The online marketplace has allowed many food entrepreneurs to establish and expand their businesses. From baked goods to condiments and beverages, you can likely find what you're looking for online. Because the cost of selling food via the Internet is much more affordable than opening a brick and mortar food operation, this can be an ideal way for those who want to start a food business to test their concept. If you are looking to sell food online, there are a few licenses you may be required to obtain.
The most basic type of license you'll likely need to sell food online is an assumed name certificate -- also known as “doing business as” (DBA) or fictitious name certificate. This documentation is essential in most U.S. counties, whether you're operating as a sole proprietor, partnership or corporation. The fee for a DBA is fairly inexpensive, costing between $15 and $50. Depending on where your business is located, DBAs may be distributed at the county or state level.
The federal license you're most likely to need when selling food online is a federal tax identification number -- more commonly known as an employer identification number (EIN). This number can be obtained for free at the Internet Revenue Service website (see Resources). Whether or not you have employees, your EIN is needed to pay federal income taxes, and most financial institutions require this documentation to establish a business bank account. Your EIN will also be key when opening wholesale accounts with supply and food distributors.
Depending on where you live, you may need to collect city or state sales taxes for the food you sell online. Contact the agency responsible for distributing tax permits in your area to find out exactly which documentation you need, and when you will be required to collect sales taxes. Some areas only require food vendors to collect taxes on items shipped within the state, while a small number of others have a special type of tax for Internet vendors. Most areas do not charge food businesses to obtain a tax permit, and those that do charge only a nominal fee. You may even be able to conveniently register your tax permit online.
Food Production Licenses
Whether your state allows for commercial home food production or you are required to rent a commercial kitchen, you will undoubtedly need to obtain food production licenses from your state. Such licenses may include food manager certification, food handler permits and food enterprise licenses. These are typically the most expensive type of permits you'll need to obtain before legally selling food online. However, if you operate without them, you may be subject to heavy fines and the closure of your food business.
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