Do You Need a Business License to Start an Online Business?
Do you need a business license to start an online business? Your online business could look like having a drop shipping business, being an affiliate, operating an Etsy store, etc. It can be hard to find a clear answer to this question when you’re searching online, so I’m glad you found this post because I’m going to give it to you straight!
First of all, what exactly is a business license? You’ve probably seen a business license framed on a wall of a local business you’ve been to like a restaurant, nail salon, or childcare center to name a few examples. But these examples beg the question, what if I don’t have a physical location for my business? Here are 3 steps to take in order for you to know if you need a business license for your online business.
What kind of attorney would I be if this didn’t have a disclaimer? I’m a licensed attorney and I practice in Utah and Idaho. I am not your attorney. This is not official legal advice. If you have any questions, please consult with a legal professional in your jurisdiction.
Business License Step #1: Research your state’s requirements.
First, you will need to research your state’s requirements for a business license. You do this by going to your secretary of state’s website. The commercial division or even the small business association administration would also be really helpful. Here’s a list of the websites for common areas. If your state is listed, click the link and consider this your headstart to getting that business license!
- California: https://www.calgold.ca.gov/
- San Diego: https://www.sandiego.gov/treasurer/taxesfees/btax/btaxhow
- San Jose: https://www.sanjoseca.gov/your-government/departments/finance/business-tax-registration
- LA City: https://finance.lacity.org/
- LA County: https://lacounty.gov/starting-a-business-in-the-county/obtaining-a-business-license/
- San Francisco: https://sftreasurer.org/business/register-business
- Idaho: https://business.idaho.gov/business-wizard/?view=section-1
- Utah: https://corporations.utah.gov/2021/11/15/business-licensing/
- Texas: https://gov.texas.gov/uploads/files/business/Texas_Licenses_Permits_Guide.pdf
You’ll also need to find out if you live in the city limits of your state or if you are considered to live outside of city limits. If you live outside of the city limits, then you’ll be under the jurisdiction of your county. You need to know this difference because your county and city may have different rules about whether or not you need a business license.
And just to be clear, a business license is different from a sales tax permit, resellers permit, LLC, DBA, or sole proprietorship. (If you want to learn more about an LLC and how to get one, check out my post HERE.)
Business License Step #2: Find out if your type of industry applies.
The main thing to know here is if your business is part of a more established industry then there’s a higher likelihood of needing a business license. For example, if you are selling food or alcohol of any type, operating a daycare or something similar, etc. then you will most likely need a permit.
However, if you are an influencer, affiliate, freelancer, virtual assistant, or anything of that nature then this is where we need to do some more digging. These types of jobs are not as mainstream as the other ones that have been around longer, so there may be different standards for you. If your business falls in this job industry, move on to step three to see what to do next!
Business License Step #3: Call the city/county office.
I know this step sounds silly at first, but when you’re dealing with a small locality it’s best to call and talk to a real live human (instead of an automated response). Once you call your city or county office (depending on where you live), explain to them what you do in your business. Then ask if this is something that requires a business license or if there are any steps you need to take to make your business legally legit.
Some questions to keep in mind when talking to your state representative:
- Is there a form I need to fill out online?
- If so, does it need to be sent by mail or virtually?
- Are there fees attached to completing these steps?
- Do I need to come in person to make my business official or can it be done online?
- How often do I need to renew my license/permit?
- If I change my business address or what I do in my business how do I handle that correctly?
Things to have handy when you make the call:
- EIN (your business’s SSN/ tax ID number)
- The name of your business
- Business address & phone number
- Forecasted revenue
Having these things on hand will make your call a one-and-done rather than having to go back and forth!
Do You Need a Business License to Start an Online Business?
So, do you need a business license to start an online business? It depends on where you live and the nature of your business! I hope you take these three easy actionable steps for you to find out. It’s super important to take the steps to set up your business correctly and as long as you follow along with me, I’ll help you feel confident as you take each step to make and keep your business legally legit!
Again, if you own an online business where you’re not dealing with any physical products or in-person customers it’s less likely you will need a business license. However, it’s good to cover all of your bases and make sure you are protecting your business as you continue to grow and make a bigger impact on your community! Make sure you’re following me on Instagram @brittanyratelle so we can keep in touch and you can stay updated on legal business tips!
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