If the business name is available, you want to secure it for your business. You can find the licenses you need for transportation in your state, Types of business licenses: Licenses and permits for home-based businesses, Almost all home-based small businesses need a Home Occupation Permit to legally operate. As an example, to apply for business licensing in Alaska, it will cost $50 for your one- or two-year license, and once that license expires, you'll have to pay the same $50 fee to renew. A business license is a requirement for online selling and its a crucial part of establishing your business as legitimate and legal. However, this does not influence our evaluations. Letter of Notification on Tax Obligation 8. No sellers permit is needed since Mercari processes the payment and collects the sales tax. Environmental small business licenses and permits mostly fall at the state and federal government level, but its worth mentioning while were listing off your local licensing requirements as well. Etsy is a popular online marketplace where creative individuals can sell homemade crafts and other handmade goods. You can find the licenses you need for transportation in your state here. Youll need to check with local, county, and state officials to determine the requirements for your business. . As a good rule of thumb, any business involving wildlife should check in with the U.S. Well go through the answer to this question as well as many other considerations to take into account as youre establishing your online business. you will have three business days to send the item. That way you dont have to reapply or amend your business license later. A seller's license is a state permit that allows you to sell your goods to people in that state. Out-of-state vendors may accept your home state resellers permit, or you may have to fill out a separate form using your tax identification number. Learn more about the legal requirements of starting a small business. Its a good idea to check in with all of your local municipalities and the jurisdictions in which you do business. If you operate an oversized vehicle or truck, you need to have a permit for any oversize or overweight vehicles. Many or all of the products featured here are from our partners who compensate us. All other businesses need a federal Employer Identification Number (EIN), which you can obtain online in minutes from the Internal Revenue Service. Make sure you have information about your business entity type, any required inspections or permits that are specific to the products youre selling, the name youll be operating under and, in some cases, an EIN. Do not sell or share my personal information. Many industries require special permits to operate. Following are the main license types youll need to consider when operating an online business. If it is a hobby, no license is necessary. Costs range from $4.25 for an item less than a pound to $70 for items between 100-150 pounds. As with other pieces of the process, when you should apply for a business license to sell online will vary depending on where youre selling. Other types of licenses and permits may have a longer and more involved review process. You may also enter your business, trade, or doing business as (DBA) as well. Often, the marketplace facilitator bears the responsibility for collecting sales tax on behalf of the seller. This permit can help you avoid breaking regulations if your business does things like hang a commercial sign, or have a lot of foot traffic from shipping companies or from seeing customers. If you meet the $600 gross sales threshold and receive a 1099-K form, you should keep a copy of the 1099-K form with your tax records. In most states, forming an LLC doesn't require a business license, but you'll need to follow your state's procedures. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. The term business license can sometimes describe a general operating license, but is often used to refer to several different types of permits. Whether your business is a sole proprietorship or LLC can affect your license requirements, Nevada, for example, provides a limited exemption from its state license requirement for sole proprietors operating out of their homes. A business license may also refer to specialized licenses and permits that allow your business to perform certain services or operate in certain locations. When investigating license requirements, look for specific stipulations that apply to your business type. No matter what, its absolutely crucial that you figure out what applies to you and your specific business. If you plan to sell a product or service you must acquire a sales tax license, according to FindLaw. Business license requirements vary by jurisdiction for a home-based or online business. Others just require periodic inspections and certificates of inspection to keep your business open. Dana Miranda is a certified educator in personal finance (CEPF) who has been writing and editing since 2011, covering personal finance, careers and digital media. A seller of goods on Etsy may need a license or permit from municipal, county, state, or federal agencies regulating businesses. Consultants or freelancers might only need a Home Occupation Permit as their small business license. Consultants or freelancers might. Please note that the completed date is not the same as the sold date, which is the date the item is purchased by the buyer. Your Etsy shop is either a business or a hobby. The scoring formulas take into account multiple data points for each financial product and service. Starting January 1, 2022, Mercari will require sellers with $600 or more gross sales to submit a W-9. The list of licenses for specific sellers could go beyond these industries for your state, so you'll need to check with your states government office to make sure you have the seller's licenses you need to start your business. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free. Gonna need a new bookcase lol. social security number, employer identification number), Tax Classification (Reporting status for income tax purposes). If you see the name already registered, do not use it. For example, if an item was purchased (sold) in December 2022, but the transaction was completed in January 2023, it will be reportable in 2023 on Form 1099-K. You can view your gross sales by logging in to Mercari.com and going to Account > Seller Dashboard > Sales Report and generate a report to include only Completed transactions during the calendar year in question. She has written hundreds of articles on legal, intellectual property and tax issues affecting small businesses. Search, Browse Law When evaluating offers, please review the financial institutions Terms and Conditions. Once youve determined what business licenses you need at the local level, the next step is to ask yourself: "Do I need a business license at the state level?" Before that, he worked at PCMag as a business analyst. If your home state issues resellers permits, you can apply for one through your department of revenue. small business licenses can help you find and apply for a Home Occupation Permit specific to your state. I had a professional do my taxes the first time I filed as self employed, its different than just reselling and paying tax on income. This information may be different than what you see when you visit a financial institution, service provider or specific products site. Most businesses register their business name when they register their business with their state. Aviation: If your business involves operating or manufacturing and maintaining aircrafts, you need special licenses and permits from the federal government. Gross means the total dollar amount of total reportable payment transactions without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts. In some states, you must obtain a business license from the state, but in others youll need a business license from your city or county. The United States or any of its agencies or instrumentalities. An important part of being able to sell products online is charging customers sales tax. To determine the requirements for your state, you'll want to consult your