Do You Need a License to Start a Shipping Company?

by Mary Jane; Updated September 26, 2017

Aspiring entrepreneurs wishing to start a shipping company must follow laws and regulations set by the U.S. Department of Commerce to ensure all shipments are legal, whether they are domestic or international shipments. While a federal license is not required specifically to ship domestically, one may be required for certain international exports. In all cases, owners must obtain licenses required by their states and localities, which vary, but usually include at least a business license, plus appropriate licenses for the operation of any vehicles involved in the shipping.

International Export License Requirements

The U.S. Department of Commerce states that an export license may be required for international export, depending on the item being sent. The shipping business owner is responsible for all shipments made by him, even if the shipment is to a freight forwarder located in the U.S. rather than directly to an international customer. According to the department, it is the shipper’s responsibility to determine the proper authorization for the shipment, while having the appropriate licenses in place at all time. Failure to get a shipping license for required items may result in a financial penalty of $50,000 per administrative violation. The license is obtained from the U.S. Bureau of Industry and Security, an agency of the Department of Commerce.

Domestic Shipping

A shipping license is not required for domestic or interstate shipments in the United States. Rather, common documents must accompany any shipment being sent to other states or cities, so the package is identifiable at all time. Domestic documents commonly include a bill of lading that serves as a shipping contract between the owner of goods and a shipping carrier, a domestic package list that explains quantity, size, description and weight of goods being shipped, and a warehouse receipt that transfers accountability from shipper to recipient upon delivery. If a start-up shipping company is going to have its own trucks, whether shipping intrastate or interstate, the vehicles and drivers must be properly registered and licensed in accordance with individual state requirements.

Business License

A general business license may be required for a shipping business, depending on the business structure and the state regulations in place. For example, some states, such as Alaska, require all business entities to register with the state, while other states, such as Louisiana, require some structures to register with the Secretary of State and others to simply inform the local county clerk. Regardless of the state requirements, a general business license and state registration may increase the credibility of a shipping business, whether organized as a limited liability company, a partnership or a sole proprietorship.

Additional Considerations

A shipping business owner must apply for an employer identification number, also known as an employer tax ID, from the IRS. The number is used as a primary identification number on documents, including tax returns. A tax ID number is required if the shipping business is a partnership or corporation, or if it has employees. Another vital aspect of a shipping business is comprehensive insurance protection in the event some shipments go lost in transport or are damaged before they reach the final destination.

About the Author

Based in Toronto, Mary Jane has been writing for online magazines and databases since 2002. Her articles have appeared on the Simon & Schuster website and she received an editor's choice award in 2009. She holds a Master of Arts in psychology of language use from the University of Copenhagen in Denmark.