056: Do I Need a Business License to Sell Online? [Podcast]

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.

Photo courtesy of Flickr/Creative Commons/SFB579 🙂 

 

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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?

So, what if you were wrong and you did need a business license? I have been. Recently I had a piece of rental property in a city and did not have a required business license. I did not know I needed one, so never checked. The city sent me a letter telling me I needed a license which is $100 per year and since I had operated for two years, they were fining me $10. So I owed them $210. I paid it, and now every year I pay the $100 fee and all is well. So the mistake on my part cost me $10.
And, if you cannot sleep at night until you know for sure, call an attorney, find out, and get it over with. Obtaining a business license is not a task that should take days or weeks, but instead minutes. Get it done and move on to the action.
More on this any many other subjects related to starting a business can be found in Discovering the Entrepreneur in You.
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2 thoughts on “056: Do I Need a Business License to Sell Online? [Podcast]

  1. Great episode. I hear so much of the former advice but it was great to hear some more practical down to earth advice regarding this, especially since you are specific to selling information products online. Makes sense, if you start selling, go get your license.