If you are considering whether you need a business license to sell products on Amazon, we’ve got you covered.
In this comprehensive Do You Need a Business License to Sell on Amazon guide, we will break down the factors involved in determining whether you need a business license, assess its significance, and help you make an informed decision for your business specificities.
Let’s get started.
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Amazon Seller Business License
It’s important to understand that, as a general rule, you likely won’t need to obtain a business license in order to sell your inventory online through Amazon legally.
This is because most products sold on Amazon are consumer goods that are not heavily regulated at the state or federal level.
Having said that, there are specific circumstances where a business license will be required. Here are a few examples:
- Sales Tax Collection: Whether you need a seller’s permit for your Amazon sales will depend on your business’s specificities and state. For instance, if you’re selling tangible goods, most states will require you to collect sales tax and secure a seller’s permit or sales tax license from your state’s Department of Revenue
- Industry-Specific Licenses: Certain industries related to Amazon sales may demand specific licenses for compliance. For example, if your Amazon business focuses on selling pharmaceutical products, you may be required to obtain licenses related to drug sales and compliance with healthcare regulations
- Federal Regulations: In some cases, Amazon sellers may need to comply with federal regulations that apply broadly to online businesses. These regulations can pertain to aspects such as online data security, consumer protections, or e-commerce tax laws
Keep in mind that you will need to purchase an Amazon selling plan in order to sell products on the platform. There are currently two plans — the Individual Plan and the Professional Plan.
The Individual Plan costs $0.99 per item sold and is suitable for those expecting to sell up to 40 items per month.
The Professional Plan, on the other hand, is priced at $39.99 per month, and is designed for businesses planning to list more than 40 items monthly. These plans determine the fees and features you’ll have on the platform and are distinct from your business licensing requirements.
How to Get a Business License
If you have determined that you will in fact need a business license for your Amazon venture, you might be wondering how to go about obtaining one.
This process can vary significantly depending on your location and niche. In the following section, we’ll provide a step-by-step guide to help you navigate the process of acquiring the business license(s) and/or permit(s) that you will need to operate (if applicable).
Step 1: Form Your Business
One of the initial decisions you’ll face is choosing the appropriate business structure.
Common options include a sole proprietorship, general partnership, limited liability company (LLC), and C corporation. Many online business owners opt to register their business as an LLC; this is because LLCs offer limited liability in law, which means that your personal assets will be shielded if a lawsuit arises or if your business accumulates debt in the future.
If you are interested in forming an LLC in your state, you will need to pick a business name, find a registered agent, and then file your Articles of Organization (also known as the Certificate of Formation) with your Secretary of State.
Alternatively, you can use a third-party service or business attorney in order to save time and ensure that all filings are filed correctly.
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Step 2: Obtain an EIN
An Employer Identification Number (EIN) serves as a unique tax identifier for your business; think of it as the Social Security Number (SSN) of your business entity.
Depending on your business — and on whether you hire employees — you might need to obtain an EIN in order to apply for your required licenses. Keep in mind that sole proprietors with no employees can use their SSN instead.
You can apply for your EIN online, via fax, or by mail. Have a look at the IRS’s How to Apply for an EIN page for more information.
Step 3: Apply for Licenses and Permits
The specific steps you’ll need to follow when applying for your licenses will largely depend on your location and industry.
This is because those two factors will play a significant role on whether you need to apply for businesses at the local, state, and/or federal levels:
- Local Licenses: In order to apply for licenses at the local or city level, you will likely need to reach out to your municipality’s or city’s county clerk or official website, and navigate to the business licensing portal. This can usually be done online or in-person
- State Licenses: Most states will have some form of licensing requirement at the state level (e.g., sales tax permit, professional licensing, etc.). You can apply for these (if need be) via your State’s Department of Revenue and/or Professional Licensing body
- Federal Licenses: Certain products and services regulated by federal agencies, such as alcohol, firearms, or wildlife products, demand federal licenses. Each agency has its application process and requirements, which you can find on their respective websites or by contacting them directly
Note: It’s advisable to consult with local, state, and federal authorities directly or refer to their official websites for the most up-to-date and accurate information regarding your online business requirements.
Step 4: Renewal of Licenses and Permits
The duration of licenses and permits for online and remote businesses generally aligns with those of brick-and-mortar establishments. Renewal periods vary, with the most common timelines being annually or biennially.
Here are two examples of the renewal cycles of common licenses and/or permits for an Amazon business seller:
- Home occupation permits often require annual renewal, with potential variations based on the city or county regulations
- Seller’s permits, especially if you’re selling to customers in multiple states, typically require annual renewal
We recommend always ensuring that you check the renewal requirements for your specific situation, considering both your residence and business location. You can also seek guidance from tax professionals or legal experts to ensure full compliance with applicable laws.
For more in-depth insights into the business licensing process, explore our comprehensive guide on How to Get a Business License.
Do You Need a Business License to Sell on Amazon FAQ
Can I become an Amazon seller without a business?
Yes, Amazon allows individuals to start selling without requiring a formal business entity. This flexibility is particularly useful for newcomers. However, as your sales grow or if you seek certain business-related benefits, it may be advantageous to think about registering your business as an LLC. Interested in finding out more? Take a look at our How to Get a Business License article.
Can you sell things on Amazon without a license?
Well, it depends. For most Amazon sellers, you won’t need a specific business license from Amazon itself. However, you may require other licenses, such as a seller’s permit, depending on your location and the products you sell. Interested in finding out more? Take a look at our Do You Need a Business License to Sell on Amazon article.
Can I be an Amazon seller without an LLC?
Yes, you can be an Amazon seller without forming a business entity at all. Many sellers start as sole proprietors or under other business structures. However, forming an LLC can provide personal liability protection and tax benefits.
What requirements do I need to sell on Amazon?
To become an Amazon seller, you’ll need several essentials, including a seller account, well-crafted product listings, dependable sourcing, competitive pricing, and a solid grasp of Amazon’s policies. Keep in mind that the specific requirements can vary based on the products and services you offer so It’s crucial to thoroughly research Amazon’s guidelines to ensure full compliance with their policies.
For all related articles, have a look at our How to Get a Business License page.