Have you ever wondered about how to apply for an eCommerce business license? This process is one that can seem a little bit daunting. As such, it’s perhaps not a surprise that many people have found themselves feeling a little unsure about how to apply for an eCommerce license for their business; this may even put you off from starting an eCommerce business overall. However, it shouldn’t have to be this way; today, we’ve outlined some of the key things you need to know about how eCommerce businesses work and how to apply for an eCommerce business license. Hopefully, this might help you find the most practical solutions for your business as a result.
What is an eCommerce Business License?
Before we go any further, one of the first factors we should consider here is, what is an eCommerce business license anyway? Well, an eCommerce business license is a type of license you will need to launch a new business – although we should point out that, specifically, there may not be such a thing as an eCommerce business license.
Instead, often, most eCommerce businesses will simply operate with a standard license. This business license is usually a government-issued document enabling the holder to transact and complete business legally.
We should point out here that there is no single type of business license, either. As such, if you are selling age-restricted products (for example), you may need to obtain further business licenses in order to begin trading online. Nevertheless, we would recommend that you always seek professional support before attempting to obtain a business license to ensure you’re getting the ideal license for your unique requirements.
Why Do I Need an eCommerce Business License?
Sometimes, people wonder: why do I need an eCommerce business license? Well, even though you’re not necessarily trading from physical premises, a business license will still prove vital if you want to trade and sell legally. However, the exact type of license you will need will still vary based on how, where, and what you are selling.
For example, some business models may require just local or state licenses if only trading locally. However, as an eCommerce business, you’ll likely be planning to deliver more widely across the board; with this in mind, you may need to obtain a federal business license. Luckily, your professional business advisor should be able to give you a little more guidance on what you need specifically for your business model.
How to Apply for an eCommerce Business License?
#1 Determine the Type of Business License You Need
Before we go any further, it’s crucial to consider what business license you will need. There are numerous types of business licenses that may apply to your firm, and as we’ve already mentioned, it’s worth consulting with a professional business advisor to ensure you’ve selected the most appropriate business licenses for your needs. With that being said, some of the four most common types of business licenses may include:
- General business licenses: General business licenses are most commonly issued by your state government, and need renewing either annually or every other year. They allow the business to operate under the jurisdiction of the state.
- Federal business license: Some business models may require federal business licenses, depending on the type of products you intend to sell. For example, alcoholic beverages are often covered by federal business licenses. Check with the US Small Business Administration to find out more about whether your firm will need a federal business license.
- Sales tax permits: Some business models operating as eCommerce firms may require a sales tax permit. This may be determined by where your business is based and where you ship products to.
- Home occupation permit: Many eCommerce businesses conduct their work from their personal home. As such, in order to ensure your home complies with regulations for business use, you may need to obtain a home occupation permit. This may not be possible in all cities, so it’s worth checking before getting too invested in starting your new business.
#2 Register the Business with the State Government
Once you’ve got an idea of the type of business licenses you will need, you can register your business with the state government. During this process, if you intend to register as a limited liability company – advisable if you want to protect your personal assets – you should also file a certificate of incorporation. You may need to hire a professional registered agent such as Northwest or Zenbusiness to ease your compliance requirement. The Secretary of State will usually handle this paperwork; however, you won’t need to include file formation papers if you intend to go ahead and trade as a sole trader.
#3 Obtain an EIN
Obtaining an EIN is important for all businesses, even if you don’t intend on employing any other staff members. Your EIN is effectively a social security number for businesses, and you can apple for this online easily. However, it’s worth noting that an EIN is not the same as a business license, as you will need to apply for this separately.
#4 Obtaining Your eCommerce License
At this point, you can begin looking at how to obtain your eCommerce license. The specific department you will need to contact will vary depending on where you live; for example, for Alabama residents, you will need to contact the Alabama Department of Revenue. Meanwhile, for Georgie, Louisiana, and Oregon, you can obtain your eCommerce business license application form through the Secretary of State. As such, it’s recommended to check with your specific state government to see who you should contact to obtain a business license application form.
#5 Application
Once you’ve got your application form from the relevant body, all that’s left to do is apply for a business license, and that’s it – you’re ready to go! Of course, we should point out that filing for a business license is not completely free, so you’ll likely expect to pay around $50 for the application process. However, some locations can cost hundreds of dollars to apply for a business license, especially if more paperwork is needed.
Final Thoughts
If you’ve been looking to start an eCommerce business, you will first need to apply for an eCommerce business license. This is a critical aspect in trading as an eCommerce business but will prove its value in the long run. And, of course, there’s a lot to love about eCommerce businesses as a whole; if you’ve ever thought about starting your own, we hope today’s guide will have given you some pointers and ideas on where to start.