Recently I was asked this question by a client, “Do I need a business license to sell online?” If you go to the bookstore and pickup a book on how to start a business, you will invariably find that they tell you to first get a business license. This is a mistake in most cases. Today I will tell you when you might and might not need a license and when you should start trying to find out how to get one. And no, it is not when you think! This podcast is based on material from Discovering the Entrepreneur in You.
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Business Licenses for Online Businesses
I am not a lawyer, so this is not legal advice, but common sense advise after having helped many start their business ventures. Just to get right to the point, you almost never need a business license to sell online information products or homemade products made in the USA.
Exceptions: Note there are a few exceptions to these rules based on your local and state governments. But they usually include special circumstances such as regulated industries like healthcare or alternative medicines. In addition, sometimes when you are reselling other peoples’ products, the manufacturer (who you buy from) may want evidence of a license. But ask your vendor is they need it before you rush down to the license office to ask.
What You Should Do First?
People have this weird idea that when you have a business license or an incorporation status, suddenly you are in business. Actually, you are not in business until you start providing a service or product to the world for a profit.
So, the first thing to do it sell something! If you spend all your time and money running around taking care of legal and tax issues before you have any money rolling in, you are wasting valuable time and resources. Fact is, you owe no tax until you have income and you are not a business until you have income.
What if I was Wrong?
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Question: What business licenses stories have you run into? You can leave a comment by clicking here.