Running your own business requires you to have adequate legal documentation, licenses, and paperwork. This is especially true if you are offering services that require licensing or certification such as working with medicine or firearms.
Running an online business does not necessarily fall under the umbrella of “business” in most states. Many people believe that making money off your computer/web browser is already considered running a business, but it is not.
Starting your own business means investing in resources and materials to run your company. You will need to possess at least a limited license for serving customers, filing taxes, and possibly even selling products.
There are some ways to avoid needing extra business licenses by doing your research and being aware of laws before diving into the entrepreneur lifestyle.
Registration requirements for a business
To operate as a business, you must be registered with either your state or federal government. This includes doing business under a company name, having an address designated by your state or county, filing tax forms such as income taxes, sales taxes and/or property taxes, etc.
Online businesses do not usually require a business license because they are typically run from home offices. However, it is still important to be aware of what regulations exist so that you aren’t violating any laws when you are conducting business online. For example, if you are offering products through Amazon then you will need to confirm whether or not you have opened a seller account there.
There can also be additional licensing needed depending on where you are located and what kind of product you are selling.
Cost of a business license
Running a business requires you to have a valid business licence, which is what most people refer to as a state-issued seller’s permit or broker’s licence. These licences are not free, however. The cost can add up very quickly for your business if you’re not aware of all the fees that exist.
Obtaining a business license
Starting your online business does not require you to have a business license, but it is advised that you do as soon as possible. This should be done before you start receiving income!
Most states require you to obtain a sales tax identification number (STIN) or seller’s permit before you can begin selling products. Most of these websites offer free STINS so there is no cost for this step.
Your personal information such as name, address, phone numbers, email addresses will be gathered in addition to other identifying documents like proof of residency and pictures. Make sure to check out their privacy policies first to see if they share any info beyond just the STIN.
While some of this paperwork can be completed and filed through your state’s department of revenue, many cannot. Some states even ask you to go visit a local office to get yours! If this is the case for you, then don’t worry about it yet because you still have time to start your business!
Just make sure to stay on top of all of your current obligations and test your internet connection frequently to ensure things are working properly. Once you feel your business is ready, you can purchase your own STIN and file appropriate records with your state.
Do I need a federal or state business license?
Even if you are just starting your online business, there is still one more thing to consider – do you require a business license? This article will talk about what kind of licenses you should have for your business and when you need them.
If you are selling products that cost less than $10,000 then you do not need a business license. You can operate as an individual seller and pay tax at the individual level instead.
However, if your sales average over $100,000 per month, you will likely need to obtain some sort of seller’s permit or seller’s licence. These two types of licences are called small business solutions (SBS) and enterprise resource planning solution (ERP) respectively.
By having these licenses, you get professional looking logos and banners for your website which help promote your business. A lot of companies offer their software free but it is company endorsed so people feel confident in buying it.
These licenses also give you access to better deals because sellers with this license “in-house” cannot make higher profits due to competition.
Exceptions to the business license
Even though running your own online business does require you have an income, there are some exceptions. One of these is if your business is not for profit or if it is educational-related.
The term ‘for profit’ means making money from the activity that you are doing. For example, if you are offering professional certificate courses, then this would fall under the category of for profit.
However, if your goal with your business is to teach people something about psychology, philosophy, or sociology, then this would be considered an academic field and therefore wouldn’t need a business license.
Likewise, if your business is only educating students as part of their education, then this also falls under the academic exception.
Licenses that are not required
Running your business from home does not require you to have a business license. However, before you start receiving income, you will need to prove that you are responsible for the money you make. This means having proof of residence or business where you live and/or operate from, as well as verification of legal ownership of the assets used in the business.
If you are running your business out of someone’s house, they may ask you to get their permission to keep earning while you establish responsibility. Also, depending on what kind of business you run, there can be state regulations that requires you to be licensed. These licenses vary by field, so do some research if this is something that applies to your area.
Running your own business from home comes with its own set of responsibilities, but no license is needed unless you decide to accept customers or products.
Applying for a business license
As we mentioned before, running your own business does not require you to be licensed unless you are planning to do some sort of business that requires licensing.
Running an online shop or website is not considered business activity so it doesn’t need a license. However, if you want to run any other types of businesses (for example, selling products in stores) then you will have to apply for a seller’s permit or sales tax certificate from your state.
These licenses vary widely depending on what kind of business you are running and whether it has physical locations or not. Some states even offer very limited licenses such as just requiring you to pay taxes!
There are many ways to go about getting this license, but most start with you filling out an application form and paying a small fee. After that, someone versed in the laws of your state will review your documents and confirm that everything is legit.
Payment methods for a business license
While some people believe that starting your own online business requires you to have a business license, this is not true! There are many ways to run an online business without having a seller’s permit or sales tax certificate. You do not need either of these if you are selling products through Amazon or another marketplace website where transactions occur directly between you and the seller. You also do not require a seller’t permit or sales tax certificate if you are only offering services like freelancing or consulting.
There are two types of licenses that most states require for businesses in the sale of goods. These are referred to as a sellers’ permit and a sales tax certificate. A sellers’ permit allows the business owner to operate a business location while a sales tax certificate verifies that they are exempt from paying sales taxes.