While running an online store seems much easier, from a law-stand point of view, than your usual brick and mortar business, there are certain rules that everyone must follow.
One of such is having a business license.
And when you’re just starting out with your Shopify eCommerce business, you might be wondering… Do I need a business license to sell on Shopify?
Today, we’re going to answer this and some more questions about the business license for online sellers.
We’ll take you from what is to how can you get it so you’ll be able to sell on Shopify with all the rules sorted out.
Table of contents:
- What is a business license
- Do I need a business license to sell on Shopify
- When do I need a business license
- The Cost Of A Business License
- How to get a business license
What is a business license
First, let’s answer the most general question of what is a business license. And the explanation is quite simple.
Namely, a business license is a government’s way to monitor who’s selling, what, and where. Business licenses are documents that are granted on a city, county, federal, or state basis. Thanks to that, the government can keep track on how many businesses are operating in certain locations.
For you, as a seller, a business license is nothing more than a piece of documentation that makes you eligible for selling specific goods or services in a specific location to a certain audience.
Do I need a business license to sell on Shopify
Now, let’s go straight to the most important question of Do you need a business license to sell on Shopify?
The short answer is no.
Shopify does not require you to have a business license in order to sell on Shopify. Yet, there are specific cases in which you’ll need to own one.
Plus, you might need a business license if your specific location or type of business requires it. Keep in mind that business licenses are granted on a city, county, federal, or state basis. Thus, even when Shopify doesn’t require you to have a business license to sell on Shopify, your city might.
In the next section, we’re going to tackle these scenarios in which you’ll need to have a business license to sell on Shopify.
When do I need a business license to sell on Shopify
The only two scenarios in which Shopify specifically requires you to have a business license is when you use the Shopify payment gateway or when you earn over $20,000/mo. through Shopify.
Besides these two Shopify’s requirements, it’d be wise to check your city and country requirements. Even though Shopify might not require you to have a business license you might still need to own one due to local law.
Just to give you an example, the most common occupations that require licenses are:
- Collection agencies
- Insurance agencies
- Real estate brokers
- Building contractors
- Automotive mechanics
- Personal service providers (such as barbers, hair stylists, cosmetologists, doctors, and nurses)
As mentioned before, some businesses may also require to have a federal-level business license. If you:
- Operate aircraft,
- Drill for natural gas or oil,
- Provide ocean transportation,
- Operate an oversized vehicle,
- Have wildlife-related activities,
- Are commercial fishing businesses,
- Produce commercial nuclear energy or fuel,
- Manufacture, import, or sell alcoholic beverages,
- Broadcast via radio, television, cable, or satellite,
- Manufacture, deal, or import firearms or ammunition,
- Import or transport animals, animal products, or plants across state lines,
your business does require a federal business license.
The Cost Of A Business License
Now that you have a general answer to the do you need a business license to sell on Shopify question, let’s quickly explore the costs behind getting one.
First, because of the fact that a business license is granted on a city, county, federal, and state levels, the price will vary.
The bare minimum that you’ll likely have to splash is $50 but it can go up to $400 in the most expensive cases. Plus, you have to keep in mind that there might be some additional costs regarding the production of the actual document, processing fees, and such.
It’s worth noting that there’s also a fee for renewing a business license. In some cases, you may need to pay the same amount of money as when it’s granted to you for the first time.
How to get a business license
To sum things up, let’s talk about actually getting a business license.
At this point, you know whether your business requires a state, federal, or state business license. Plus, you’re aware of the costs associated with getting one.
What you need to get a business license and the whole process will depend on your specific case. Yet, in general, getting a business license will require:
- Determining legal structure
- A detailed description of your business’s activities
- A sales tax license, which you can obtain from your state agency
- Inspections and other permits, such as a liquor license or fire code inspection
These are for the documentation that you’ll need to provide.
When it comes to where do you apply for a business license the best solution is to check the U.S. Small Business Administration website.
There, you’ll find all ins and outs regarding the process of getting a business license in your specific case (business-wise and location-wise).
Now you know the answer to do you need a business license to sell on Shopify!
At this point, you’re all ready to sell on Shopify. Or maybe not?
Maybe you need to get a business license first?
Whatever the situation is you know what your next steps should be.
In most cases, you won’t need a business license to sell on Shopify but if you do, now you know how to get it!