Ecommerce is a trending and profitable niche of 2019 and hopefully, it will continue to gain more popularity in upcoming years. The issue with Ecommerce business in India or any other part of the world, especially in countries like Canada, UK, Germany among others or some states in the USA like California, Alaska, Avada, Texas, has a lot of rules and regulations surrounding the E-commerce or any online selling Business.
In many cases, you need some permissions and licenses from the local governmental authorities in order to sell online. Today we are going to talk about how you can apply for a license to sell online on popular eCommerce building portals like Shopify, Bigcommerce, Magento or Woocommerce.
What is a Business License?
A business license is a Government document issued to any online or offline seller (according to the nature of business). It is important to have a business license in order to manufacture products, Manage inventory and sell online.
Now there are different online business types and thus licenses vary according to your business although you have to do research before applying for the license and know which type of license does apply for your business.
There are many factors affecting the business license type and documents required to submit for obtaining the license and the important factors among all is the location of the business, Type of the business, digital or physical product listing, Taxation etc.
Is it important to get a business license to sell online?
Yes, you will be required to provide a business license for a lot of different online activities such as :
- Getting approval from payment gateways.
- Shipping services.
- Fulfillment services.
- Taxation and yearly audit.
- Selling products internationally.
- Getting products from other countries to your local warehouse.
It is also important to note that this are just a few of the important places where you require a Business license but there are many other sectors where you have to submit your business license in order to gain trust and verification purposes.
Selling products online may get you easier access to your customers and gain global outreach but this does not mean that you are excluded from business license procedure. You are also entitled to a business license even if you are operating from your bedroom having no employees, Physical company location or using third party fulfillment service like Oberlo, Dropified.
Does Registering a company similar to getting a Business license?
Company registration is mainly done for incorporation purposes (Getting a legal name for your company) or for taxation purposes but getting a business license is for selling anything online or offline. In simple words, the business license permits you to sell your products without any hassle or government interference as long as you have the license.
Many Countries and states do not require a business license until you are doing X no of sales. But for many other countries or even local bodies, it is important to have a license even before launching your product line.
Before starting anything just go to the local authorities or any person who is in a similar business and ask them for the required documents for obtaining the license.
What are the types of business licenses in different countries and locations?
Business license nature and distribution may vary according to different states and locations your business operates in. Below we are mentioning common business license types and governmental bodies issuing the licenses.
City Business License :
It is a normal license and you can get it easily without much hassle or without submitting many documents. For obtaining a City or local business license you have to visit the local government officials and tell them about the nature of your business, Operational location for business, Online/Offline scope of the business, etc.
State Business License :
State business license is required for specific occupation like
- Building Contractor
- Insurance agent
This is mainly done to ensure that the person providing the services is a professional in their respective field and can do the work effectively and it is important for a person to obtain a license in order to ensure the safety of the citizens and to avoid bogus people from entering the profession and not providing any real value.
Federal Business License :
Although, Not all businesses are required to obtain a Federal Business License we are still covering the topic to understand what nature of business comes under the Federal Government watch. Below are the business verticals which requires the Federal Business License:
- Manufacturing, Importing or selling alcohol
- Pet Shop or animals related business
- Dealing in firecrackers
- Manufacturing or dealing of Firearms, ammunitions
- Natural gas or Petroleum plant
- Transportation service
- Shipping service
You can easily get more information about the businesses required to obtain state and federal licenses from your country’s website or any other government website which handles and permits licenses in your state or country.
Which Businesses Needs License to sell online or for starting an Ecommerce Business?
For many eCommerce Business types you do not need any Specific license like for shopping niche, third-party Electronics, Digital Services, etc. but there are still other businesses for which you will need a license to sell online. Below are a few of them :
- Selling Skincare products online
- Selling private-labeled electronic gadgets
- Selling food, Beverages, and other consumable items
- Baby food and baby products
- For selling alcohol or other drugs
- for selling marijuana and marijuana-related products
- for selling sex toys or sexual treatment medicines
If you are manufacturing anything from your home or locally then you must inform your local government about the same and obtain local manufacturing license otherwise you will be flooded with heavy fines and sometimes serious legal charges.
Difference between sellers permit and business license
Sellers permit and business license are two completely different things. I have seen people mistaking both the things to be the same.
A Business license helps you to run your business in any location or niche whereas a seller’s permit is used for selling rights and taxation purposes. to put this in simple words a seller’s permit allows you to sell specific products that come under the license issued to you and business license helps you to register your company as a legit business and operate under its name.
How do I know more about my local Business rules and regulations to obtain a license?
You can easily get information about your state’s or local business rules by visiting their respective websites or by hiring a lawyer or firm which generally helps you to obtain this type of license. You can also search for the person on the internet or on websites like fiverr.com, Upwork.com, Peopleperhour.com Here you can get experts for as low as $5 per hour.
How do I get a Business License in my Country?
Below we are listing some official websites from where you can obtain your Business license and also look for the documents required for the approval.
Apply for Business License in the United States of America:
Apply for Business License in Canada:
Apply for Business License in India:
Apply for Business License in the UK:
For all other countries, you can refer to Google Search Engine and search for “Apply for Business license <country name>”.
If you are dealing with third-party sellers or manufacturers then it’s not required to obtain a license just for selling. Also if you are operating from home and running a small online E-commerce store then also in many cases you don’t need any business license just a simple company registration document is enough but if you are dealing in industries like skincare, baby products, Food and illegal substances like alcohol or marijuana it’s better to look for the license information on government portals and on internet to get the basic idea of what are the rules and regulations and how it can affect your business or whether you will need a license for operating the specific business in your area or worldwide.