Do you have to have a license for an online business?

Question

And tax ID? Is it required by law to be licensed if you have a business online selling a physical product?

Answer 1

If someone reports you to IRS or for a lawsuit, you'll sure wish you have a license and tax ID. People love to report home businesses... and they do all of the time. With the proper business paperwork, you can write off costs (including the licenses) that you would otherwise pay out of your own pocket so it makes sense to get legal and run your business professionally and legally. By writing off costs, you immediately increase your income by writing off a room in your house, internet and website expenses, bookkeeping and legal fees, and so much more. If you believe in yourself and believe in your business, show it. Your tax ID will let you buy inventory without paying tax until you sell and will qualify for vendor price breaks. So... are you convinced??? Call your City Hall and IRS for the forms you need and get yourself legalized.

Answer 2

You do need a Federal Tax ID if you are doing business.  In many states, you are required to have business license.

Look at it this way.  Amazon.com is online sales.  They need Federal ID, and business license. Sure, that business is a lot bigger.  It may be bigger, but it is the same concept.

Answer 3

I don't think so...

It makes sense to do so but I don't know.

Answer 4

No you don't need a license to run an online business.  You will want to get a sales and use tax certificate. Ask your local chamber of commerce about it. It usually costs about $20 and you will have to add tax to your sales if the item is sold within your state if you want to be official.

But the other part of it is that if you think your business is going to work, why not incorporate to shield yourself from personal liability.  You can get a mail box at a local UPS store for $50-$80 for a year and business cards in your business name.  This way no one will get your personal name, personal social security number, personal credit, personal checks or bank numbers and credit or debit card numbers. Your business will even have its own mailing address at the UPS store and you can get a pre-paid phone for $30 and about $10 per month for limited usage so the business even has its own phone number, website, and phone number. It will be a totally anonymous.

If you rack up $1000 in ebay fees, buy something on a payment program, sign up for internet and internet programs to help your busines, and your business fails, it won't affect your personal credit. In fact, won't even know it is you.  In the first name type the first word of your LLC or corporation in the last name put the last words of your businesses name and then Inc. LTD or LLC after it depending on the type of business structure you set up.  Also with some affiliate programs you need to give your social security number and checking account number, not when your are incorporated/licenced.  If you sign up and identity theft happens in the internet, it only affacts your business and the problem doesn't touch your personal life.

For $300 - $500 for everything, you can create a totally seperate identity for your business.

I remember that I set up an LLC through the state attourney general. A business partner signed up for some services under the LLC's name and the business failed.  Those businesses couldn't come after me, and my personal credit report wasn't negitivly affected.

It is well worth the money incase you or anyone else in the business screws up. No one who knows what they are doing wouldn't set a business up without an LLC or other legal structure.