What Licenses Do I Need to Sell Items for Nonprofit Purposes?

Though many government bodies provide some leniency and flexibility for nonprofits, these organizations must secure proper licenses and certificates before offering products or services for sale. State and local government agencies require nonprofits to collect and remit sales tax when selling products, and many require nonprofit organizations to obtain special licenses when selling alcohol or other regulated items.

Sales Licenses

Before selling its very first item, a nonprofit organization must have several licenses already in place. According to Glenn Lyon, an attorney licensed in the state of Georgia, nonprofit organizations must have a regular business license in order to conduct any type of business. Though nonprofits typically do not pay sales taxes when making purchases, according to the state of Wisconsin, many states require a sales tax certificate for nonprofit organizations engaged in retail sales. Each time the organization sells products to the public, despite its own tax-exempt status, it must still collect and remit all applicable sales taxes.

Alcohol Licenses

Nonprofit organizations that plan to sell alcoholic beverages -- or serve beverages at fundraising activities -- must have appropriate liquor licenses in place. According to the state of Oregon, a nonprofit must obtain a liquor license if it requires payment when serving alcohol. Nonprofit organizations may get around this requirement in some states, though, by enlisting a licensed organization to sell and serve the alcohol. In addition, the state of Oregon clarifies that nonprofit organizations do not need a liquor license when serving alcohol for free; this exemption may vary from location to location, so nonprofit event coordinators should check with local regulators before serving alcohol.

Special Licenses

In some situations, a nonprofit organization must have additional special permits or licenses before selling certain types of products. According to the city of Papillion, Nebraska, a nonprofit organization must obtain a permit to sell fireworks at retail before selling explosive products during the Fourth of July holiday period. In addition to the special permit, nonprofits must register their nonprofit certificate and 501c3 status with the city, provide proof of insurance and pay a licensing fee. Other municipalities may have similar requirements for nonprofits offering holiday-themed merchandise, so event coordinators should check with local regulators to determine any special or seasonal licensing regulations.

Other Legalities

In addition to obtaining sales-related licenses, nonprofit organizations must complete a number of other legal formalities before conducting business. The Society for Nonprofit Organizations, or SNPO, notes that nonprofits must apply for nonprofit status with the Internal Revenue Service, as well as register with the appropriate state agencies. Nonprofits must typically secure a county solicitation license. SNPO also recommends that non-profit organizers apply for liability insurance to protect against lawsuits that may arise after a consumer purchases a product from the organization.

References

• State of Wisconsin: Nonprofit Organizations and Government Units - Certificate of Exempt Status
• State of Oregon: Guidelines For Nonprofit Organizations And Special Events with Alcohol
• Papillion, N.E.: City Clerk & City Code Licenses
• Society for NonProfit Organizations: Starting A Nonprofit Organization