What If I Didn't Register Business License

Y'all asked, nosotros answered

Setting up a new online business organization is an exciting time, but the thought of getting the right licenses in identify can quickly dampen your entrepreneurial zeal.

But burying your caput in the sand is the worst thing yous can do. Fortunately, if y'all've landed on this folio, you know that – and you're being proactive about staying on the right side of the law.

In this post we'll talk through the main types of business license you're likely to need as an online business based in the U.s., where you lot can get these from, how long they last and how much they're probable to cost.

Just first, the brusk answer is: Yes, you do demand a business license to sell online. Ecommerce business licenses don't differ much from brick-and-mortar licenses, and they permit local, state, and federal authorities to keep rail of businesses for tax and accountability purposes.

A quick heads up earlier we get started: This article isn't intended to serve as definitive legal advice – please consult the authorities sources we have linked to, or seek professional legal advice if you are unsure. That said, we accept spoken to a few lawyers in the process of writing this guide, and they each gave u.s. some of their best advice for business owners looking to sell online:

Andrew Winters

Co-Founder at Cohen & Winters, PLLC

My Top Tip:

"Enquiry and register your trademark. Ensure that the name you lot accept chosen is legally bachelor, which requires far more than just a search on Google. Spend the money alee of time to ensure that all registration and trademarks are right, in order to save yourself from having to spend more money and time on re-branding later."

Ira Domnitz

IP and Patent Police force Attorney at Stephens Domnitz Meineke, PLLC

My Elevation Tip:

"Showtime from the top downward: start looking for online selling regulations from the federal level, then expect a level down into state regulations, then local municipalities. Merely because the federal government allows sure interstate commerce, you need to remember that the state controls its ain internal commerce in terms of how certain goods are regulated, and each county will also have its own governances on online goods and commerce."

Types of business licenses and permits

There are plenty of business concern licenses out there, but we'll be focusing on these three:

State-issued (or 'full general') business licenses
Federal licenses and permits
Doing Business Every bit name (DBA)

That's because, along with a sales tax license, these are the three types of license you're most likely to come across when researching what yous demand for your online business.

A sales revenue enhancement license, likewise called a seller's permit or a sales and apply revenue enhancement let, is a separate entity from the concern licenses we'll discuss in this article. A sales revenue enhancement license is regulated by state, and allows your business to collect and remit sales taxes to the issuing land.

Which license(s) do you demand?

If you lot're making money from a business – online or offline – yous will nigh definitely need at least ane kind of license. How many, and which kind, depends on your industry, business organization size and business location (amongst with, we're deplorable to say, many other variables).

Country-issued 'general' business organization licenses

As with many things in the US, the rules around business licensing change from land to state (or in this example, even from county to county). That makes it very hard to offering general instructions.

Even the United states Modest Business Assistants can only offer this rather flimsy statement:

'You'll have to research your ain land, county, and urban center regulations. Industry requirements often vary by land. Visit your state's website to detect out which permits and licenses you need.'

To find the regulations for your city (and remember, this should be wherever your concern is based – fifty-fifty if that just ways where you manage it from) then check out the regulations inside your country or territory by clicking on it below:

Even if y'all don't need a standard business concern license to open your business (which, in about states, you lot practice), chances are you will once you hit a certain revenue or number of employees. In nigh cases, we'd say information technology's a bit of admin that'southward worth doing from the start, specially because licensed businesses can also claim revenue enhancement deductions.

It'southward important to as well keep in mind that if your town requires yous to have a business license, this volition also be the case if your business operates out of your firm. However, provided you lot aren't taking loads of deliveries or storing inventory, working from home should make the process of obtaining a license much easier.

Good to know: Abode occupation permits are as well a matter in virtually states. While these are mostly only for consultants and freelancers, information technology's worth checking whether you'll demand 1 by heading to your country's website. Data is usually under a section called 'zoning' or 'pocket-sized business organization'.

As an ecommerce business owner, you're unlikely to come across many issues, since most areas have relaxed regulations for home businesses. That said, some zoning laws practice restrict outward changes to a dwelling house'southward appearance (like signage) and the number of employees/visitors allowed in the workspace.

Federal concern licenses

While most questions around business licenses are answered on a land-by-country basis, if your manufacture is federally regulated, you'll too demand to apply for a federal license from the relevant governing body.

Yous tin check whether or non this applies to your industry on the Us Pocket-sized Business Administration (SBA) website, as well as finding the right issuing agency to employ to.

Doing Business Equally proper noun (DBA)

Most businesses will be required by their state to obtain a Doing Business Equally name (DBA) license, unless you lot're trading under your own proper noun, without any amendments.

Past that we hateful the trading name 'John Doe' would be fine without a DBA (if it's your name), only 'John Doe'south Spider web Design', or anything not including your name at all, would require one.

A DBA is a handy affair to have, and an easy thing to obtain. Even if you're only running a very small side hustle, we recommend you get one. It stops your business proper name from existence used past anyone else within your state, helps protect yous from fraud, and means you can open a business bank account.

