Ecommerce Platforms FAQ

Today it is super easy to launch an online business thanks to services such as BigCommerce, Shopify, and OpenCart, that can help set up a website and payment gateway with just a few clicks. In addition to that, marketplaces such as Amazon, eBay, and Etsy have become go-to platforms to share your products with a global audience.

By moving the business online instead of opening a brick-and-mortar store, you skip the need to obtain a handful of licenses and permits, covering aspects like the retail space you work in, health or fire department licenses, or even those protecting your employees. Still, that doesn’t mean you don’t need any license at all, so let’s take a look at the most common licenses online business need to apply for.

Basic business operation license

This is the must-have permit in order to get started with your online business. It allows the owner to operate the business in the selected country, county, or state. But keep in mind that regulations vary by the type of business, and the rules will differ by city, county, or state.

Employer Identification Number (EIN)

Also known as a federal tax ID number and issued by the IRS, the EIN identifies the business entity and serves the purpose of making sure your business collects payroll tax and complies with the local regulations. You’ll need an EIN if the business is new, if you plan to open a business bank account, or if you want to establish business credit, for example.

Home occupation permit

Since at the start many online stores are operated from the business owner’s home, it’s important to keep in mind that many city and county zoning agencies require all home-based businesses to get this permit. This ensures that the neighborhood is zoned for business activity, meaning that your business won’t add unnecessary traffic noise to the community.

Sales tax license

For every item sold, business owners must pay sales tax. For this you’ll need to get a sales tax license with a certificate of resale. However, it’s important to keep in mind that sales tax differs by state, and as such it’s wise to use sales tax calculators that are integrated into ecommerce platforms. Along with the sales tax license, it’s important to be informed about whether you need any other tax permits in the state that your business is located.

Seller’s license

Depending on the products you plan to sell, the business owner may be required to file for a seller’s license. The most effective way to get the right info on this license is to get in touch with the state’s government office.

How about licenses for selling online through marketplaces?

Marketplaces are well-established, highly trusted websites where people are comfortable buying goods. They are accustomed to going to these platforms instead of somewhere new to find products, which is why it is wise to keep these opportunities in mind and use such platforms to sell your own products. However, if you’re selling as a business, then a license is required. The more money you make, the more likely you’ll fall under the spotlight of the IRS, and at this point they may be interested in how you represent yourself.

While it’s easier with ecommerce platforms because licenses fall into the must-have category without question, the best thing to do when selling through a marketplace is to read their terms and conditions.