Do you need an Online Business License for your LLC?

Many solopreneur folks initiate their online business with the misconception that unlike a traditional office it doesn’t require a license.

While there are many evident differences between a virtual business setup and a conventional one, but the need of having a business license remains constant.

Depending upon the kind of business you have and the state you operate from, you might or might not require an online business license but being a smart and responsible business owner it’s a better idea to register for yourself.

This guide will explore the meaning of an online business license, its various kinds, and the necessity for you to have one.

What is an online business license?

A business license is a permit issued by the government which shows that a particular company is running under the government’s consent.

Some businesses may require more than one business license depending on the business type and location eg the state, county, or town you operate from.

Moreover, government agencies are authorized to shut down a business or to charge a  fine if they are caught running without a license.

Common types of Business License

Business Operation License

A business operation license is also known as a general license which gives you the authority to work in a state, county, or city.

The necessity to own a business operation licesence also differs from state to state so reach out to your state munuicipalities to make sure if you are qualified for one.

The application process is quite simple and requires you to turn in an application along with a small amount of fee to the license division.

One thing to keep in check with these licenses is that they need to be renewed annually or within a few years to avoid any fine or penalty.

Doing Business As License

The ‘Doing Business As’ License allows you to choose a fictitious name different from your state-registered name.

 Anyone looking to run a business using a trading name other than his real name must possess a DBA license to execute certain contracts and to open a business account.

So, if you want your DBA license for yourself head to the closest county courthouse, choose the desired company name, and get started after paying the registration fee.

The requirements, procedures, and charges to file a DBA license can be diverse but generally range between $25 to $100.

 Occupational License

This type of online business license is not necessarily needed by all businesses but if your company requires some competent skills like medicine, construction, food preparation, real estate, accounting, or transportation then you probably need one.

So, if you are just running a business by selling goods online, it’s unlikely you need an occupational license.

An occupational license ensures that you are an utmost skillful person and assure the wellbeing and safety of your customers.

To make sure that your business is valid to get an occupational license you should contact National Occupational Licensing Database and determine your criteria.

Sales Tax License

Another significant license you probably will need if you are a home-based business selling goods is the sales tax license.

Like other licenses, this too has diverse laws and regulations according to the state or county you run business in. So, reach out to the municipalities and jurisdictions to inquire about the laws and also probe if you require other tax permits aside from sales tax.

And under no circumstance, you should collect sales tax from the customers without a sales tax license because if you do, you’ll be charged some hefty penalties.

Sellers Permit

If you are selling taxable items whether through your home or online business you should get a seller’s permit to collect sales tax from your customers.

Aside from the fact that it allows you to collect sales tax, seller’s permits also enable you to purchase certain products from suppliers without paying the sales tax.

Like other business licenses, the requisites of a seller’s permit can also differ from state to state. Therefore, you should contact the department of revenue to confirm if you are eligible for one.

One important thing to keep in check is that seller’s permit can also be required if you are selling intangible products or services, so make sure to get the right one for yourself.

 Final Takeaway

Whether you run a physical or online business you are required to obtain certain licenses.

Through this, the government can keep a check on the business activities happening in an area and can also monitor the tax revenue.

In some business areas, you might not need any license until you achieve a certain milestone but on the opposite, some businesses require one even before you begin.

All such details should be closely inquired into before you set up to prevent any legal hassles.