If yous desire to protect your name beyond the country, you lot'll demand to jump for a trademark instead. This involves a petty more than paperwork, merely for ecommerce businesses, it could well exist worth doing; you may be the just person selling under the name 'Lily's Candles' in Texas, but that won't help you if in that location's another 'Lily's Candles' in California that's competing for the same pinnacle spot on Google!

If you accept a trademark, y'all should just need a DBA if y'all want to apply a different trade proper noun to what y'all have trademarked. Once more, this needn't be wildly different, so call up advisedly well-nigh whether it'due south something yous'll need; Ford is the trade proper name of Ford Motor Co., for example, and so the visitor needs a DBA to trade equally just 'Ford'.

Ask AN Owner: WIKILAWN

contributor headshot

"My business has a physical location in Texas, but we don't sell from a brick-and-mortar store. Our services are offered online, with consulting happening both on and offline. I didn't have to get a general business license, as Texas doesn't require them for ecommerce. And considering my business is not operated out of my home, I'thousand not required to get an occupational license, either. What I did need to apply for was a sales and use tax permit. Texas has country sales taxation, and thus requires anyone selling goods and services to tax Texans appropriately. The license ensures that you acknowledge this, and holds you answerable should you fail to do so. The permit was free, and I applied for it online through Texas' tax registration site. It took a fleck of time to be approved, but nothing excessive."

Dan Bailey is the president of lawn care services company WikiLawn, which operates nationwide to connect people with the best lawn care companies in 4,000 cities.

How do I get a business license?

What information do I demand?

When applying for a business organisation license, there are a few things y'all should have in order kickoff:

Your business organisation' legal structure – e.k. a sole proprietor or a limited liability corporation
Your business' activity. Have this prepared in particular, and be prepared to answer questions
A sales revenue enhancement license, which you can become from your state bureau

If y'all need a federal license or allow, get this in order before applying for annihilation land-level.

When and where to utilize for a business license

How you get a general business license or DBA is – surprise surprise – up to your state. And we recommend you use for a business organisation license from the start, even if your country doesn't require that you take one at your current acquirement threshold. For well-nigh towns, it's a case of going to your metropolis hall to fill in some paperwork. In some states, you can download this, fill it in, and then drop it off in person. Even if your business is online-simply, you'll most definitely take to do something in person, whether that's just dropping off the forms, or having your fingerprints taken, too.

If your industry is federally-regulated (if you lot sell vino online, for example), yous'll need to apply to the relevant issuing agency for a license too. The SBA has helpfully outlined which issuing trunk y'all'll need to contact in each case.

How much does a business organisation license cost?

State-issued business license price

A land-issued business organization license will typically price between around $50 and $400. Some have an boosted processing fee of effectually $25.

Business licenses renew annually, and normally expire at the cease of the fiscal year (September 30). While getting a business license can be a bit of a pain, renewing it should be fairly easy; you can normally do this over the phone, in person or by post.

DBA cost

The cost of a DBA varies from country to land, and even canton to canton. They can cost betwixt $ten and $50, although most are in the $20-$25 bracket.

Remember to renew your DBA; most expire after 3 to five years.

Enquire AN OWNER: BEST ONLINE TRAFFIC SCHOOL

contributor headshot

"The requirements for a business license vary from city to metropolis, so you would demand to enquiry what your urban center's finance section says. In our example, we take to renew it every year, and pay around $200 a year. For the DBA, you should use for one if you programme to sell under a trade name. Nosotros had to apply through the LA County Clerk's Office, publish a discover in the newspaper, and send a notarized form. This cost us around $100, and requires an almanac renewal of $29."

Rodney Yo is the founder of Best Online Traffic School, which allows California drivers to fulfill their traffic school obligation through an online class.

What happens if you sell online without a business license?

If you operate without a business organization license when y'all should have one, your business will be operating illegally. This comes with some pretty serious consequences, the severity of which depends on state laws and the size and nature of your concern.

The penalty for not having a business license could include:

Being forced to cease selling online. This may just be until a license can be obtained, or there may be a mandatory probationary period to look out.
Receiving a fine. Depending on the size of the business organization, this could be just from local authorities, from your state, or at a federal level.
Potential lawsuits. An aggrieved customer could have a case for suing y'all for fraud if you don't accept the proper licensing in place.

Basically, it'southward non worth taking the risk!

Conclusion

Nosotros'd usually love to requite you a clear conclusion at this betoken, but the fact of the affair is that business licensing is a complex topic; you lot'll almost definitely need a sales revenue enhancement license, probably need a concern license, may demand a DBA or a trademark, and might need a federal license, as well.

If you're in whatsoever doubt, we highly recommend that you get in touch with someone at your state section – they're usually actually helpful, and information technology'south a cinch way to make certain yous're not missing anything. Yous as well tin, and should, seek legal advice if you're unsure, particularly if you're going to start employing people.

If you've been through the process of applying for whatever of the licenses to a higher place, delight share your experiences in the comments below to help other users on their journey!