Others just require periodic inspections and certificates of inspection to keep your business open. Especially if selling online, you want your name to stand out among your competition. However, a formal corporate entity like acorporationorlimited liability company (LLC)offers other benefits to an Etsy seller: In addition to a business permit, businesses must hold otherlicenses and permitsto operate their business. A general partnership is similar to a sole proprietorship for tax purposes. Many other states require licenses for specific types of businesses, although retail or online sales arent usually listed among them. Many businesses can operate without an operating license, so you may not have to pay anything. Here is a list of our partners. Please note that the IRS encourages that you use your SSN. The process is simple and youll receive your number right away. Our guide covers local, state and federal licenses. You may have to renew annually or every five years, for example. Our opinions are our own. Finally, your business may involve a regulated activity or product that requires licensing at one or more levels of government. The business license also monitors safety standards and health, collects taxes, and regulates zoning. Contact a qualified business attorney to help you navigate the process of starting a business. On the whole, however, here are the state-level licenses that may be required to start a business. Therefore, a one-person Etsy shop may most likely be a sole proprietor. If you see the name already registered, do not use it. Getting a business license to sell online shows credibility, but it is also required to operate legally. Additionally, if you're starting a business that is technically outside of your closest city limits, you may need to acquire this license from your county government office. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free. A business operating license, also known as a business license, A sales tax license, which allows businesses to sell goods and services, A liquor license, which is necessary if your business sells or distributes alcohol, Specialty licenses, such as for accounting, massage therapy, plumbing or legal counsel. Its always a good idea to consult with your business attorney during this process to ensure youre obtaining all of the necessary business licences for selling online. This will only apply to some businesses, but, again, youll want to check in with your state to figure out what regulations they have around DBA licenses. You could get hit with big fees if youre found operating without the proper licensure or an expired license. Wait to receive your license. Randa Kriss is a lead writer and small-business specialist at NerdWallet. This influences which products we write about and where and how the product appears on a page. you should reach out to your state's government offices. Per IRS requirements, do not enter the disregarded entitys EIN. What kinds of licenses do you need to run an online business? If youre going to incorporate as a business entity other than a sole proprietorship, its essential. You likely wont have to wait long for a business operating license or a sales tax permit to be approved. If you buy materials or products for resale to your customers, you will also want to get a resellers permit, also called a resale certificate, to avoid paying sales tax on those purchases. Once you've gone through this . . Heres everything you need to know to figure out which licenses you need and how to get a business license in your area. You're only required to file taxes in the US if you make over $10k. Performance information may have changed since the time of publication. Many or all of the products featured here are from our partners who compensate us. So, therefore, the first thing to do is figure out if your Etsy activity is a business or a hobby. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Costs range from $4.25 for an item less than a pound to $70 for items between 100-150 pounds. An Etsy seller needs a business license if their Etsy activity is a business. A permit from your fire department is especially necessary if your business uses flammable materials. Unfortunately, to maintain your home-based business legally, you'll still need these types of business licenses to start and run your operations. . Do not sell or share my personal information. Sole proprietors who dont have employees can use their Social Security Numbers instead of a tax ID number, but all other businesses need a federal employer ID number or FEIN. Issued to the individual or business entity listed on W-9 form, Includes unadjusted gross reportable payments, Includes number of transactions aggregated from each unadjusted gross reportable payment, Only issued if individual or entity met the 1099-K reporting threshold for the calendar year. Shes written about work and money for the New York Times, CNBC, The Motley Fool, The Penny Hoarder, a column for Inc. and more. A Home Occupation Permit essentially just shows that by operating your business out of your home, you arent significantly adding traffic, noise, or harmful environmental conditions to your area. The specific business license youll need varies state by state, but their purpose is common: They show you have government approval to operate your business in the area in which youve been approved. We make business formation EASY. As an example, to apply for business licensing in Alaska, it will cost $50 for your one- or two-year license, and once that license expires, you'll have to pay the same $50 fee to renew. Yes, you do. Alcohol: You need a business license from the federal government along with your state business license if youre selling alcohol as a part of your business. This Form 1099-K should be considered at tax time as you may need this information for tax reporting purposes. individual v. business), Legal Name of Entity (if different from individual), Registered Business Name/Disregarded Entity Name/Doing Business As (DBA), if any. However, this does not influence our evaluations. Again, check with your local or city government office to know what the rules and regulations are regarding home-based businesses in your area. We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. However, you may still be. Robert Beaupre leads the SMB team at NerdWallet. This information may be different than what you see when you visit a financial institution, service provider or specific products site. to get a list of exactly what youll need. A basic business license will either have a nominal fee, or cost a couple hundred dollars. Your citys business license department will, of course, be specific to your location, so you'll need to locate the office on your own to obtain this type of license. 