If you’re thinking about setting up an ecommerce platform, you might be wondering how you can get a business license for your online enterprise.
If you plan to sell products online, chances are you require a business permit that lets you sell these products legally. If not, you and your online business will be subject to penalties and other legal issues.
In some instances, failure to have all the required business permits can result in your online enterprise being shut down. If this is the first business you’ve ever set up, you probably wonder if you have to get a permit from the on-set.
Although this is generally recommended, the truth is most states don’t require online enterprises to register for a license until they generate a specific amount of revenue or fulfill a particular number of digital transactions.
You can visit your SBA’s or local government’s web page to find more information on the local laws regarding online businesses. Remember that just because your state doesn’t mandate a license from the get-go doesn’t mean you shouldn’t register your online business.
Registering your enterprise has benefits such as tax benefits and personal protection. It also assists in legitimizing your business which is key in attracting and retaining clients, particularly in the early stages.
This article goes over how to get a business license for your online enterprise.
Business License Requirements For Online Enterprises
Since we live in the digital age, applying for a business license is easy and can be done online.
The most common types of permits for online enterprises include:
- Reseller’s permit
- Seller’s permit
- Employer permits and licenses
- General business permits (based on location)
- Industry and profession-specific licenses
Registering for an online business license usually requires that one provides the following details:
- The business’s legal framework
- An in-depth description of your enterprise’s products, services, or activities
- Sales tax license
- The business’ address
Some permits and licenses usually expire. Therefore, ensure that you keep close track of their renewal dates. You can set up calendar reminders to avoid late payments or having to reapply for the permits.
Depending on your enterprise’s structure, you can use your address as your company address.
In some instances, it isn’t possible to use your home address as your business address (and typically is not advised). Thus, you’ll need a commercial business permit to apply for your ecommerce license online.
Nonetheless, you can opt for establishing a virtual business address via a customizable virtual office pack.
A virtual office refers to a combination of processes, people, technologies, and places that come together to assist individuals and businesses in operating more efficiently, often remotely.
In essence, virtual offices offer businesses and individuals access to a well-known business address, meeting services, mail forwarding, demand-based office space, etc.
Virtual offices are the go-to solution for most entrepreneurs, startups, and small businesses since they are cost-effective and offer access to:
- A commercial business address destination for mail
- Work and meeting spaces
- An address to include in marketing materials and business cards
- A registered company address (that’s not a personal address)
- On-site services like administrative services printing, copying, and faxing
- A local presence in a particular city or area associated with your prospective clients
Although some company frameworks let owners use their home address as the business address, this isn’t possible in some instances.
Some zoning regulations limit physical alterations to a house’s appearance (for example, putting up a sign), the number of employees and visitors, noise restrictions, and limitations on how much inventory you can keep in your house.
If you want to use your address but you’ll be dealing with a lot of inventory and wish to erect a sign with your company name, you’ll need to register for a zoning license.
While this may appear to be the easiest option, using your address for your online enterprise isn’t advisable because:
- Privacy matters: If your address is the same as your company address, your home address will be available for everyone to see. For instance, as of 1st September 2020, Amazon began displaying sellers’ business addresses and names on the platform’s Seller Profile Pages
- Business legitimacy: If an individual looks up your company on Google Maps and sees that it’s in a residential place, they may shy away from doing business with you
- Homeowners association and lease rules: If you rent an apartment/house, running a business using your address may be contrary to the lease agreement terms. Furthermore, some house owners associations have laws that bar you from running an enterprise from your home address
- Lack of access to a meeting place: If you have to meet with suppliers, clients, vendors, and business partners, your house isn’t an ideal location. Although restaurants and coffee shops are a simple solution, they aren’t suitable for business meetings as they can be noisy and you might not find seating
How To Apply For An Online Business License
Applying for an online business license differs depending on the type of business, the state, and the industry.
As a result, the cost of the licenses also varies based on the type of business, the state, and the industry.
Due to the varying regulations and laws in different cities, counties, and states, it can be challenging to determine your licensing and registration needs.
This can be more difficult for online enterprises that carry out business across city or state borders.
Here are some resources that can make establishing an online enterprise easier.
Use Automated Licensing Processes
Various online platforms can provide you with business registration and licensing services to make it easier to obtain the permits, licenses, and requirements needed for your business.
Such platforms have software that streamlines and automates the business permit compliance procedure and a robust current repository of permit and license governmental information, ensuring you get all the necessary details from the state, county, municipal, and federal licensing bodies.
Apart from simplifying the setup procedure for all company sizes and types, these platforms also ensure long-term compliance.
This amounts to thousands in savings by avoiding hefty fines, expiring permits, and applying for a new permit or license.
Registering A Corporation Or An LLC
If you settle on setting up your enterprise as a corporation or an LLC, you must register it.
Since you’ll be forming a legal body, you’ll require the services of a firm or an individual to aid you in the process and ensure that you fill in all the necessary details correctly.
Furthermore, you need to ensure that you’re protected and everything is spelled out in the official documentation. This is particularly necessary if you set up the enterprise with other individuals.
Platforms such as IncAuthority.com offer free corporation and LLC setup services. The site only requires that you carter for mandatory State Fees.
Do You Require A Registered Agent?
The law mandates that partnerships, corporations, and LLCs should have a registered agent. A registered agent serves as the intermediary between your company and the government.
Consequently, registered agents can receive mail and other official correspondence on behalf of the company.
Although you can act as your registered agent, it isn’t advisable since:
- It could make your LLC application more difficult as it could be argued that your LLC isn’t sufficiently separate from personal assets
- The law mandates that registered agents should work during business hours. Therefore, if you wish to take an extended vacation or your company works outside normal business hours, you’d still need to ensure that someone is available to get mail.
- An agent’s address is public. Thus, it may be in your best interests not to work as your agent for security and privacy reasons
- Agents should have physical offices in all states in which a business operates. Therefore, a P.O Box address isn’t sufficient
A registered agent can assist you in maintaining your company image. This is because you’ll avoid instances where you’re served with government documents, services, or processes while you’re with visitors or customers.
With a registered agent, you can rest assured that they’ll quickly receive and respond to all critical mail. You can also minimize the non-compliance risk by addressing essential issues before deadlines.
If you wish to expand your company across state borders, you should hire registered agents in every state your business operates. In such instances, you can’t be your registered agent.
Setting up, licensing, and registering your online enterprise takes effort, time, and research.
Although it can be difficult, it’s worth it, especially bearing in mind that various resources and tools are available to business owners to simplify the process.