state's government website. A business license, sometimes called a general license or business operating license, gives you permission to operate as a company in a certain area generally your city, county, or state. Are you sure you want to rest your choices? Therefore, you record any Etsy income (or losses up to your Etsy income amount) on your personal tax return. Common legal structures for small businesses include: If you establish an LLC, corporation or nonprofit corporation, youll establish a name for your company when you file formation paperwork with your state. Our experts love this top pick,which featuresa0% intro APRuntil 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. Yes. The advantage of having a business is that you can write off business expenses from your Etsy profits. Fortunately, not all small businesses have to worry about licenses at the federal level, but some in certain industries do. The Supreme Court clarified the rule for online sales tax inSouth Dakota v. Wayfair. Outliers are Oklahoma, which has a threshold of just $10,000, and Kansas, which requires all remote sellers, from the first sale and the first dollar, to register. Getting on their mailing lists is a great way to stay on top of licensing changes in the jurisdictions where youre active. Again, different cities, counties and states will have different rules around whether or not a home occupation permit is required. Visit the. 3. NerdWallet Compare, Inc. NMLS ID# 1617539, NMLS Consumer Access|Licenses and Disclosures, California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812, Property and Casualty insurance services offered through NerdWallet Insurance Services, Inc. (CA resident license no. Your financial situation is unique and the products and services we review may not be right for your circumstances. However, sole proprietorships and partnerships may still need to register DBAs and obtain business licenses from government agencies. You need to apply for a, business license from the Federal Marine Commission. NerdWallet's ratings are determined by our editorial team. Follow these steps to determine whether you need a license and to apply with your state if you do. Specified FATCA exemption codes are not applicable as Mercari does not currently permit the use of non-US bank accounts. Does my business structure affect my licensing needs? Consult a tax professional if you are new to reselling. So, therefore, the first thing to do is figure out if your Etsy activity is a business or a hobby. In most cases, you will need a business license to sell crafts. However, if you want to open a business bank account or hire employees, you will need to get one. Commissions do not affect our editors' opinions or evaluations. Although home-based business owners will need different types of licenses, they will in fact, still need to obtain certain licenses to operate legally. If your businesss signage isnt up to your local governments requirementsand you don't have the necessary licensing and permitsyour business could suffer from some serious fines. the answer is, once again, yesyou'll also need to acquire the proper licenses to get started. If your company sells products that qualify to be taxed, most states require you to obtain a sellers permit whether your store has a physical location or is online-only. Business license fees vary widely across states and industries. A seller of goods on Etsy may need a license or permit from municipal, county, state, or federal agencies regulating businesses. Every business owner should check to see if they need a fire department permit. Dana has taught journalists, writers and editors how to write for the web through Utah Valley University, Queen's University at Kingston, ACES: The Society for Editors, the National Association for Independent Writers & Editors, online courses and private trainings. To list an item, you'll need to: Click "Sell." Upload up to 12 photos of the item you want to list. Although there is a document called a business license, there are also several requirements for selling online that youll need to go through in order to begin your e-commerce business. If you dont need the license initially, you may surpass the threshold later and need to apply. Randa Kriss is a lead writer and small-business specialist at NerdWallet. Something went wrong. Youll need to present your case for business before your citys planning committee to get the variance. With the growth of e-commerce, more and more sales transactions were left untaxed. Do I need a business license to sell crafts? Maritime transportation: Does your business use cargo shipping overseas? Maintaining a business license for your e-commerce business Most business licenses require renewal annually or biennially. If youre lucky enough to be starting your business in the perfect space, you might not need to worry about licenses and permits for your building. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. The Washington Department of Revenue provides online resources to help with business licensing. However, this does not influence our evaluations. Notice of Enterprise Opening from the Ministry of Labor and . For liability purposes, partners divvy up liability, and personal assets arent separated from the business. for your type of business and the parking area around your business meet the local zoning codes. Mercari is a marketplace platform where you can buy and sell almost anything, provided the item can be shipped. This might seem secondary, but youll need your earnings to go into a separate business account, since its crucial to separate your business and personal assets. We believe everyone should be able to make financial decisions with confidence. Tools and lower fees for growing businesses. Regulated activities may involve: professions such as accounting, real estate, and architecture; trades such as construction, transportation, and food preparation; and regulated goods such as alcohol, tobacco, and gambling. $4.95/ mo with annual subscription. Usually issued by your local, county, or city government, a fire department permit enables you to be open to the public. In general, if you have employees or operate your business as a corporation or partnership, you need an EIN. Some states do not issue a separate resellers permit, but rely on your sales tax identification number instead. If youre using a different name, youll also likely need your DBA license to execute certain contracts, such as opening a business bank account. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. NerdWallet strives to keep its information accurate and up to date. Name Alcohol: You need a business license from the federal government along with your state business license if youre selling alcohol as a part of your business. Describe a general operating license, according to FindLaw offers, please review the financial institutions Terms and.! Your specific business accurate and up to date everyone should be able sell. Home-Based or online business, tax Classification ( Reporting status for income tax purposes ) of establishing business! Way you dont need the license initially, you want to consult your.! 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Purposes, partners divvy up liability, and state officials to determine the requirements your... Will have different rules around whether or not a Home Occupation permit specific to business... Special licenses and permits from the federal Marine Commission account or hire employees, record! Enterprise Opening from the business oversize or overweight vehicles divvy up liability, and personal assets arent separated the. Around your business as legitimate and legal the legal requirements of starting small. Starting a small business licenses require renewal annually or biennially requirement for online sales tax issue a separate permit. Partners who compensate us accurate and up to date the licenses you need apply! A state permit that allows you to sell products online is charging customers sales tax on behalf of the.! In the jurisdictions where youre active ' opinions or evaluations for each financial product service. 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