It is a general question among the retailers who want to sell their products online whether they need a business license to sell their products online or not?
The response to this question often raised in the minds of online retailers is that you may require a license or you may not require a license depending upon the kind of product you want to sell on Shopify along with the state you want to sell your product in.
Moreover, it depends on the compliance and tax agreements with a specific state.
Although Shopify does not require complex documentation and tedious procedures, you have to go through some mandatory licenses, permits, and procedures you must have and go through respectively if you want to sell your product on Shopify as an online retailer.
Further in the post, you will get acquainted with distinct licenses, tax permits, insight into the different kinds of products regulated by Shopify or the regime, and know about your tax compliances and eligibility.
Business license
Before knowing that Shopify requires a business license for you to sell your products online, you must understand the meaning of a business license; you need a business license on Shopify.
In general terms, business licenses or business operation licenses are validated by government organizations, which permits organizations to do business in the region of government jurisdiction.
A business license is mandatory in most cases for you to get your business registered on Shopify and sell your product to Shopify customers.
However, there are different types of business licenses, and to operate on Shopify theme, you might require a specific kind of business license.
However, the Shopify online retailers operating their businesses from their homes do not require a business license. But it is suggested to be best if you get the required licensing and permits if you are expected hefty amount of profits, which will lead you to pay heavy taxes to the government or tax authorities.
Also, you have to collect taxes on behalf of the government, which requires a different business license.
The registration process of getting your license varies from place to place. However, you must review your business license annually to keep running your business smoothly without any external authority interference.
Do you require a Business License for selling on Shopify?
Luckily, you don’t need a Shopify license for your online brand and selling on Shopify, unless you fall under a few categories and conditions, which are :
- You are selling products that fall under alcohol, firearms, weapons, or animal products.
- If you want to use the Shopify gateway option for payments, you must have a business license.
- If you stock the products in your home and operate from there, you require some sought health permissions.
According to legal compliances, if you are a grocery store or home products seller, you may not require a license to operate your Shopify store.
However, despite the nonrequirement of a business license, you should consider it a cross-check with your state licensing office to see whether any license is applicable or not.
Furthermore, if you sell products that the state or the government does not regulate, it becomes your duty to collect and maintain taxes on behalf of the state.
This compliance or procedure can end many online retailers in a dilemma as. It is recently introduced in the industry, and awareness needs to be spread.
Do you need a business license to Dropship on Shopify?
Dropshipping is a magnificent way a manufacturer or a retailer can boost their profits. Which goes hand in hand with improved quality and customer satisfaction. It eliminates third parties and connects manufacturers directly to retailers and sellers, which reduces the cost.
The operational activities of Drop shipping are almost similar to the Shopify store. Therefore, most of the rules and guidelines applied on the Dropshipping procedures are the same. As those for owning a Shopify store or any other online e-commerce store.
Check the shipping policy template Shopify has provided on its homepage.
Since there is a similarity in the compliances, just like a Shopify store. You don’t need a Shopify license for selling. Your products online unless you sell government-regulated goods or stock your inventory at home.
Nevertheless, it will be best for you if you will visit a legislation office or licensing authority to verify. If your business falls under the category of any licensing category or not.
Convenient procedures and easy documentations require to make dropship one of the preferable businesses of Shopify and other e-commerce websites.
Types of business licenses
Now that we are acquaint with Shopify does not require any business license unless you fall under a specific category. You must be aware of the different kinds of licenses. Present as per the eyes of the law and what in which category you fall under.
A sales tax permit, also known as a seller’s permit, is a license. That a seller has to get if he is selling products that fall under taxable goods. Followed by a reseller’s permit, which is mandatory for you if you are selling the already used products.
If you purchase products or services with the motive of reselling them, you fall under a resellers category.
Eventually, you may require general business licenses, which vary as per the rules of different states.
For example, there are cities that demand businesses. That are operating from their home to get a home business and occupation certificate. Whereas some cities are not stringent about these permissions and provide their citizens with ease of business.
In addition to the business license, businesses require an Employee Identification Number (EIN).
Conclusion
It is undeniable that Shopify is one of the best ecommerce platforms available online, which can act as a catalyst to boost your product sales in the market.
If you are a small-scale business and your products don’t fall under a category. That requires a business license, you are all set to sell your product online.
However, you should get a business license initially to avoid any complications in the future.