2023 Forbes Media LLC. In addition, you may need business licenses at the county and local levels. Our opinions are our own. Mercari signup screen on a computer You can sign up using your Facebook profile or use an email and password, and then you can immediately get started. If I'm on Disability, Can I Still Get a Loan? If you're a home-based business owner, then, you may still be wondering: "Do I need a business license?" If you operate an oversized vehicle or truck, you need to have a permit for any oversize or overweight vehicles. This licensing all falls under the Gun Control Act, and you can learn what you need to secure from the, Bureau of Alcohol, Tobacco, Firearms, and Explosives, For a business in the wild or commercial fisheries or wildlife industry, you need to obtain certain environmental permits and licenses before you get going. If you have creative talent and want to sell items online, Etsy is a great tool. NerdWallet strives to keep its information accurate and up to date. Some of them will not apply directly to you, but its essential to know about all of them so you can make certain you have the right operating paperwork before you start selling online. Being properly licensed is critical to business development and growth because it reassures customers that your online business is legitimate and compliant with the law. When youre starting a business, it can be difficult to sort out which steps to take to get up and runningand stay compliant with confounding government regulations. Most likely, you operate your Etsy business from home. Some permits might not cost anything at all. All rights reserved. Mercari Fees. If you are a sole proprietor, you use your social security number. As e-commerce grows, many are wondering if you need a business license to sell online. All rights reserved. The important thing here is that you have a business license period, which enables you to sell your goods and also registers you to pay the taxes for which youre responsible. So how do we make money? Past performance is not indicative of future results. However, this does not influence our evaluations. Types of business licenses: Local licenses and permits, Your citys business license department will, of course, be specific to your location, so you'll need to locate the office on your own to obtain this type of license. The IRS doesnt technically license your businessbut it does require that certain businesses obtain an employer identification number (EIN), or a federal tax identification number. You'll want to apply for and receive all necessary licenses before you actually start operating or open your doors to the public. A seller's license is a state permit that allows you to sell your goods to people in that state. Do you need a business license to sell online if youre an existing brick-and-mortar store? According to Etsy's Fees and Payment Policy, In some states, Etsy will collect the sales tax amount from the buyer and pay this to the relevant tax authority." The Motley Fool has positions in and recommends Amazon and Etsy. A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities. Therefore, you record any Etsy income (or losses up to your Etsy income amount) on your personal tax return. Bigger discounts designed for larger businesses. Choose a store that's right for you. Check your department of revenue website for application instructions. In many states, business owners in certain occupations need to secure a specific type of license to operate legally. Before joining Forbes Advisor, he was a content producer at Fit Small Business. , which enable you to sell online temporarily if thats all you need. Or buy from other sellers. Some states provide temporary sellers permits to cover specific time periods or events. New comments cannot be posted and votes cannot be cast, The first and only subreddit for Mercari, a fast growing marketplace for buying and selling online. When should you apply for a business license? These are usually issued by your state government even though they fall under federal jurisdiction. So far, we've discussed the possible types of business licenses needed to start your business in a commercial space. Determining which business licenses you need to sell online, How to apply for an online business license. FindLaw.com Free, trusted legal information for consumers and legal professionals, SuperLawyers.com Directory of U.S. attorneys with the exclusive Super Lawyers rating, Abogado.com The #1 Spanish-language legal website for consumers, LawInfo.com Nationwide attorney directory and legal consumer resources. Etsy's seller policies do not require you to have a business license to sell on their platform. Select a name for your business venture.Choose a business namecarefully because it becomes your brand. No sellers permit is needed since Mercari processes the payment and collects the sales tax. To list an item, you'll need to: Click "Sell." Upload up to 12 photos of the item you want to list. Basic. If you run a brick-and-mortar business, youll probably need permits for planning, zoning, building, signs and fire in your city or county. I had a professional do my taxes the first time I filed as self employed, its different than just reselling and paying tax on income. Youll need to check with local, county, and state officials to determine the requirements for your business. Others are silent on the specifics. Press question mark to learn the rest of the keyboard shortcuts. Alaska, Delaware, Nevada, Tennessee, and Washington issue statewide general business licenses. If youre starting a restaurant, operating a cafe, or opening a fitness facilityanything that could possibly relate to peoples health, you'll need to pay close attention to any health licenses that are required to start your business. 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