these taxes to your state tax agencies, which forwards them to the appropriate state. Even if your state has such an agreement, though, it may not be mandatory for you to participate.
Resale License
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Not all wholesalers require you to have a resale license before they do business with you; but if you don't have one, a wholesaler may be legally obligated to charge you sales tax on products you buy for your inventory. Obtain a resale license from your state tax agency to avoid paying more than you have to. Apply online for an employer identification number from the Internal Revenue Service as well, since some wholesalers may require you to present one to prove you're a business owner.
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