Do I Need a Business License to Sell Products Online?

young woman making an online purchase image by Paul Hill from

Selling products online can be a lucrative way to run a business. Once you have the product images and descriptions live on a sales website, you simply add a purchase button and advertise the store, and it can make sales for you 24 hours a day. Online stores don't require you to be in a specific location at specific times of the day, so you can earn money while keeping a flexible schedule. An online store is still a business, however, and depending on where you live there may be specific business licensing requirements.

Business Permits

Specific types of business permits may be issued by your local city or town government. Some small government bodies require you to get a "license" to work from home, for example, in the form of a home occupation permit. This is the most common form of business license that may be required to sell products online, particularly if you ship products from your home office.

Sales Tax ID

A sales tax ID license, wholesale permit or resale permit are essentially the same. Some states require this permit for any business that sells products, online or off. This permit is also flexible based on where you live and do business. Some states require a sale tax permit if you are selling taxable goods and products to customers in the same state; other states only require this permit if you are selling tangible products in a physical retail environment.

Generic Business License

Some states issue a generic business license to all businesses in the state regardless of the type or size of the business. Many states don't follow this practice, but do offer the option of filing a DBA, or Doing Business As statement instead. A DBA is a formal declaration that you're doing business under a name that does not match your official given legal name. Some states may require both a generic license and a DBA; others don't require either and leave licensing up to local ordinances.

Federal Licensing

Several business types are strictly regulated and overseen by the federal government. If you plan to sell products online that fall into these regulated areas, you will be required to obtain a federal license before you can start selling. Drug manufacturing businesses, and businesses that deal in firearms and alcohol or tobacco are examples of those that are regulated and must be licensed by the federal government.