April 04, 2022
How to get a business license for ecommerce

Before you launch your ecommerce website, you’ll want to determine how to get a business license for ecommerce.

Starting any business is complicated, but ecommerce businesses present their own set of challenges. In many cases, the regulations and licensing requirements were last updated when the internet and ecommerce were still in their infancy.

This post will help new ecommerce businesses navigate getting their ecommerce business license by determining which licenses they need and the steps to apply.

What is an Ecommerce Business License?

Unfortunately, there is no such thing as a standard ecommerce business license.

In general, a business license is a government-issued permit that allows a business to operate and sell goods legally.

Licensing requirements vary by location and the type of products you sell. Selling some products like alcohol might require a business to obtain federal, state, and local licenses, while someone selling clothing might only need state or local licenses.

How to Get a Business License for Ecommerce

Applying for a business license in your area is not as complicated as it sounds. Follow these four steps to expedite the process.

Step 1: Register Your Business With the State

Start by registering your business with your state. If you operate your business as a limited liability company or a corporation, file a certificate of formation or incorporation.

In many states, the Secretary of State’s office processes business registrations. If you operate as a sole proprietor, you don’t need to file formation paperwork. But you may need to register as an assumed name or “doing business as” for the state to recognize your business name.

Does an LLC Count as a Business License?

Filing to form an LLC is not the same as a business license. Setting up an LLC establishes your business as a separate legal entity from yourself. An LLC formation is like your company’s birth certificate. You may still need permits for operating your business or selling items in your ecommerce store.

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Step 2: Obtain an EIN

An Employer Identification Number is an IRS-issued number unique to your business. Think of an EIN like a Social Security Number for your business.

Again, it’s not a business license, but much like how you list your Social Security Number on personal applications, having an EIN can expedite the process of applying for opening bank accounts or applying for ecommerce business licenses.

You can request an EIN online.

Step 3: Research Ecommerce Licensing Requirements

Before applying for a business license, you need to know which licenses your business needs.

Common types of business licenses are:

  • General Business License. Typically issued by a state or local government, this permit gives the business permission to operate in the jurisdiction. You can expect to renew this every year or two. 
  • Home Occupation Permit. If you're running your business from your home, your local government may require this permit to ensure your business complies with local zoning regulations. Some cities prohibit certain types of businesses from operating out of residences.
  • Federal License. Some specialized categories of businesses may require a federal license. Check this U.S. Small Business Administration list to see if your business falls into one of these categories.
  • Sales Tax Permits. Depending on where you operate your business and where you ship to, you may need sales tax licenses.

Do I Need a Business License for Ecommerce?

Most states don’t have specific requirements for ecommerce businesses. But your business is likely subject to one or more of the common types of business licenses listed above.

What Business License Do I Need for Ecommerce?

Knowing which licenses you need comes down to your location, business structure, and types of products. Start with your state’s commerce department or local office of the Small Business Administration. Both typically offer resources for starting a new business, including guides for adhering to all the permitting requirements.

Do I Need a Sellers Permit for Ecommerce?

States or local governments issue seller's permits or sales tax licenses to businesses that need to collect sales tax. Most ecommerce businesses will need one, although some states don’t require them for online retailers.

How to Get an Ecommerce Business License by State

Here are the links for getting an ecommerce business license, depending on the state where your business is located.

Step 4: Apply

If your formation paperwork is your business’ birth certificate and your EIN is the business equivalent of a Social Security Number, you need both when you start filling out applications.

Obtaining those items first and identifying what permits you need should accelerate the process of applying for each of the licenses you need. You can apply for most licenses online. Even if you can’t submit the forms online, you can typically find a copy to complete before you head to city hall or your local tax office.

How Much Does an Ecommerce License Cost?

Some permits may be free. Others may have nominal filing fees from $20 to $50. Depending on your location, some permits may cost upward of $400.

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Lindsey Miller
Lindsey Miller

Lindsey Miller is a WordPress and WooCommerce expert and Chief Executive Officer of Content Journey, a content marketing agency that focuses on increasing organic website traffic for their clients through SEO and blogging. She knows WordPress inside and out and has been working with WordPress since 2010 when she started her first WordPress blog. Since then she has attended WordCamps all over the world and had the honor of speaking at many WordCamps and other WordPress events such as WooSesh and WordFest. Lindsey has a bachelor's degree in history and a master's degree in human relations, clinical mental health from the University of Oklahoma.

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